Creating Cross-Sector Partnerships

Introduction

As the previous chapters have indicated, the complexity and scale of societal concerns are too great for any one institution or sector to tackle independently. The future flourishing of society fundamentally depends on establishing effective partnerships among business, civil society, and government. The UN Sustainable Development Goals specifically call out in Goal 17 the need for, ‘global partnerships for sustainable development’ (UN 2015). Goal 17 proposes crossing institutional boundaries to address the other sixteen Goals such as poverty, food shortage, clean water, climate change, and inequality. These partnerships extend beyond vertical integration and horizontal integration in the supply chain. These are partnerships with institutions from other sectors such as non-profits, social enterprises, and governments. As highlighted in Chapter6, the ecosystem of stakeholders is rich and diverse. The business–non-profit partnerships discussed in this chapter are one possible implementation of ecosystem orchestration practice. Here, we elaborate on how businesses can build and manage business–non-profit partnerships to address the societal and environmental concerns of communities.

A key issue in managing a partnership is sustaining the participation of all partners over extended periods of time. We explore how partnerships can be managed to deliver long-term success to the corporation, the non-profit, and to the community. These discussions are based on a qualitative research study in which we interviewed partnership managers from corporations, non-profit organizations, and social enterprises.

Corporations and non-profits have different expectations from their partnerships. We find that these expectations change as the partnership stages change. Even within the same institution, managers on the ground work to different goals than do the managers at corporate headquarters. We offer managerial recommendations for using different sets of key performance indicators (KPIs) to clarify and manage these different expectations. Impact measurement remains an incomplete component in partnership management.

Context and Theory

Since the 1990s two powerful trends have converged, both elevating and extending the importance of collaborations between corporations and civil society. The first is the effect of globalization on the power and scope of multi-national corporations (MNCs) to influence and reach people. Today, not only are many MNCs larger (in monetary terms) than nation states, their extended value-chains cut across countries around the globe.

The second is a deep distrust in shareholder capitalism—or, put positively, the widespread acceptance that corporations have a social as well as an economic purpose and are responsible for more than profit maximization for distribution to shareholders. Indeed, as Colin Mayer and Bruno Roche argue in Chapter 1, the debate about whether it is the responsibility of business to address social and environmental challenges is over. The question now is how.

Together, these trends have sparked a substantial change in the nature of the relationship between corporations and civil society. This is shifting from a primarily adversarial posture—civil society seeking to challenge and hold corporations to account for their poor behaviours—to collaboration. Now, both parties primarily see each other as key contributors in tackling complex global social and environmental challenges. This is what Bradley Googins and Steven Rochlin (2000) dubbed the ‘partnership society’ and Pieter Glasbergen (2007) the ‘partnership paradigm’. For this chapter, we will use an inclusive definition of cross-sector partnerships set out by John W. Selsky and Barbara Parker (2005) and will focus on partnerships between the private and not-for-profit sectors. Cross-sector partnerships are collaborations between organizations from different sectors, designed to achieve a common overarching social or environmental goal.

Business–Non-profit Partnerships

There has been an undeniable increase in academic attention devoted to partnerships, particularly since 2010. Similarly, on the practitioner front, there is grey literature of successful case studies (e.g. Acumen Fund) and best practices. However, reality at the implementation level and the degree of impact achieved are often sobering. John Elkington (1998) leans in favour of corporations and non-profits complementing each other in win–win strategies in which the non-profit discerns outlier corporations within an industrial sector for partnerships.

Business–non-profit partnerships can draw on the relative strengths of each partner and on diverse resources to tackle societal and environmental problems in unfamiliar markets. They evolve through multiple stages along what the business academics James E. Austin and Maria May Seitanidi called a collaboration continuum—philanthropic stage, transactional stage, integrative stage and transformational stage (Austin and Seitanidi 2012a, 2012b).

In the philanthropic stage, the corporation is a charitable donor channelling a unilateral transfer of financial resources to the non-profit. In the transactional stage, there is a reciprocal exchange between the two partners, with a functional relationship pertaining to specified activities such as employee engagement opportunities. In the integrative stage, there is an organizational integration of values or the mission of the two partners based on what they have learnt from their partnership experience. In the transformational stage, the emphasis is on value created at the societal level or the community level, rather than for either of the partner organizations. This stage looks at the transformational changes to the local community whose problem was placed at the centre of the partnership. As these partnerships evolve through different stages, the relationships among the partners and stakeholders are revised, and the benefits accruing to each partner alter accordingly. Partnerships can terminate at any of the stages along this continuum, with repercussions for the local community which had been the recipient of those products or services. Further, cross-sector partnerships have been analysed at three levels: the macro, meso, and micro levels (Vock, van Dolen, and Kolk 2014) focusing on implementation effectiveness, formation and outcomes of the collaboration, and on individuals and their interactions, respectively. The micro-level is perhaps the least developed, with further questions remaining on the linkages among these levels.

