How collaboration creates value and accelerates change

How collaboration creates value and accelerates change

Corporations, non-governmental organizations and other major institutions increasingly conclude that they will be more successful in attaining their individual objectives by collaborating with other partners with aligned interests. This realization has accelerated because of the emergence of a growing number of global-scale problems — water resource scarcities, challenges to producers in providing sufficient quantities of food products, limits for key raw materials in manufacturing operations — as well as a heightened understanding that no single institution has the capacity to provide solutions to these and other challenges.

The practice of collaboration is familiar to most organizations as it is a normal feature of customer-supplier relationships, specific government-business partnerships or through individual initiatives developed with non-governmental organizations, universities and other partners. What is changing the collaboration conversation is both the need and the scale for new kinds of thinking about partnerships that goes beyond the traditional focus on individual topics such as plant performance, mitigation of discrete environmental risks or management of research projects.

Succeeding this traditional focus is an agenda of challenges focused on newer sources of disruption and risks to businesses and natural systems, the need for new business models that can sustain profitability while providing solutions for societal needs, strategies for optimizing natural resource management, product and service innovation, and differentiation of brand value, to name a few.

As the dialogue on global collaboration needs and opportunities is transacted across business, government, multi-lateral, NGO and academic institutions, several themes are emerging. They include:

  • Successful collaboration ultimately can change the core strategy and social purpose of the business enterprise. Based on analysis by Michael Porter, Mark Kramer, Marc Pfitzer and their colleagues at the FSG Group, integrating the solution of social and environmental problems into the core business strategy is changing product portfolios and competitive boundaries across a growing number of business sectors by: 1) innovating new products and services; 2) redefining productivity across value chains; and 3) building clusters of relationships, capacities and competencies to create growth opportunities. Companies that build successful collaboration across these areas are not only adding to their internal competencies; they are simultaneously redefining their business purpose by using civil society as another kind of research and development laboratory for innovation.

As Christopher Meyer notes in his recent book Standing on the Sun, such affiliations between the for-profit and non-profit sectors, for example, function “as a cohesive business unit and interact with each other on an arm’s length basis while leveraging their respective synergies.” Marks & Spencer’s collaboration with the U.K.-based charitable organization Oxfam provides a continuing illustration of the power of a transformational relationship where for-profit motivation is linked to alleviating the needs of lower income citizens who benefit from access to clothing delivered through Oxfam’s on-the-ground network. As a result of numerous collaborations at different levels and scale, Nestlé’s business purpose also is evolving from a producer of food and beverage products to that of a world leader in nutrition, health and wellness for consumers and stakeholders. Such a change in core strategy also stimulates additional collaboration from the C-suite to joint actions taken with small and medium-sized enterprises in the field or communities.

  • Transformational collaboration requires a commitment to build and sustain relationships over the longer term. Like any economic, social or political movement, the pace of change generally moves incrementally before it expands exponentially. Relationships — and very important, trust — must be built, pilot projects must be conducted, financial returns and other outcomes must be measured before institutions gain confidence that they can achieve larger scale changes.

To date, few collaboration initiatives involving business, government and non-government organization partners have reached global scale. Those that have, such as Coca-Cola’s Global Water Strategy, are the result of years of working with individual partners and, over time, expanding the ambitions, scale and governance of their relationships so that both the needs of business and civil society are simultaneously addressed in program design and implementation. IBM’s expanding work with cities in both developed and emerging markets has set the stage for ambitious new plans for investment in nascent African markets. Success in this region will require years of building on-the-ground relationships and capacities in nations such as Kenya, while leveraging the results obtained from specific projects into larger scale partnerships that generate positive economic, environmental and social impacts. These and other companies are still finding their footing as they seek to build global collaboration to match their global business strategies.

  • Executives must possess a system-level understanding of societal and environmental changes that are transforming the global economy and civil society. An important consideration in the design of future collaboration strategies is the skill set of senior executives of global companies, governmental agencies and NGOs. To the extent that they possess competencies in collaborating with partners outside their sectors, they were not generally attained through formal academic training but rather through on-the-job experience, a personal open-mindedness about other organizations and cultures, and a recognition of potential value creation. Another major hurdle that many executives need to overcome is a tendency to consider themselves as solvers of individual problems rather than builders of systems of inter-connected capabilities and solutions. Policymakers in regulatory agencies, for example, are often slow to recognize and modify decisions that account for pollution as part of an entire value chain of economic relationships, focusing instead of emissions from an individual firm.

Some business executives are beginning to learn that issues such as population growth, accelerated urbanization, concerns over food security and natural resource scarcities may affect their firms in ways that can significantly affect return on investment metrics or payback periods. As one example, future investment decisions on upgrading power generation systems will need to take into account demand for electricity from individual and networked passenger vehicles, or the interconnected energy and water use in building design and maintenance. Only a “system-level” understanding of the characteristics and goals across these functions will enable executives and managers to develop more innovative approaches to understand both customer and societal needs. Organizations and their partners that accelerate their common learning on system-level challenges will, over time, accrue important advantages in their ability to deliver business or policy solutions to their customers and citizens.

  • Voluntary collaboration initiatives are important but not sufficient to develop solutions to global scale problems. For two reasons, it is unrealistic to expect that voluntary collaboration alone ultimately can provide effective responses to emerging megatrend challenges: 1) too many free riders in the private sector will seek to avoid modifying their business plans in ways that may affect short-term financial returns; and 2) policymakers in many nations will seek to game any system of collaboration in order to protect subsidies, tax, trade or other advantages against other national competitors.

At the same time, despite numerous proposals for some form of global authority to regulate the behavior of enterprises or nations, this option lacks legitimacy in most national, regional or global forums. A more viable alternative at present is the creation of networks of global companies, national agencies, multi-lateral institutions, NGOs or foundations, such as those created for the cross-border regulation of pharmaceutical products or eradication of malaria, that jointly can develop licensing standards and transparency practices.

These and other large-scale collaboration processes also will need more clearly defined governance processes with explicit goals, performance metrics and accountable behaviors if worthwhile experiments are to evolve from individual projects to Big Bang transformational initiatives. One step in this direction will occur if leading companies assume more advocacy responsibility within their own business sectors to commit to more ambitious performance standards.

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