Twenty-eight Steps to a Strategic Alliance
How Calyx
Published April 1993
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COMMENT ON THIS ARTICLEThink strategic alliances are only for high-flying high-tech companies? Think again. When Ruth Owades first crafted close partnerships with suppliers in her industry, she didn't even have a company yet
* * *The first time Ruth Owades went into business for herself, she did it the conventional way. While working at CML Group, in Acton, Mass., then the corporate parent of four mail-order catalogs, Owades hatched an idea for a catalog of upscale gardening paraphernalia. Avant Gardener, she wanted to call it; she would operate it under the CML umbrella. When CML decided to pass, the Harvard M.B.A. set out on her own and spent three years, beginning in 1978, growing the new company, renamed Gardener's Eden. In the process she opened up a new catalog-industry niche. But what was conventional about Gardener's Eden was that it was an independent venture -- Owades and her business were, for all intents and purposes, going it alone.
Not so Owades's second time around. Calyx & Corolla, which she founded in 1988, is also a catalog operation and sells flowers and plants. Orders are processed at the Calyx office in San Francisco, and the flowers are shipped directly from growers to customers via overnight delivery. But whereas few partnerships were key to the success of Owades's first business, her second venture is completely dependent on alliances with the growers and the shipper.
That second venture was a long time coming. Back in 1982 Owades sold Gardener's Eden to Williams-Sonoma, a cataloger offering the financial resources needed to expand Gardener's further. The deal required that Owades relocate to San Francisco and run Gardener's for five years -- which she did, building it to $15 million in yearly sales. In 1987, at age 39, she had a choice: stay or go. "I decided that if I didn't leave, I'd wake up 20 years later and be doing the same thing," she says today. "I certainly sensed there wasn't a future for me in the corporate management of Williams-Sonoma, because no women had made it there before, so it just seemed right to sever the ties and find something new to do."
She figured she'd relax. After nine years of high-speed company building, she relished getting back to her tennis game. She took a cheap office in a warehouse district of San Francisco. She spent more time at her weekend house, in Napa Valley, where her husband, Joe, a beer designer admired in the industry for his work with Anchor Steam ale and Samuel Adams beer, would take over the kitchen with his new concoctions.
Owades also began entertaining at home again, pointedly catching up with friends. She'd stop by the wholesale market near her office and pick up fresh flowers. Which is when the idea for a flower catalog started to dominate her thoughts.
That's also when, slowly, her plot to start a business by allying it with larger, reputable companies began to take shape as well. Though strategic alliance has become a hot catchphrase among business thinkers, Owades knew that if the relationships she had in mind were to work, she would have to beat long odds. At best, just one in three alliances in business is truly successful. She'd have to select and recruit her allies wisely and then make the relationships work. If they didn't, she'd fail.
Here is Ruth Owades's story: the step-by-step process by which she built the alliances that brought Calyx & Corolla to life.
Contemplate alone. Owades didn't plan to start another catalog company -- in fact, she had been trying to leave herself open to just about any other kind of venture. "For a really long time I had been telling people who had called me for advice that this is not a business to get into anymore," she says. "Expenses are much too high, and the market is flooded."
But the idea of a flower catalog stuck because the concept made sense. Most flowers are cut, transported to a wholesaler, transported to a distributor, transported to a retailer, and transported yet again to a customer -- taking anywhere from 6 to 10 days on average to go from soil to vase. As Owades envisioned it, flowers chosen from a catalog, in which customers could see exactly what they were buying, would be cut one day and reach the recipient the next. Not only would the process put customers more in command of their orders, but the flowers would be more vibrant and longer lasting. By her calculations it could be done at prices comparable with those for ordering flowers via Florists' Transworld Delivery (FTD).
Brainstorm with others. In December 1987 Owades revealed her idea to her husband. "You know, when you have an idea, you're almost afraid to say it to anyone, because you don't want anyone to say, 'That is the dumbest thing I ever heard.' But he said, 'That's really interesting.' "
