Robert S. Kaplan (rkaplan@hbs.edu) is the Baker Foundation Professor at Harvard Business School.

David P. Norton (dnorton@ thepalladiumgroup.com) is the founder and president of the Balanced Scorecard Collaborative, Palladium Group, in Lincoln, Massachusetts.

Bjarne Rugelsjoen (bjarne@rugelsjoen.no) is a director at GoalFocus, a performance-coaching consultancy based in London.

Managing Alliances with the Balanced Scorecard
Fifty percent of corporate alliances fail. But you can increase your partnership’s odds of success by applying these techniques. by Robert S. Kaplan, David P. Norton, and Bjarne Rugelsjoen

114 Harvard Business Review January–February 2010

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ILLUSTRATION: BRETT RYDER

orporate alliances are a 50/50 bet—at least according to a recent study by McKinsey & Company, which found that only half of all joint ventures yield returns to each partner above the cost of capital. That’s worrying, given that partnerships and alliances are central to many companies’ business models. Originally used to outsource noncore parts of supply chains, alliances today are expected to generate a competitive advantage. So it is necessary to dramatically improve their odds of success. Why do alliances fail so often? The prime culprit is the way they are traditionally organized and managed. Most alliances are defined by service level agreements (SLAs) that identify what each side commits to delivering rather than what each hopes to gain from the partnership. The SLAs emphasize operational performance metrics rather than strategic objectives, and all too often those metrics become outdated as the business environment changes. Alliance managers don’t know whether to stick to the original conditions or renegotiate. By that time, the companies’ leaders have returned to run their own organizations and haven’t followed up to ensure that their vision for