Wesley Phillips, CEO of the Hunter Barth advertising and marketing agency in Costa Mesa, Calif., was surprised to hear employees gripe about the strategic partnerships he had formed with outside market-research, direct-marketing, and public-relations agencies. Hunter Barth employees "would get angry if projects went slowly, and they didn't always use the new partners when there were opportunities to do so," says Phillips, who had sales of $7.2 million in 1998.

Once he instituted systems to promote harmony with partners, Phillips found that things improved. He asked the partners to adapt to his company's way of doing business by making requests in writing and sending finished work on disks compatible with Hunter Barth's computers. Other changes included holding regular meetings between his employees and the partners' staffs as well as having the two groups make joint presentations to customers.

Sharing information with partners is critical. But you also have to be cautious about how much you divulge. Kathleen Mullinix, chairman and CEO of the biotechnology company Synaptic Pharmaceutical, in Paramus, N.J., instructs her employees in how to manage her company's alliances with large drug companies such as Eli Lilly and Merck.

"We have separate groups of people working with each partner," says Mullinix, whose company had revenues of $9.3 million in 1998. "Scientists love to talk about what they're doing, but they're told that the partner should get information only about the specific project we're working on," she says. That policy is critical: The pharmaceutical giants must be confident that their proprietary information isn't finding its way to a competitor via their smaller biotech partner.