Working together works - the true value of collaboration to business and society
Itâ€™s easy to talk about Positive Impact, but itâ€™s much more difficult to deliver it in practice. Whatâ€™s even more difficult is trying to tackle a large-scale challenge if finding a solution involves working with direct competitors.
It’s easy to talk about Positive Impact, but it’s much more difficult to deliver it in practice. What’s even more difficult is trying to tackle a large-scale challenge, like growing inequality or the spread of non-communicable diseases, especially if finding a solution involves working with direct competitors. How can we be expected to win this proverbial game without having a clear set of ground rules? Does doing so even make business sense?
Agreeing on a shared vision
One approach to tackling these pre-competitive, industry-wide issues involves bringing together multiple players, private and public, to agree on a shared vision and plan to execute and deliver Positive Impact strategies. In this scenario, multiple companies, communities, governments, and NGOs work together to solve market failures too large for any one stakeholder to address on their own. This is a type of Positive Impact Partnership we refer to as a Collaborative Alliance. Through these alliances, we can co-create and implement systemic solutions in order to reach a higher functioning ecosystem, ultimately creating enduring and measurable economic and social value. This approach has been traditionally used in pharmaceutical and chemical industries, and it is now expanding into new sectors as the value of working together recognised. By establishing a shared vision and understanding, this approach promotes collaboration while also redefining the relationships in the system itself, better enabling systemic change to take root.
While there is no silver bullet, collaborative alliances enable enduring and scalable change.
Here are some of the key steps in executing a successful collaborative alliance:
- Assign a ‘Catalyst’ or backbone organisation (this is where Palladium comes in) to co-develop a shared agenda and business model for the identified opportunity.
- Work with the Catalyst to provide seed financing for the creation of a new ecosystem.
- Build trust, redefine relationships and build new connections among the actors to move towards a new ecosystem.
- Co-develop a shared measurement system (central strategy map, cascading scorecards by actor, performance measures) among all actors in the system.
- Create consensus, commitment, and accountability through a governance structure for a long-term, sustainable strategy.
Success is defined by behavioural changes and new win-win relationships among stakeholders across the system, which is why we cannot underscore enough how important it is to develop common governance mechanisms. At Palladium, we facilitate the development of the backbone support organisation that administers the complex funding arrangements, from impact bonds to grants, while establishing a dynamic resourcing facility that enables expertise to be deployed as challenges arise.
Collaborative Alliances in practice
Through these Collaborative Alliances, partners are actually expanding the size of the pie as whole. Not only is there is a clear business case for competitors to work together in alliances to change dysfunctional markets, but in many instances, this may be one of the best models for creating new business opportunities and lasting change.
For instance, the Peru Cocoa Alliance has brought private investors to the table in the fight against illicit cultivation and poverty, while also serving the business interests of the companies involved. Through this Alliance, Palladium leveraged the $61 million provided by USAID to generate $124 million in private sector funding and co-investment, including $21 million in investment from farmers themselves in the form of labour (land clearing and planting).
Alliance members include Peru’s cocoa farmers, USAID, buyers such as Romex (one of Peru’s largest coffee and cacao exporters), ICAM, Barry Callebaut, the largest cocoa Peruvian cooperatives, investors such as Althelia Climate Fund and Agrobanco, technology providers such as Yara, Husqvarna and Naandanjain, and the Peruvian agency for alternative development.
Palladium is introducing companies such as Barry Callebaut to the Alliance in Peru to partner with one of nine supply chain managers to co-invest in a central processing facility that selects and ferments wet beans according to their preferred flavour profiles. These beans will be used in new and differentiated recipes for single origin chocolates marketed at a premium price. The Alliance simultaneously creates value for farmers by facilitating direct purchasing commitments from the end-buyers, essentially bypassing traders and directly off-taking from Barry Callebaut. This assures financial services providers (who are in the alliance) of stable long-term farmer income, and enables farmers to obtain financing that helps them increase farm size and gain access to technology to improve traceability yields.
Delivering Positive Impact solutions successfully often involves going beyond the traditional Public Private Partnership model. In sectors like cocoa, before we can even play the game, a Catalyst is needed to help players come together to co-create a common agenda and obtain seed financing. From there, we can redefine relationships and establish the sustaining monitoring and governance system that will eventually create ground rules for the industry. So, in this case, the only way to win is not to play at all.
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