In his book, The Value Pricing Imperative for Design Firms, Frank Stasiowski wrote that “If there is a firm that has an absolute lock on a given practice and in a given geography, I don’t know of it.”

Technology has knocked down the geographic barriers. Just a decade ago it was practically impossible to share large files like CAD drawings, but now they sit in secure cloud-based repositories, and remote teams collaborate on them as if they sat together in the same office.He stands by that statement. Yes, a healthcare-focused architecture firm based in Chicago has the upper hand in designing hospitals there, but not necessarily in designing research laboratories—but it wants a trusted ally to fill that gap, and that ally can come from anywhere.

Strategic alliances open doors for smaller firms while minimizing their investment; allies market for you. For example, Cooper Zietz Engineers (CZE) of Portland, OR has great penetration into the U.S. Army’s Chemical Stockpile Reduction program, which enabled CZE,to make alliances with several major engineering companies that work in the government sector.

“This has paid off in both prime contracts and subcontracts, most of which were multi-year awards,” CEO Fred Cooper told us. Besides that, the via Wikimedia Commonstraditional design-bid-build model is giving way to such collaborative models that foster alliances, such as design build, integrated product delivery (IPD) and public-private partnerships (P3).

Because of the nature of today’s A/E marketplace, firms relying on the traditional sub-contracting model have seen decreased proposal success and fewer contractor-originated RFPs. In this environment, strategic alliances are a true boon to profitability.

Successful alliances are typically forged between non-competing firms. Competition may be removed because of distance—a civil engineering firm with a stronghold on the Texas market does not feel competition from a civil engineering firm that works primarily in Washington—or discipline.

Firms that form alliances have done so to win projects they otherwise never would have landed, either because of location or specialty. Smaller, specialized firms are thriving by making alliances with larger ones, or ones outside of their geographies. Typically, a strategic alliance requires an exchange of one or two key firm personnel, with the rest of the project communication carried out online.

The exciting aspect of alliances is how many benefits (with virtually zero risks) firms can realize from being in them. Allied firms can market jointly and share costs. They can pursue jobs in sectors previously impenetrable to them. And they can combat labor shortages with ease. The risk in all of this is extremely low because the firms are either not competing geographically or discipline-wise.

A PSMJ Resources poll showed that for those firms that have established alliances, 88 percent have been awarded work because of the alliance, and almost 70 percent indicate their efforts have already been profitable. Participants also appear to be satisfied with their arrangements, with 50 percent looking to expand their participation.  About half prepared unique marketing materials or agreements, either for clients or for the alliance partners.

Now it’s your turn: Has your firm engaged in a strategic alliance? If not, what has stopped you? If yes, what were the benefits? What challenges did you face? Did you set up formal agreements? What did they contain? Please submit a comment.

This article is an excerpt from excerpt from PSMJ's complimentary ebook Strategic Alliances for Small Firms: A Path to Profitability, a concise overview of the essential information on what it takes to have a successful alliance in today's economy, directly from PSMJ’s business development experts.