Finally, many JVs struggle with insufficient planning to respond to eventual changes in risk. Moreover, parent-executive involvement often declines in the later stages. In many cases, the process lacks discipline, both in end-to-end continuity and in the transitions between five stages of development-designing the business case and internal alignment, developing the business model and structure, negotiating deal terms, designing the operating model and launch, and overseeing ongoing operations. So why do so many joint ventures fall short? Our interviewees suggest that in the rush to completion, even experienced JV managers often marginalize best practices or skip steps. In fact, most of our interviewees endorsed several that have long been the gold standard for JV planning and implementation: a consistent business rationale with strong internal alignment, careful selection of partners, clear and open communication, balanced and equitable structure, forethought regarding exit contingencies, and strong governance and decision processes.
We examined joint ventures valued at more than $250 million that were launched between 19 and in which one of the parent companies was in the Fortune 250.Ĭonfirmed that even companies with many joint ventures struggle, even though best practices are well-known and haven’t changed for decades. When we interviewed senior JV practitioners in 30 S&P 500 companies-with combined experience evaluating or managing more than 300 JVs-they estimated that as many as 40 to 60 percent of their completed JVs have underperformed their potential some have failed outright. Not all joint ventures fall apart so spectacularly, but failure is far from a rare occurrence.
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