Building Trust in Alliances

"A relentless assault of trust and respect is the major factor in making alliances work," declares Gene Slowinski, director of alliance studies at Rutgers University, in Newark, New Jersey. Few participants in R&D alliances seem to disagree. "No alliance can survive without trust," David Jones told the annual Rutgers conference on managing strategic alliances, last year. Jones, who gained extensive partnering experience at the engineering construction division of Raytheon Co., said companies tend to undervalue personal relationships. Legal contracts are important, he noted, but "the vitality of the alliance resides in the relationship that develops between operating managers. " Peter Booth is senior vice president of strategy and development at Corning, Inc., which has been partnering via jointly owned equity ventures since the 1930s. Calling trust "the single most important ingredient" in making such ventures work, he stresses that managers of jointly owned companies must treat the partners equitably and work to maintain a climate of trust between them. "You have to be allied with someone with whom you can work through problems," says Booth. Washington, D.C.-based consultant Jordan D. Lewis, who advises international companies on how to fix troubled alliances, has found lack of trust to be a major reason why so many firms don't think their alliances are working as well as they should. Trust "is always number one" on the list of priority concerns that Jordan requests from attendees at the annual seminars he holds for executives in Asia, Europe and North and South America. Lucia Luce Quinn, senior vice president of strategic planning at Digital Equipment Corp., urges that before committing your business to an alliance, ask yourself, "Is there trust? " If you feel the level of trust is low, then consider your plan for improving it. Otherwise, she warns, "you will fail. " And three researchers from the Norwegian School of Management in Sanvika concluded from a study of 84 Swedish, Norwegian, Japanese, and U.S. firms' alliances that while trust and commitment are not sufficient conditions for long-term cooperation, "they are certainly necessary conditions" (1). But building trust is far easier said than done. In fact, it may well be the toughest part of creating a durable, effective alliance. Here is advice from several practitioners: ENCOURAGE FRIENDSHIPS "It definitely is helpful that there be a preexisting friendship wherein individuals have gotten to know each other over time," says Booth, of Corning. "A lot of time has to be put into the development of good personal relationships with analogues on the other side. " This means social as well as business time. "A certain continuity and familiarity of faces is useful," says Booth. In his book, Partnerships for Profit (Free Press, 1989), consultant Lewis cites the important role that personal friendships played in alliances between Excel and Ford Motor Co., and between Ford and Mazda. He credits the close friendship between two executives on opposite sides with helping to save a joint program between Ford's Escort and Mazda's 323. That building trust and friendship takes time is more apparent to other cultures than to many Americans. "It should be emphasized that this kind of cooperative relationship cannot be established in a day," Nippon Steel's Azusa Tomiura wrote in 1985 (2). "In most cases, such relationships are established gradually by deepening mutual understanding and distilling the information obtained through daily contact," he observed. Lewis points out that it takes years to build trusting relationships, and that companies don't invest nearly enough time to it. "They think in terms of deals," he told the Financial Times recently. Noting that trust starts between the people immediately involved "and hopefully spreads slowly," Lewis related that at the start of the aircraft engine venture between competitors GE and the French SNECMA, "there were only two people who trusted each other, but they gradually buried this deeper and deeper in each organization" (3). …