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Best Practice > X-engineering Success (James Champy)

X-engineering Success
(James Champy)

Executive Summary

  • Partnerships are more important today than ever. Few companies can afford to invent, manufacture, sell, and service everything that they make without some help.

  • So companies come together in relationships, typically called alliances, to complement each other’s products and capabilities.

  • With attention to harmonizing processes across organizations and with the good fortune of compatible cultures, alliances can work. But truth be told, most alliances now fail.

Introduction

An example of the joint venture is Concert, formed by AT&T and British Telecom to provide communications services to large multinational companies. The venture made sense on paper. Neither AT&T nor British Telecom had the global coverage that its big customers required. Rather than try to build this capability—at a cost of billions of dollars—and bang heads in competition, it made more sense for these companies to create a jointly owned company out of their combined resources. But in the end, these giants did bang heads, taking the venture apart. It would seem that someone forgot to put terms into the deal about what to do with assets and customers in the event that the alliance failed. About the only thing that the partners seemed to be able to agree on was that it hadn’t worked. As Concert wound up its business, it was losing about $200 million each quarter.

What happened? Most observers attribute Concert’s failure to a difference in cultures between the two partners. That’s certainly plausible. The management styles of both companies are different, and each company has been distracted with its own struggle to maintain share in its local markets. A similar alliance formed by France Telecom and a number of other telecommunications companies also failed after much effort and millions of Euros. In fact, the business landscape is littered with alliance failures.


  

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