Partnerships that Last - How to Date a ‘For Profit’
Thursday, 6th August 2015 at 11:47 am
A partnership between a private company and an Not for Profit can offer a practical means of delivering better social outcomes, but don’t rush the relationship, writes NFP strategy expert George Liacos.
As Not for Profits face tough conditions, the conversation around sustainable business models is becoming more common. One key building block in the business model is potential partnerships. Traditionally a Public-Private Partnership (PPP) meant a partnership between a private company and a government entity. We’re redefining this.
A partnering between a private company and an Not for Profit can offer a practical means of delivering better social outcomes while innovating and improving business and funding models.
It’s not enough to be the wallflower staring at your shoes anymore. It’s time to tango with someone new. Someone outside of your usual clique.
Financial sustainability isn’t just about cost reduction and efficiency. It’s also about the top line growth. Partnerships are an avenue to both, but before you go running to your usual suspects and friends in the social sector, consider this:
From our experience working in and with the social sector it has become clear that despite value alignment and similar goals Not for Profits don’t always play effectively together (see our previous whitepaper on partnerships for our summary of the different typologies: One Night Stands, Honey Mooners, The Love-In and Soul Mates). Usually this will come down to a misplaced partnership that lacks a complementary skill set. A strategically placed, mutually beneficial partnership with a player from the private sector may just be key to survival.
It’s no secret that government is looking favourably upon organisations that have established this type of partnership, especially as many contracts are being now opened up to tender. This is relatively new ground for many NFPs though – and it can be challenging finding a private company with a social conscious, let alone similar social objectives, let alone establishing that first instance of trust.
And it takes more than a for-profit friend by your side. To make a strategic partnership work an overhaul of your entire business model may be required to achieve the maximum (or any real) benefit. This isn’t a comfortable process. It’s one we’ve gone through ourselves and lead dozens of NFPs through.
A big success story of this kind can be found in Population Services International, a Not for Profit set on raising the hygiene standards of people living in poverty in third world countries by developing accessible hygiene products. Through partnering with multi-national conglomerate Unilever (names like Dove, Lipton, Omo, Vaseline et al) they were able to tap into Unilever’s global distribution network and sell their LifeBuoy soap throughout Asia, Latin America and Africa.
One study on LifeBuoy in India showed use of the soap lead to a 25 per cent reduction in diarrhoea, a 15 per cent reduction in acute respiratory infections, and a 46 per cent reduction in eye infections. Utilising the assets of the for-profit partner lead to PSI achieving their social objectives on a scale they could never dream of achieving independently.
Sharing some of our learnings along the way, we’ve identified three key steps to fostering a strategic and fruitful PPP.
1. Be open to reimagining your business model to capitalise on the partnership.
Bringing on a partner will force you to challenge some of the traditional ways you have done things. Rather than view this negatively, think of it as an opportunity. What extra value can be borne of this opportunity? Similar to a real life relationship, gaining a partner means you can no longer just think about yourself.
As with the popular ‘Shared Value’ thinking, it’s important to think about what value both parties can get out of the collaboration: Benefits of collaboration can include resource efficiencies, increasing impact of services and distribution for brand awareness. While it doesn’t necessarily have to be completely equal, mutual value from the arrangement will lay a solid foundation for a happy relationship.
Consider how private business can become integral to achieving your social objectives. It has the ability to support, fast-track and elevate your mission.
2. Design the approach for partnership.
While I’m one for practical action, it’s important to take the time to effectively design the partnership first, so that everyone is clear what they will get out of it and how this will be achieved. Think of it like a personal relationship – you wouldn’t rush into marrying someone so why would you rush into this?
Values alignment remains the most important aspect. However pragmatically adjusting the Operating Model for the relationship will be a critical factor between success and failure. An operating model relates to the people, processes and technology required to achieve the desired outcome. For example, if you are merging back office services, you may first need to map each organisation’s existing functions, design the future ‘to be’ state and then perform a gap analysis. Don’t be worried if this is all sounding quite technical, it’s actually a very logical exercise that just needs attention to detail. The time investment in this exercise is well worth the return it will deliver later.
In short, take the time to assess the prospective members of the Partnership. Use a structured approach that balances both rational and cultural considerations.
3. Look to the growing B Corp army.
There is much scepticism within the NFP community around the motivations of private sector organisations. As new territory can be difficult to navigate, a good place to start looking, which should bring a little comfort as to the genuine social perspective of one group of private sector organisation is to look at those that have survived the B Corp audit. The B Corp community is ripe for social sector partnerships.
So above I’ve listed three things to consider before heading out on your first date. Remember dating a for-profit might feel a little different to the comfortable conversations you are used to, however if you focus on aligned values this will typically build a solid bridge between you and the conversation will flow a little better.
Be clear on where your business model is at. Be open to their views on how to improve your model through partnership. Be brave and suggest improvements of your own to their business… the NFP sector is a hard one to play in and you’ve done really well to date to keep your ship afloat….just because you are a Not for Profit doesn’t mean you can’t mean business!
About the author: George Liacos is the Managing Director of Spark Strategy, an agency that works with Not for Profits and Social Enterprises to realise their social mission objectives. Liacos has advised Not for Profits, Social Enterprises, Governments and Commercial organisations for over 18 years in the areas of new business and funding models, business and digital strategy, and system transformation.