Make partnerships integral to your business model
Social Impact Business Modelling Principle no. 4
The principles of partnerships are inseparable from the rules of competition — in the social sector just as much as elsewhere. However, the dynamics of rivalry in the social sector are different*, creating a different set of challenges that traditional partnership models are not an ideal fit for.
[*A separate post on social sector competition is in the pipeline.]
Two challenges inherent in social sector dynamics
Customer engagement and retention: Most people want to give back to society in some way; but what constitutes ‘doing our fair share’ for each and every one of us is the most complex question any market analyst would ever face. Additionally, the answers on what and how much we contribute can change drastically for one single individual from one day to the other. This variety and fluctuation creates a lot of indirect competition, making hard for any single company to engage and retain customers.
Product innovation: The great force fueling product innovation in most industries is good old-fashioned competition (1); but not so much in the social sector where the sentiment is ‘the more, the merrier’. As a result, we lose out on the stimulation and engagement of rivalry. Still, continuous product innovation is a must to improve results. Without continuous bench-marking to force better performance, we need to find other ways to foster innovation and maintain a sense of urgency.
The resulting feeling of isolation
These two challenges — a wide variety of substitute solutions and having no one to race against — create an illusion of lone heroes. Many social impact organisations operate in a Kegan-esque bubble because they feel that customers ‘don’t really care’ and peers ‘just do their own thing’.
Partnerships can help solving for both challenges and bring siloed actors together; that is if we take partnerships to a whole new, nontraditional level.
A new, partnerships-based approach to business modelling
The traditional approach to business modelling follows for-profit sector dynamics and treats partnerships as a key, but interchangeable part of the value delivery system. This means that changing the value proposition might result in changing partners, but a change in partners should not trigger a change in the value proposition**.
Models of this type limit the value provided to the customer to value that can be produced in-house, hidden from competitors and with only limited reliance on external partners. However, these safeguards are unnecessary and even counter-productive in the social sector. Without the limitations, partnerships can be brought to the core of the business model and built into the value proposition.
[**Consider the following example. If a business switches from brick-and-mortar retail to online sales, which is a change in the value proposition, they will change their delivery channel partners from property rental agencies to delivery companies. But if the same business, now selling products online, has to change POS system providers because of a new industry regulation that should not have an impact on the value provided to the customer.]
Designing a partnership based business model in five steps
Step 1: Understand the need or opportunity
As a first step, take a fully beneficiary centred approach. Don’t think about solutions at all, instead focus on defining the under-served needs or unexploited opportunities in the community you aim to work with.
There are a few great tools and methods you can use for this:
- The tools listed in the ‘Inspiration’ section of IDEO.org’s Human Centred Design field guide
- Dave Snowden’s SenseMaker®
- The Value Proposition Canvas (using the customer side only)
…but even a simple brainstorming session or a fishbone diagram can be a good start.
Step 2: Research existing solutions
Once you have identified the priority needs of the community, instead of jumping into solution design as you would normally do, pause and research existing solutions for similar problems. Be creative!
- Could there be other communities elsewhere in the world that had or have the same problem? Has there been a successful, sustainable solution elsewhere? What are the similarities and differences with your problem statement?
- Is there a paid solution for this problem?
- Is there a partial solution in your community? Could elements of that be incorporated in the new solution?
- Is there another service or product in the community that could be modified relatively easily to solve for this problem?
Reach out to any organisation you find during your research that seems to be working on a similar problem and learn as much as you can about their value proposition, model and practices.
Map the businesses in your community which are already providing partial solutions — they could be your first allies.
Step 3: Think how to best contribute to the whole
Now that you understand the problem, have a list of possible solution models and have a map of current services/products in use, take a step back and assess the picture. It is important to suspend ego and scarcity thinking at this point.
What do we have available that works and what’s the gap? If you don’t need to start from scratch, don’t. Think rather how you could strengthen or scale existing good solutions, make them more accessible or easier to adapt. Build a value proposition that complements the existing solutions; this should be easy if you have done extensive research. Then use that value proposition to open conversations of potential partnerships.
Step 4: Identify any missing resources, skills and capabilities
Once you have a clear value proposition and a core group of partners you will deliver it with, take stock of your combined resources and assess if there is anything missing to deliver the planned solution***. If you identified any gaps, bring in new partners who can cover it. For example, you can reach out to a for-profit company that is an expert in the area and propose a tailored CSR partnership. Approach any new potential partner with a clear, focused pitch on how they would fit in the picture and how their contribution could amplify the impact of the partnership group as a whole.
[***You can use the Business Model Canvas for this, just make sure you fill it in for the partnership as a whole. Use the ‘Key Partners’ section to list any resource gaps.]
Step 5: Establish roles, responsibilities and ownership
Once you have all the partners needed to create your joint value proposition and everyone is unified by a clear mission, it is time to plan for delivery. This is a routine exercise similar to designing for the delivery of a large-scale project with multiple moving parts, but it should not be neglected under any circumstance. Partnerships are incredibly powerful, but only if governance and communication channels are in place, roles and responsibilities are clear and decision-making processes are transparent and solid (more on this later).
