Co-opetitions Can Empower Public Sectors To Tackle Covid-19 Worldwide
Stat Zero’s CEO explains how co-opetitions can solve COVID-19
By Marquis Cabrera, CEO, Stat Zero
Global co-opetitions can change tech innovation for good.
Despite the plethora of management literature on how to collaborate exist, most of us anticipate that successful collaboration is rare: where there is money to be made, self-interest prevails. Because we live in a world where people care most about WIIFM or “What’s In It For Me?”
What doesn’t make sense is that collaboration in the social sector, where success is defined by providing comfort to the afflicted and binding the wounds of societal ills, also fails frequently, as happened with Google and The World Bank who had planned to bring the Map Maker program to governments and multilaterals to improve disaster preparedness.
And yet, if we want to innovate for good, we can and must learn to collaborate, and in my opinion, co-opetition, where entities act with partial congruence of interests, is the way forward. Or as Linkedin founder, who practices co-opetition by partnering and competing with headhunters, said in a New York Times article, “[No] one can succeed by themselves. The only way you can achieve something magnificent is by working with other people. There [are] lots of co-opetitions.” Here are some powerful examples:
Nonprofit: Collaboration in the social good sector is ostensibly easier, but we are often blindsided by competition. One example of co-opetition in the social good sector is #GivingTuesday, which is a campaign spearheaded and incubated by The United Nations Foundation and New York’s 92nd Street Y to create a national day (November 27) of giving before the annual start of the holiday season, because Holidays could be about gift-giving and giving back. Former President and CEO Kathy Calvin of the United Nations Foundation said, “Efforts like this are part of a new generation of thinking about giving, philanthropy and collaboration.”
#GivingTuesday has had ~2500 organizations from coast-to-coast who have 501(c)(3) status or taken an action to benefit one. According to blackbaud, the primary clearing house for online fundraising data, the first annual #GivingTuesdays’ fundraising efforts increased 53% percent between 2011 and 2012. In addition, #GivingTuesday garnered ~1000 social media ambassadors who signed up to share the concept and take action. As a result of establishing #GivingTuesday, Microsoft launched a major donor matching campaign on GiveforYouth.org — a new micro-giving portal designed to allow donors to fund and follow the dreams of young people around the world offered in partnership with Global Giving. #GivingTuesday was recognized for its innovation in the charitable and nonprofit space with a prestigious Cannes Lion Award.” And the movement has recruited thousands of partners including US Airways, QVC, Ebay, and the NY/NJ Super Bowl Host Committee.
Evidently, when the motives are altruistic, nonprofit sector co-opetitions, like #GivingTuesday, increase the chances of achieving meaningful collective impact, highlight the sector’s work, and help to significantly ameliorate societal ills, even when nonprofits are competing for the same dollars. As thought leader Whitney Johnson suggests, “A better way to think about social good is are you building an organization for-power-for-you or for-power-for-others.” Yet when done effectively, nonprofit collaboration pays dividends for good. Recently, the Gates Foundation partnered with the Chan Zuckerberg Initiative (CZI) to develop solutions to the coronavirus that will also establish new home healthcare markets.
For-profit: It is a common occurrence for companies that create the “latest- and-most-gadgeted” automobiles and airplanes to form coopetitions, like BMW-Toyota and American Airlines-Boeing did, because R&D is super expensive. But we needn’t look far to find failed for-profit co-opetitions, from WordPerfect-Novell acquisition that led to bankruptcy to the misfires of the Target-Neiman holiday collaboration that went bust. It’s clear though: a for-profit co-opetition may indeed mean survival for a company, but must be well-executed.
Here’s an example of a co-opetition that maximized profitability for both parties: When I was a consultant at Wayfair, an online retailer that Forbes considers to be one of ‘America’s Most Promising Companies’, we partnered up with Amazon, Wal-Mart, and Sears to leverage their brand recognition and used their online marketplaces to increase sales of our products and in turn gave them a cut of the profits. We could have easily refused to recognize their place in the market-space but we would not have grown revenue from $250M to nearly $500M in 2 years time, hired hundreds of new employees, or opened new offices in Utah and Internationally. As management professors Brandbenburger and Nalebuff have written in their book Co-Opetition: Businesses that form co-opetitions become more competitive by cooperating. This is even more evident today: GE, Ford, and 3M partnered to build ventilators to support healthcare providers, which is the number one need for coronavirus patients.
By partnering together during times of crisis, we can create new solutions. Moreover, I am excited to announce our ZERO disease challenge to get fresh ICT ideas to the COVID-19 virus communications crises. Note: If you have ideas, submit them here and win $10,000 USD.
