Getting to the bottom of alliance failure rates
Nearly fifty percent of alliances 'fail'. Right? Well no actually. In fact recent research by Silico Research suggests that just about a quarter of alliances significantly fail to match the main expectations of one or both participating organisations. This is a substantially lower failure rate than put forward by many consultants for alliances in general. Our analysis is based upon the aggregation of data from multiple respondents to a number of surveys it has conducted to assess the health of various alliances. The confusion arises because questions asking respondents to rate the success of an alliance out of '5' or '7' are treated as categorical with only the maximum possible rating being treated as a 'success'. On this basis an alliance that a respondent rates as, for example, '6' out of '7' is treated as a 'failure'. That can't be right.
So what to do? We'd suggest two solutions to this 'problem' for those interested in determining the success or failure of a set of alliances. First, if you need to use a scalar question then group responses together on either side of the mean rating (typically '5' on a seven point scale) so that all ratings of 1-4 are treated as a failure and all ratings of 6-7 are treated as a 'success'. Alternatively, you could simply ask the respondents if the alliance has failed 'yes' or 'no'. Our hunch is that this type of questions would generate a far, far lower failure rate than 50%.
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