New Book Examines Strategic Alliances
Social Enterprise Newsletter, Spring 2000
James E. Austin, John G. MacLean Professor of Business Administration and Faculty Chair, HBS Initiative on Social Enterprise
Where once "corporate giving" meant writing an annual check to a favorite charity, more recently for-profit firms and nonprofit recipients have begun to join forces to better carry out their separate, but related, missions. When many of these relationships began to cross the line from traditional philanthropy to more strategic and mutually beneficial alliances, HBS professor James E. Austin, head of HBS's Initiative on Social Enterprise (ISE), took note. "Here was a new arena," he says, "in which the goals of different kinds of organizations were very productively linked and in which significant value was being created, both for the collaborating nonprofits and for the businesses."
A 1998 Social Enterprise research forum at HBS spurred Austin to delve more deeply into this phenomenon. Identifying a core group of five cross-sector alliances, he interviewed key executives on both sides of each partnership to document the process of their unfolding relationships. Austin's initial research corroborated his hypothesis that these alliances were creating value - for the partners and society - far surpassing what each participant could do on its own. In addition, the research led to a survey of ten other alliances in his new book, The Collaboration Challenge: How Nonprofits and Businesses Succeed Through Strategic Alliances (Jossey-Bass/The Drucker Foundation).
Austin found that most of the partnerships he studied went through three stages of development, which he terms "the collaborative continuum." "Recognizing that relationships can evolve along this continuum, forward or backward," he says, "is a useful strategic tool for managers who are assessing what type of relationship they're in and considering if and how they should progress to the next stage."
In the first, or philanthropic, stage (which some partnerships skip entirely), the parties assume the traditional roles of "benevolent donor" and "grateful recipient." For example, urban community-service nonprofit City Year began its relationship with Timberland, a maker of outdoor apparel and footwear, when City Year requested fifty pairs of boots for its youth service corps program. The second, or transactional, stage begins when the organizations start to regard each other as partners. For City Year and Timberland, this transition occurred when leaders of both groups realized they had similar visions of how to make a positive impact on society. By the third, or integrative, stage of a relationship, Austin notes, "resources from both organizations have been mobilized and meshed to create a new set of services, activities, and resources unique to that collaboration." His example is the 1995 pilot rollout of a new line of Timberland apparel called City Year Gear.
While Austin's research underscores the importance of ensuring a good fit between partners' missions, strategies, and values, this fit may not always be readily apparent. Consider, for instance, the alliance struck between The Nature Conservancy, the largest private owner of nature preserves in the United States, and Georgia-Pacific, one of the world's biggest forest products companies. The two longtime foes decided to join forces in 1994 to create a landmark agreement enabling both of them to manage some forested wetlands in North Carolina. "These organizations are combining their core competencies to devise a unique approach to resource and business management," says Austin.
Austin also found that leadership is frequently of paramount importance in the creation and development of cross-sector alliances. Strategic partnerships "need champions, or internal entrepreneurs (intrapreneurs), at high levels on both sides who largely determine the acceptance and vigor of the collaboration," he writes. Not all successful alliances, however, start from the top. For example, the CARE-Starbucks relationship began when a CARE regional officer bought a cup of Starbucks coffee and noticed that the two organizations did business in the same countries. A telephone call to a Starbucks official followed, and a short time later, their partnership development process began.
"Underlying the sustainability and power of a partnership," Austin emphasizes, "is the amount of value that's being created through the collabora-tive process." He also notes that "in cross-sector social-purpose collaborations, unlike commercial business alliances, an essential ingredient for strong leadership involvement is an emotional connection individuals make with the social mission and with their counterparts in the other organization."
Austin's hope for these new alliances is that "greater interaction will result in productive two-way learning: corporations can be enriched by finding out how nonprofits mobilize and motivate personnel, while nonprofits can learn more about marketing and financial management. "As a result," Austin concludes, "we'll see the stark differences between nonprofits and businesses diminish, revealing a new world of integrated, rather than independent, sectors."
Adapted from the Fall 1999 edition of Working Knowledge, a publication of the HBS Division of Research. The Collaboration Challenge was also featured in the debut issue of Independent Sector's Facts & Findings, and will be presented in a forthcoming issue of the Nonprofit Times, further increasing the impact of HBS social enterprise research on the nonprofit sector. The Collaboration Challenge is available through Jossey-Bass (http://www.josseybass.com).