Inter-Managerial Relations

The relationship between individuals is an important yet underexplored aspect of partnership management. Different stages of partnerships pose different considerations for the partnership managers. One NGO Manager in our study explained:

There are all sorts of assumptions about what it means to work with someone from another economic segment of society and . . . often our people think they (corporations) have tons of money and are secretly evil, they (corporations) think we’re (NGOs are) sort of hippy-dippy and not serious.

By intent these partnerships are convened to deliver win–win relationships to the three primary stakeholders—the corporation, the non-profit, and the community:

It’s when there are two entities that have mutual benefit of working together where there’s a win/win and that, you know, both are doing something to get to something in the end.

Value Proposition

Whether formally or informally, all firms operate on a business model that creates value, delivers value, and captures value in its transactions with its customers. The value proposition by a firm to its customers has been at the heart of business thinking and business modelling. Conventionally, value has pertained to economic benefit. However, with approaches such as business–non-profit partnerships, we are seeking ways to make it profitable for the firm to solve societal and environmental problems. As the number of stakeholders increases, value takes various forms encompassing economic benefits, societal benefits, and environmental benefits because different stakeholders seek different benefits from their value transactions with each other. Value proposition can guide managerial decision-making. Value proposition is therefore applicable not only to corporations, but to non-profits and partnerships too.

To address this gap in partnership management, we explore how business–non-profit partnerships can be structured to deliver success to the corporation, the non-profit, and the community.

The Research Study

This chapter is based on a research study that explored partnership success from the perspective of partnership managers who described their experiences and managerial decisions over various stages of those partnerships.

We spoke to twenty-one partnership managers, drawn from eight multinational corporations, five non-profit organizations, and four social enterprises. The corporations spanned multiple industries—food, fastmoving consumer goods, beverages, pharmaceuticals, and textile furniture. The smallest firm we considered has about $1bn in revenues (2017) with operations in three continents; the larger firms have up to $100bn in revenue (2017) and up to 250,000 employees worldwide. The non-profits in the study are also large organizations: the smallest was operating in over twenty countries with about $50m in revenues; the larger non-profits were operating in over ninety countries, managing about a thousand projects with revenues touching $1bn. The social enterprises were expectedly smaller in size, revenue, and geographic reach.

Interviewees were responsible for the relationships with their counterparts in partner organizations, and for delivering results to their own organizations from those partnerships. Within their parent organization, they were usually part of a team that managed both philanthropic and partnering engagements.

Defining Partnership Success

Partnerships need to be beneficial to each stakeholder in order to ensure continued participation, and therefore survival of the partnership itself. But not only do different partners interpret success differently: our study also found that partners’ expectations and priorities change as the partnerships move from one stage to the next. To add to the complexity, individual managers at different levels in the hierarchy also have different performance measures. As a manager in an NGO told us:

I think everybody comes to the table with various different agendas and expectations...it’s really working out how closely the two different agendas can be aligned together to make a partnership work...it’s really reviewing that at the very beginning, planning it.

These different expectations and benefits can be interpreted as key performance indicators (KPIs)—a separate set for each partner (Figure 9.1). The corporation may measure the number of bars of soap distributed, for example, while the non-profit may measure the number of people reached through a hygiene awareness campaign. As a manager in an MNC described it:

What do you (from the NGO-side) have to do, what I (from the MNC-side) have to do, what we have to do together, what’s the governance, what are the KPIs that we’re going to measure if it’s successful, like all that, to be clear with it and put it in a legal document (is how I manage my partnerships).

Meanwhile, the partnership itself would be better served by measuring societal impact in a corresponding manner. Impact measurement helps track project success and to persuade future partners to participate. An NGO manager explained how one project adopted KPIs at the MNC-level as well as at the partnership level, through measuring the effect of the project on the community:

You could...have very physical (KPIs), so number of insecticide-treated nets distributed, number of toilets built, number of bars of soap distributed, those kinds of things, but ultimately we find that the health impact on the DALY [Disability-Adjusted Life Year] is most effective and that’s where we will always go to in terms of indicators of success.

The above discussion on KPIs pertains to the operation of a partnership within one stage. However, the partnership itself may shift from one stage to the next if deemed agreeable to the partners. As a manager in an NGO described it:

So the conversation will start with compliance, human rights potentially and maybe traditional CSR, but then it’s getting operationalized completely and moving into the commercial, which is great for the partnership really because it gives it real legs.

By combining the above two insights—the use of sets of KPIs to characterize performance of a partnership stage, and the partnership itself changing from one stage to the next—we argue that the accruing benefits for a partner would be revised as the partnership changes from one stage to the next. Partnership managers would need to manage their projects either as philanthropic or commercial, each with its own set of KPIs. An NGO manager illustrated this as:

At (my NGO) we have a Partnerships Team . . . within the Fundraising Division but increasingly . . . we’re closest to . . . our Private Sector and Campaigning Team . . . on influencing and working with companies on key issues in their supply chains . . . which is . . . part of our corporate partnership work which is interesting. So we seem to sit across the teams now and we manage a number of partnerships with companies . . . So some of our work is strategic, some is more philanthropic, some is more marketing-driven. So our partnerships really range across the spectrum of different partnership models.

