As COVID-19 continues to rage across the globe, business executives are faced with the urgent challenge of how best to respond and contribute to the benefit of their employees, their customers, their communities and ultimately their businesses. The challenge is that the pandemic is what social scientists like to a call a truly “wicked problem”—an enormously complex challenge where no single solution exists.
Over the last decade or so, global business leaders have increasingly tackled these types of wicked problems through new, creative, non-traditional partnerships with non-governmental organizations (NGOs) and government agencies. Celebrated CEOs, such as former Unilever CEO Paul Polman, champion these cross-sector collaborations as critical for tackling issues ranging from climate change to the sustainable sourcing of inputs and materials. These partnerships enable companies to leverage new resources, expertise and networks.
But cross-sector partnerships differ from traditional business alliances that companies have with vendors or suppliers. You don’t simply hire an NGO or a UN agency and cut them a check, but rather start with building a shared understanding of the problem to be solved and develop common goals and a framework for sharing risks, responsibilities and rewards. In a cross-sector partnership, the value is created by partners leveraging the capabilities of the other partners to solve the problem.
For example, CPG companies, including Unilever and Colgate-Palmolive, partnered with development organizations such as Mercy Corps to improve handwashing in Africa and Asia through the Global Handwashing Partnership. For the CPG companies, the partnership is a great opportunity to build demand for soap and sanitation products by leveraging the expertise, funding and reach of the NGOs. For an NGO like Mercy Corps, the CPG companies bring enormous marketing capabilities—an incredible resource, especially during the COVID-19 pandemic.
Sounds great, right? The problem is that these cross-sector collaborations are very hard to do well. In fact, a recent study by the Hilton Foundation found that roughly 75% of these cross-sector partnerships fail to live up to expectations. Why are they so hard to get right? Here are three common reasons:
1. Different missions, cultures and time horizons. Businesses, governments and NGOs have very different organizational goals and corresponding cultures. Most companies are wired to deliver and report on a quarterly cycle that the stock market demands. Meanwhile, governments and NGOs work on longer time horizons and, as publicly-funded institutions, are accountable to taxpayers and citizens—not shareholders. These differences in mission, culture and time horizon can make it difficult for organizations to synch up.
2. Poor internal alignment. Believe it or not, a major cause of problems in these cross-sector partnerships is often the internal alignment within organizations. In companies, a CSR or sustainability team may develop a partnership with an NGO, but the sustainability team has to rely on other business units—operations, marketing, etc.—to deliver. If those business units are not incentivized or aligned properly, a company may fail to deliver on its commitments in a partnership. Lack of internal alignment is not unique to businesses—governments and NGOs often face similar internal alignment challenges.
3. Failure to select the right partners. Too often, companies will rush into a partnership with an NGO or agency with little or no due diligence. Perhaps, the CEOs met at a conference, hit it off and decided to work together. As they get into the details of how to work together, these partners often quickly discover that their capabilities and resources are not as complementary as their leaders originally thought.
While cross-sector partnerships are not easy, there are some simple steps business leaders can take to increase the odds of success:
1. Be very clear on the problem to be solved. Make sure that your team working on the partnership understands very clearly the business’s goals and motivations for engaging in a partnership. Those goals and motivations should be clearly communicated within your company and to your prospective partners. For example, when PepsiCo faced productivity issues in their agricultural supply chains in key markets in Asia, they thoroughly investigated the issue and determined that much of the productivity problem could be solved not through the use of new seeds or fertilizer, but rather by empowering women in decision-making on smallholder farms in their supply chain. By getting very clear on the nature of the problem to be solved, PepsiCo was then able to identify NGO and donor partners with the mission, resources and expertise needed to help address the needs of women on smallholder farms in Asia.
2. Align incentives. If a partnership is going to engage multiple business units within your company, you need to ensure that those business units are aligned with the goals of the partnership. In the PepsiCo case above, the company’s Asia subsidiaries will be critical to the success of the partnership. However, the subsidiaries may be primarily focused on their quarterly P/L goals and see a partnership—however beneficial in the long-term- as a distraction. Therefore, it is important that corporate leaders step up and work with business units to align incentives in support of a partnership.
3. Do your homework on potential partners. There are literally tens of thousands of NGOs and agencies out there. Companies need to do their due diligence on partners in terms of reputation, capabilities and resources to ensure they are the right fit.
The wicked problem of COVID-19 is making new, unprecedented demands on all facets of society, including businesses. As business leaders look to engage in solving COVID-19 related issues, they need to get creative and collaborate with NGOs and governments in new ways. By being thoughtful and intentional in how they approach these partnerships, CEOs greatly increase their chances of success in having a lasting impact on the pandemic.
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