(11) Strategic (Mis-)Alliance - Germany, 2009: wrong market niche

Compelling Event

    After selecting 17 possible allies in Munich for a possible new venture in executive coaching in 2009, I was confident of success. I would research these further to narrow them down to a list of half a dozen candidates. In the course of 2009 the winning candidate would be selected and the business launched. 

    Maximilian Berlitz, a German who immigrated to the U.S. in 1872, founded Berlitz Language Schools. Berlitz is renowned for the “direct method” and as of 2009 has 429 centers in 70 countries. I had noticed that Berlitz in Munich offered Business Coaching through a strategic alliance with the Synk Group out of Switzerland. Synk has about 50 business coaches, and also offers training to become a coach.

    There are about 80 language schools in Munich, and over half of them offer English. None of them had an active E-zine (electronic newsletter), and they did not appear to be offering coaching either. The concept was to repeat the Berlitz/Synk strategic alliance model. Added to that would be the launching of a Business English E-Zine. Presumably some English teachers like to write, and I, too, could contribute material.

    A strategic alliance with a language school would give Bridges immediate access to a viable client base. Bridges coaching would add a premium service to the offerings of the language school. I made contact with my short-list of six schools, and arranged meetings with four of them. However the concept of growing a service business through a strategic alliance was not one any of the schools had practical experience with.

    At the end of the day, I had meetings, in two cases, series of meetings, which did not lead to concrete results. I returned to one particularly competent language school owner for failure analysis. Why?

    He said that once he had sought to cooperate with a high-powered attorney. Programs would be jointly developed, targeted at the several thousand law firms in Munich. However the attorney was not in the business of teaching English at all, any more than Bridges was. After six months the attorney had worked through his client list and was handling various legal cases, with no reciprocal benefit accruing to his firm at all.

    I then double-checked how active the Berlitz-Synk alliance was by submitting RFQs (Requests for Quote) to both organizations. These were worded in such a way that a natural response would have been to refer to the ally. However, that did not occur. I repeated the RFQ to Berlitz in Frankfort, but again was not referred to Synk. Cross-marketing may in fact occur, but this small experiment seemed to indicate not very aggressively.

Lessons learned

    A company that has a list of paying customers is going to be extremely cautious in sharing that list with a potential ally.

Relevance 

    In other markets cooperation with a language school may make sense. For instance in Japan, the language school GABA offers premium, and expensive, one-on-one English training. However a better approach is to seek strategic alliances for add-on services and products for your existing customer base. In this case you are offering the ally sales. Eliciting interest and reaching agreement should be much easier.