Small-to-Midsize firms often form alliances to kickstart growth
13 Jul '07
3 min read
Scores of new alliances are born every day. One of the fastest, least capital-intensive ways for small-to-midsize companies to grow is to connect with a larger, more powerful partner or brand. But there is risk.
Experts estimate a failure rate as high as 60 percent among new alliances. An Executive Action report from The Conference Board looks at how mid-market companies can go about finding a “big brother” they can trust.
Alliances: Engines of Growth
For all the risks, an alliance with a larger company is one of the only ways that some smaller and midsize companies have to accelerate growth without huge capital outlays. Normally, growth takes patience and a very long time.
Brands are not created overnight. But with help from a powerful partner, a smaller company can raise its visibility, develop a new technology or product, gain access to broader marketing channels, tap into sources of new customers, or ride the coattails of a strong brand.
Making an alliance work takes tremendous effort and commitment. And the risks are not to be underestimated. What if the larger company is not so well-intentioned, and walks away with the smaller company's secrets? Sometimes the larger company develops other priorities and allows the partnership to fall apart.
“Since the sharp falloff in alliance creation after the dot-com bust in 2001, companies have learned much about how to design and manage these partnerships more effectively,” says Howard Muson, author of the report. “Alliances are making a strong comeback, and companies have more realistic expectations about what they can achieve.”
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