Joint ventures are tricky business. It involves the blending of two paradigms that can fail without cross-process discipline in place that ensures a transition and sustainable change.
MCKinsey & Co just published a great podcast on the topic which can be found here. The conversation touches on the causes of joint venture failures. These include:
- rushing to get the deal done as quickly as possible before addressing operational realities or finances
- this can be addressed by finding ways to balance the pressure for speed with the demands of planning a healthy joint venture, following an explicit checklist of expectations for each stage in the planning process
- insufficient leadership continuity of vision and execution
- this can be addressed by assigning end-to-end accountability to a single person with clear authority to make executive decisions, supported by team members who serve overlapping terms across the transition
- declining executive engagement throughout the entire process
- this can be addressed by front-loading the most important decisions about which partner will have the operational control and roles and responsibilities in advance rather than waiting for them to emerge
- poor planning to respond to changes in risk
- this can be addressed by choosing to prioritize transition risk management over potential conflict
Even when organizations adhere to what are considered best practices for JV planning, they will face significant challenges half way down the road if the process isn’t built to ensure transition and sustainable change. Successful joint ventures take time and more work than anyone believes at the outset.