The micro-level of partnership management pertains to inter-managerial relationships. As a generic structure (Figure 9.2), we identified that each institution—corporation or non-profit—had people filling possibly three roles. The operations were managed by the designated partnership managers. These partnership managers also had supervisors and administrative support personnel. While the bulk of the communication was between the two partnership managers, all six people were aware of each other and familiar with the roles that they all held. The cross-linkages were activated under two circumstances. Firstly, when partnership success was to be demonstrated to the boss of one partnership manager, they would work closely with their counterpart to present results. As a result, the other boss would also notice what was happening. Secondly, for escalation of issues—if the two partnership managers were unable to resolve an issue in the partnership, then the two bosses would discuss the issue.

Different managers have different performance metrics depending on their position within the hierarchy of their own organization. For example, within the same corporation for the same partnership, the local manager on the ground level and the manager at global headquarters would have two different metrics for partnership success. As a regional manager in an NGO told us:

‘The project I’m working on...is being implemented in one of the countries in Africa . . . It’s being handed over to local management for implementation and . . . the person on the ground in Africa who’s being asked to implement this has got different levels of motivation, different targets, is working on multiple other projects, you know, he’s being pulled in different directions by different people I’m sure.

The managerial relationship can become a key factor in developing successful partnerships. One NGO manager described how these relationships can develop:

We have been engaging more with professionals from our partners . . . coming and spending . . . three to six months with us . . . And then you end up with ten, fifteen advocates for your organization sitting in (the corporation’s) headquarters. One of them sits on the board now. These guys are sort of like, you know, whenever anything’s coming up and it’s like, ‘Oh we’ve got a market that needs creating, we should talk to (my NGO).’ So, so many of our partnerships have either started in that place or have been expanded from actually having their people sitting in our offices and spending time with us.

The different KPIs emerge because of the varied managerial expectations. We find that there can be two types of KPI-mismatches (as shown in Figure 9.2). A horizontal mismatch of KPIs is between the MNC manager and the NGO manager on the same partnership, as discussed earlier. A vertical mismatch of KPIs is between managers within the hierarchy of the same organization. Organizational studies have concentrated on the roles and relationships between managers in a common hierarchy, within the same organization. However, we find that understanding these inter-organizational linkages among managers is needed to manage partnerships, since they belong to dissimilar institutions. Our findings bridge the meso-level considerations of partnership organization to micro-level considerations pertaining to inter-managerial relations. We explain how interactions at the individual level underpin partnership management.

Conclusion

Cross-sector partnering is inherently challenging. There is nothing simple about managing across different interests, motivations, incentives, cultures, and ways of working, often across time-zones and virtually, in institutional arrangements that lack trust. We find that these expectations change as the partnership moves from one stage to the next. Even within the same institution, different managers work to different priorities on the same partnership. This chapter not only elucidates these horizontal and vertical mismatches in priorities but also proposes how to manage for these different motivations in partnering. Successfully meeting the expectations of each partner is needed for continued participation. We offer managerial recommendations to use multiple sets of KPIs to clarify and to manage these different expectations. These KPIs would be different but aligned for the community’s benefit. Further, they would be redrawn for every stage of the partnership. In essence, we are proposing a lifecycle view for partnership management, based on evolving KPIs.

Multi-level impact measurement remains an incomplete component in partnership management. When successful, partnerships build social spaces for solving community-level problems. This chapter proposes how to sustain the necessary interest at various levels simultaneously.

Sudhir Rama Murthy is a research fellow at Saïd Business School, University of Oxford. He is also an early career research fellow at the Skoll Centre for Social Entrepreneurship, and a member of the Senior Common Room at St Antony’s College, Oxford. His research interests are in sustainable manufacturing, circular economy, and stakeholder management. He was a recipient of the Dr Manmohan Singh Scholarship from St John’s College, University of Cambridge, for his PhD in engineering. He holds a master’s degree from the Indian Institute of Science. Sudhir’s broad motivation is in sustainable industrialization of the developing world.

Alastair Colin-Jones joined Mars Catalyst in 2016 and is responsible for the day-to-day management of the joint research programmes between Mars Catalyst and various university partners around the world. He also supports the implementation of the Economics of Mutuality within large businesses on both the supply and demand side. Previously, he was the knowledge manager at the Skoll Centre for Social Entrepreneurship at Saïd Business School and prior to that helped to start a social enterprise in Oxford. Alastair has a first-class undergraduate degree and a graduate degree from the University of Oxford.

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