Details, Details, Details

Suggested Links

Donna Fenn (incfenn@aol.com) is a contributing editor at Inc.

Ask the experts
When Is an Alliance Illegal?

Strategic alliances, especially with competitors, can raise sticky antitrust issues. Everyone knows you can't convene with rivals to set prices for your industry; that's collusion. But what about the following real-life scenario, reported to us by the CEO of a $5-million company? A group of small-company competitors, faced with an expensive bidding process, decided to pool their resources and put in one bid, winning the contract and saving everyone in the group time and money. Did they also unwittingly break the law?

"The laws around temporary joint ventures and alliances are murky," replies Yale University law professor Ian Ayres. "The issue is whether it increased or decreased competition. Was it anticompetitive by decreasing the number of bidders? You're safe if you can prove you couldn't bid by yourself. You're in more difficult waters if you could have competed independently." There is a middle ground, he says. "If you were able to put in a more competitive bid together and can offer a product that's cheaper or better, that's the murky water in between." But a rationale such as "we should stop beating up on one another" is not a good-enough reason to join forces, Ayres adds.

Phoebe Morse, regional director of the Boston office of the Federal Trade Commission, says the big question is whether the competitors exchanged pricing information while putting this bid together. "If so, they're in very dangerous waters," she warns, particularly if that exchange impaired competition. One key question, Morse notes, is how much power these companies had in their product market and their geographic market. --Susan Greco

Resources

If you're a glutton for punishment and faithfully follow every management trend--total quality, reengineering, the learning organization, teams--chances are, you're now striving to be "agile" and "networked." You're not alone. And that's the idea, really--that companies should reexamine their relationships with their customers, suppliers, peers, and competitors, and devise ways to cooperate and compete to bring about mutual benefits. It's the 1990s way of thinking about strategic alliances. So how do you do it? Check out these books:

Jessica Lipnack and Jeffrey Stamps have written a trilogy of books about networking (defined here as the process of crossing traditional boundaries to share information and link people and organizations). They are The TeamNet Factor: Bringing the Power of Boundary Crossing into the Heart of Your Business (1993, $29.95); The Age of the Network: Organizing Principles for the 21st Century (1994, $16.95); and Virtual Teams: Reaching Across Space, Time and Organizations with Technology (1997, $28). All are available from John Wiley & Sons (800-225-5945). Entrepreneurs will get the most from the first book, which offers plenty of specific information for small companies.

Cooperate to Compete: Building Agile Business Relationships, by Kenneth Preiss, Steven L. Goldman, and Roger N. Nagel (Van Nostrand Reinhold, 212-254-3232, 1996, $24.95), is rich with examples of large and small companies that put the concept of "agility" to use. It's a good read, by credible authors who have spent time in the trenches. (It was their work that first inspired Ed Kinsella to form strategic alliances.) All three authors are associated with the Agility Forum (800-923-2445), in Bethlehem, Pa., a nonprofit consulting, research, education, and training organization; the forum's Web site (www.agilityforum.org) is well worth a visit.

Getting Partnering Right: How Market Leaders Are Creating Long-Term Competitive Advantage, by Neil Rackham, Lawrence Friedman, and Richard Ruff (McGraw-Hill, 800-338-3987, 1995, $22.95), includes a particularly informative chapter on partnering with other suppliers. The book's suggested guidelines for suppliers--including tips on defining real market value around customer needs--will also help partners stay on the right side of antitrust laws. The authors don't dodge the disadvantages of supplier partnerships, either: namely, that many salespeople hate them. The book may also be ordered on-line (www.huthwaite.com).

Interested in a network like Harry Brown's? If you want to find out how Brown got his started, check out the August 1988 issue of Inc. "Make Love, Not War: How Competitors Are Joining Forces to Create Opportunities They Wouldn't Get on Their Own," by Tom Richman, details the then-fledgling alliance. Later, Lipnack and Stamps included Brown in The TeamNet Factor.

EBC INDUSTRIES, Harry Brown, 1325 Liberty St., Erie, PA 16502; 814-456-4287 107

HUNTER BARTH, Wesley Phillips, 30 Corporate Park, 2nd Floor, Irvine, CA 92606; 714-852-9800 107

JM MOLD, Ed Kinsella, 1707 Commerce Dr., Piqua, OH 45356; 513-778-0077 107

JANA MATTHEWS, Center for Entrepreneurship, Ewing Marion Kauffman Foundation, 4900 Oak, Kansas City, MO 64112; 816-932-1100 107

SYNAPTIC PHARMACEUTICAL, Kathleen Mullinix, 215 College Rd., Paramus, NJ 07652-1410; 291-261-1331 107

WARREN CO., Robert Porter Lynch, 1 Richmond Sq., Providence, RI 02906; 401-273-0010 107

Follow Inc. magazine at @incmagazine