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28 Steps to a Strategic Alliance

Now the business would depend on how successfully Owades met her third big challenge: getting potential customers to care. She hadn't done any market research on the idea; she admits she was betting $2 million of capital on little more than a gut instinct that customers would like the catalog and buy into the concept.

The biggest question, she thought, was not whether the price points were OK -- her experience in the high-end catalog industry made her confident that bouquets in the $30-to-$70 range were reasonable -- but more whether customers actually would understand what the catalog was offering, why it was different, and why she thought it was better. Calyx would have to change fundamental customer buying habits.

The catalog would be key to Calyx's initial credibility; it had to look, Owades felt, as if it had been around forever. There would be no promotion or advertising to support it. With everything gambled on the mailing's ability to do the selling, the first Calyx & Corolla catalog went out in January 1989.

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Expect -- and deal with -- problems. Customers did, in fact, slowly buy the idea. The phones started ringing the first day the catalogs reached customers, and by Valentine's Day the company had logged 5,000 orders. But in those same first months things also went wrong. "There was no question that the growers were on board with what to do to get those flowers there safely, but the fussy part of how the boxes looked was harder," says Owades. There were little glitches, like the time Calyx ran a photo of how a bouquet would look, without confirming it with a grower, and the grower wasn't able to supply the greenery depicted.

Meanwhile, with Federal Express, Owades was learning that "when you're dealing with a $7.5-billion corporation, agreeing on something at the top management level is one thing, but for them to communicate that down to every courier on every route is another. We were the only company for which they had agreed to an automatic leave-it-at-the-door, and that's great in theory, but they really have to leave it at the door." (Federal Express helped by publicizing the Calyx story in its in-house magazine and in-house television program.)

Sever ties with a partner if you have to. Calyx dropped one grower from its brood of six in those first months because of inconsistent quality. "It was horrible, like having a problem in the guts of your own business. I knew we had to cut our losses quickly. We sent letters to everyone who had received flowers from this grower -- even though some of the packages were fine -- saying we were so sorry, we didn't realize what was going on, here's a gift certificate. We sent those to several hundred people, which at the time seemed huge."

Recognize that some things are hard to control. Calyx and its partners all share responsibility, but each displays a degree of territoriality. Says Abe Wynperle, the president of Miami-based Sunpetals, one of the largest flower growers in the world: "Ruth created the relationship with Fed Ex, but when it comes to managing the logistics on a daily basis, she does not get involved. All Ruth wants to know is that the package got there eventually; how it gets there is my problem and Fed Ex's problem." Of course, how it gets there is Owades's problem as well -- even if she isn't directly involved in solving it.

Moreover, natural disasters are impossible to control, and they abounded for Calyx & Corolla. On Valentine's Day during its first year, a freak snowstorm cloaked Memphis, the hub for Fed Ex flights, threatening delivery, and Calyx had to call many customers and tell them their flowers would be late. In October 1989 the San Francisco earthquake shut down Calyx's high-rise office for five and a half days, destroyed a warehouse, and badly hurt some primary growers. And a freak cold spell in California in December froze many stems. "I remember writing to my investors at the end of the year and trying to finish on an upbeat note," says Owades. "All I could think of was that the table of probability showed that Mother Nature does not strike three times a year two years in a row."

Do ongoing training. Federal Express flies a team from Memphis to Calyx's headquarters to train new Calyx employees before a busy season. (Telephone staffers get two weeks of training.) Calyx employees regularly visit growers to offer help. Wilson says Calyx and its growers are setting up a more formal quality-assurance program for the people picking and packing the flowers, one that may include bonuses and incentives.

Push interaction with partners down to many staff levels. Owades, Wilson, and Ann Hayes Lee, who came on as Calyx's vice-president of marketing in June 1989, aren't the only ones who nurture the alliances: for instance, Laura Goodman, the company's operations manager, spends about a day a week visiting growers. "Spreading the interaction with partners through a company is very important," says Owades. "At our company it's very, very important. The chain gets solidified at so many other places."