g-f(2)47 MIT SMR: Four Questions for Appraising Your Alliances

Extra-condensed knowledge

Corporate alliances are a means to an end, and they involve costs and obligations. 

• Accordingly, corporate leaders, like the heads of nations, should never take the value of their partnerships for granted. 
• Toward that end, you can conduct a fast review of the value of your company’s alliances by asking four questions, derived from the short list of attributes of a good ally that Stephen Walt offers in his article.
• “Wise countries choose their allies carefully and do not treat any of them as sacred and inviolable.”

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Condensed knowledge 

• Four Questions for Appraising Your Alliances. 
• Corporate alliances are a means to an end, and they involve costs and obligations. Accordingly, corporate leaders, like the heads of nations, should never take the value of their partnerships for granted. Toward that end, you can conduct a fast review of the value of your company’s alliances by asking the following four questions, derived from the short list of attributes of a good ally that Stephen Walt offers in his article.
• Companies enter alliances in good faith and with high hopes. But like everything else, the conditions that prompted the alliance in the first place are likely to change over time. When they do, leaders need to respond by reappraising alliances and, when necessary, altering or ending them.
• Question 1. Does your partner make a meaningful contribution to the alliance? 
• If your partner hasn’t made the contributions it promised, you don’t have a good ally.
• Question 2. Is your partner stable? 
• The stability of your partners is a key ingredient in the valuation of alliances. 
• A partner who is at risk strategically or financially can do your company more harm than good. 
• Take Boeing’s troubles with the 737 MAX, which led it to shut down production of the plane in January 2019. 
• Question 3. Are your partner’s interests compatible with your company’s interests? 
• When the interests of allies diverge, you need to reconsider the alliance.
• Question 4. How well is your partner treating your company? 
• Alliances often founder on broken promises — and sometimes outright deceit.
• Over the past four years, many of the United States’ geopolitical alliances have been remade with bewildering speed. 
• Stephen Walt, the Robert and Renée Belfer Professor of International Relations at Harvard University. Article in Foreign Policy titled “How to Tell if You’re in a Good Alliance.” It is instructive for business leaders as well as diplomats. 
• Walt points out the unspoken assumption behind the uproar: that each of a nation’s existing political alliances is actually worth maintaining. “Surely this is not the case, for all allies are not created equal, and the value of any commitment is likely to wax and wane over time,” he writes.
• “Wise countries choose their allies carefully and do not treat any of them as sacred and inviolable.”

Category 2: The Big Picture of the Digital Age

[genioux fact deduced or extracted from MIT SMR]

Type of validity of the "genioux fact". 

• Inherited from sources + Supported by the knowledge of one or more experts.

Authors of the genioux fact

Fernando Machuca

References

Four Questions for Appraising Your Alliances, Theodore Kinni, December 22, 2020, MIT Sloan Management Review.

ABOUT THE AUTHORS

Theodore Kinni (@tedkinni) is a senior contributing editor for MIT Sloan Management Review. He also blogs at Reading, Writing re: Management.