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But at the eleventh hour, the key players at Microsoft moved into different positions. The shuffle left Connected, well, disconnected. The new Microsoft powers-that-were had different priorities--ones that didn't include Connected. And that's a situation that Gerdes says is hair-pullingly common. "You never know what's going to happen at these large organizations," she says. "That's why there's this sense of urgency in every meeting, because you know the right environment may not last." For his part, Grandinetti is philosophical. "Some opportunities just die their own natural death," he says. "You just have to hope you've got enough things in the pipeline that something will come to fruition."

Though strategic alliances may be fraught with potential pitfalls, Gerdes's experience demonstrates that with persistence even troubled deals can be turned around. In early 1998, Gerdes received a call from Mike Walsh at NavTech. Discussions regarding licensing NavTech's database to Microsoft had stalled after a somewhat torturous two-year process. NavTech's database provides detailed digital maps for in-vehicle navigation--such as the talking directional devices installed in certain rental and upscale cars. Microsoft was interested in using the database in its street-navigation and trip-planning Auto PC software and potentially in Internet applications.

Walsh stresses that, particularly for a product-based company like NavTech, interconnectedness is the name of the game. "We're relationship dependent," says Walsh. Whereas early-stage companies in the past might have been far less willing to share information, it has now become imperative for start-ups to have major partners on board from the launch of their first product. "With markets moving as quickly as they are, a multiplicity of relationships is very advantageous," says Walsh. "If we spend a huge amount of time cementing one relationship, then we're going to miss out on a lot of others. These relationships make us or break us."

And the Microsoft relationship almost broke NavTech. What had started as a straightforward licensing deal had descended into a caustic battle of wills. "The ship was going down," says Gerdes. "It was a very destructive situation." The first danger sign Gerdes spied was too many lawyers--at least 12 for both companies. Another part of the problem, according to Walsh, was that the relationship had been relegated to inappropriate people in both companies: a marketing vice-president on NavTech's side and a software technician at Microsoft. "They couldn't see beyond their own requirements, and the whole thing got mired," says Walsh. "We were flailing, and we needed help."

Gerdes requested new contact people on each side to start with a clean slate. She then functioned somewhat like a marriage counselor, communicating to both sides that, believe it or not, all that pain and agony was a normal part of the process.

Gerdes helped negotiate a deal in which Microsoft would use NavTech's database for its immediate product needs, but the two sides would agree to revisit other key long-term issues at a future date. "With the complexity of the relationships," says Walsh, "I doubt whether we would have reached any kind of closure without Sarah."

As for Gerdes's own company, its future looks bright. BMG's revenues and stock holdings have tripled each year since the company's founding--and Gerdes is projecting sales of $4 million for 1999. She sees no signs of that pace's abating and is crafty enough to ride the crest of the partnership wave. She's even taking her services "down market"--for those companies and entrepreneur wanna-bes that can't afford to hire a BMG--by offering one-day seminars as well as books, tapes, and interactive CDs that outline the BMG approach to partnership development.

But even with such ambitious plans, Gerdes realizes that to stay competitive in the long run, she may have to practice what she preaches. "We don't have the name or the money to fight a Booz Allen & Hamilton if they come into this after us," she says. "We create partnerships for other companies, and we will probably have to do the exact same thing for ourselves." That means either teaming up in some way with a large consulting service or somehow developing the financial and marketing wherewithal to compete with one. "So," Gerdes says, "we're running just as hard as the start-ups that we serve."

Christopher Caggiano is a senior staff writer at Inc.

The smart way to create alliances

By Sarah Gerdes

If you're hoping to land that killer partnership for your company and you're looking for inspiration, try looking at the vineyards of Napa Valley, at least metaphorically. Even under the perfect environmental conditions, the roots and vines of those precious grapes need care. But with proper maintenance--and some luck--the product gets better, stronger, and more valuable every year. So it is with alliances-- the real work begins once the roots are planted. But before you can even start tending your "plant," you have a lot of preparation to do. So...

• USE YOUR "SIX DEGREES." Maybe you've seen the movie Six Degrees of Separation or are familiar with the concept: anyone on earth is only six or fewer contacts away from anyone else. That's a powerful idea, especially when you're researching potential partnerships. A good place to start is with the industry analysts who follow your market. Those folks get paid to learn, listen, and provide their insights to the media. In the process, they form opinions about partner strategies and opportunities and are often open to solicitation. Another group to approach is executive recruiters. They often spy partner opportunities but do little with the information. The fact that they could provide their services for your company in the future is the leverage to get the information without an up-front cost. Other groups to approach include your PR agency, local business reporters, and even the government, which probably has special-interest groups for the dominant industry in that area. Don't be shy; ask for names and referrals. Those people love to provide value from their perch as industry experts. The best part of your leveraged network--apart from being quick, easy, and free--is that all your efforts build brand awareness in the industry, setting the stage for future efforts.
• AIM SMART, NOT HIGH. Identifying and contacting the right partners is only half the battle. Getting the callback is the other. Most sales-and-marketing books will tell you to "dial high" at the vice-president or president level. But that works only with small or midsize companies. The reverse is true when you're targeting large, complex organizations with thousands of employees. Often, people with mere "manager" titles have budgets in the millions of dollars and make all the business decisions associated with their group. If you seek funding or an equity position, avoid soliciting the organization's investment group directly; otherwise you will typically enter a six-month due-diligence process, after which your letter will be routed to the product group you should have spoken with in the first place. Save yourself time by finding the product people first.
• SHOW THEM THE MONEY. Once you've got your partner on board, measure every component of the partnership and establish a monetary value. That will attract your partner's attention and support. Some companies believe in measuring only levels of "satisfaction." I believe in hard-and-cold dollar paybacks. Be sure to include and measure performance incentives for overachievement as well as penalties for missed opportunities. If joint sales are a component of the alliance, keep monthly revenue totals for both companies, produce quarterly forecasts, and discuss both during intercompany meetings. Tie marketing activities to technical or product milestones whenever possible so that each company is dependent on the other. Ideally, make your own company the lead so you have a better chance of controlling project completion.
• KEEP ADDING VALUE. OK, so you've convinced your partner of the financial benefits of a relationship with your company. Don't stop there. Extend training, education, and product-awareness activities throughout your partner's organization whenever it is realistic to do so. Volunteer to participate in focus groups, advisory boards, and marketing events. Look for opportunities to create and deliver solutions for the partner, even if they don't necessarily involve your company or its products. Show that you deliver value to the partner across multiple fronts and, by so doing, that you and your organization become more strategic to the partner. That way you'll be more likely to get your opinion heard and advanced among the partner's hierarchy.
• LEARN THE VOCABULARY. Perhaps the biggest challenge to a successful partnership is understanding how the other side speaks. Most individuals don't ask for clarity for fear of tipping their hand. Here, then, are some sample translations that might make facing your potential partners easier.

Why partnerships fail