Foundations: Private foundations, like the Draper Richards Kaplan Foundation, are philanthropic arms of for-profit companies or they are endowed with vast fortunes of wealthy individuals, like the Bill and Melinda Gates Foundation. Beyond their charitable functions, foundations often come together to fund industry reports, like Bill and Melinda Gates did with the “Measuring and/or Social Value Creation” article, and use their convening powers to tackle societal ills in a broader sense. Here’s a prime example of a foundation helping form co-opetitions: MacArthur Foundation’s work with the Funders of the Amazon Basin.
During a conversation with a fellow White House Intern Lauren Mueller-Soppart, who worked for the MacArthur Foundation, I was told: “At the outset there were six foundations working in the Amazon to address rainforest degradation, dedicating on average $2 million each.” The solution here was relatively straightforward. The MacArthur Foundation brought each organization together, explained what each was trying to accomplish, and articulated the incremental impact they could have by pooling resources. If they donated $2 million individually, x would happen. If they pooled their resources into $12 million, y could happen. This however, required a willingness to set aside — a power-for-me motive, and embrace good-for-the-region. This is one possible type of co-opetition: 2+2 = 5.
Mixed: Perhaps the easiest type of social good sector to broker is one that pairs doing good with making money: Impact investing, other known as “philanthrocapitalism,” is a movement in which a new generation of businesspeople, such as Pierre Omidyar and Steve Case, and organizations, like Whole World Water Ltd. and the Acumen Fund that have the flexibility to invest in social good business ventures or give grants to nonprofits, are shaking up the philanthropic world with their businesslike methods.
Many wildly successful entrepreneurs, who have committed significant portions of their incredible wealth to charitable pursuits, have turned to social investing. For example, philanthrocapitalist Jim Andersen’s brainchild, Legacy Venture, harnesses the returns of investments for philanthropy. Legacy, a fund-of-funds, leverages the capital that high-net-worth individuals set aside for philanthropy to invest in exclusive venture capital funds, like Andreessen Horowitz, that invest in the hottest startups, like Paypal, Facebook, and Netflix, than use the fiscal returns to ameliorate social problems both abroad and nationally by empowering social enterprises metrics-driven approaches to change the world. Legacy Venture’s Managing Director Alan Marty said in a Philanthropy Roundtable article, “We are investing for maximum profitability, and then all the dollars go to philanthropy.” Since its inception in 1999, the Legacy Venture’s community, which makes up a network of peer investors, has committed to invest more than a 1 billion dollars. Their model is simple: form co-opetitions between other venture capital firms; then use money to make more money and give additional money to philanthropy.
This is perhaps the easiest type of collaboration because it combines doing good with profit — so self-interest can be reconciled. The initial focus has been do-good, but by subsequently finding a way to satisfy the for-profit needs, collaborative efficacy is at its best.
Organizations similar to Legacy Venture have led to the birth of Social Impact Bonds (SIBs); also known as a Social Benefit Bonds. SIBs have revolutionized the way governments fund social innovations and how nonprofits scale their programs. Essentially, governments contract an impact investor, intermediary to finance and help to scale existing innovations; when the impact is generated, government pays back the intermediary a marginal amount. This pay-for-success instrument originated in the UK and is now being implemented and in the US. In 2012, then President Obama designated $100M in his proposed FY 2012 to implement this relatively new instrument.
New York City was the first to launch a Social Impact Bond in the US. Social Finance reports: “The $9.6 million project aims to reduce recidivism among young men exiting the Rikers Island prison facility. Goldman Sachs is the investor in this project; Bloomberg Philanthropies is supporting it with a 75% guarantee of the principal.” This is evidence that SIBs, by definition, establish co-opetitions at all levels of business and governments. By becoming involved with impact investing, businesses and governments better the collective.
Organizations and entities that create mutually beneficial (win-win!) relationships maximize both their profits and social impact. General Partner at Kleiner Perkins Caufield & Byers General Partner, Trae Vassallo, one of forty women profiled in 40 Women Over 40 to Watch, has shown that investments can yield positive social returns. One of Vassallo’s portfolio companies is Recycle Bank — a for-profit social enterprise that rewards people for taking everyday green actions with discounts and deals from thousands of national businesses — is certified a B corporation that is required by law to create general benefit for society as well as for shareholders. Social enterprises can create “shared value” and change the world for the better, but everyone is self-interested.
This is why forming co-opetitions is the best way to collaborate moving forward; they create transparency about motivations, agendas and goals of business, including those of customers.
All businesses (for- and non-profit or hybrid) must be allocentric, and be built “for-power-for-others” and account for-self-interest-of-others, in order to change how they innovate for good. So in your next meeting with someone from another company, ask: “How can we leverage each other to achieve in ways that we will! achieve together?”
If you’re an innovator, sign up to the letter that Co-Founder and CEO of i(x) Trevor Neilson has been promoting to empower congress to tie Covid-19 stimulus to sustainability.
About Author: Marquis Cabrera is Chairman and CEO of Stat Zero. Previously, he worked at the White House, Wefunder, Wayfair, and IBM.
