NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

I can’t turn my head without hearing either how difficult partnerships are or how essential they are for inclusive business.

I’ve just come off a webinar conversation with Ted London, who argued that inclusive businesses need a chief ecosystem director in the leadership team, because business success will depend on strategically selecting and creating external partnerships. A mistake made by many businesses, particularly social enterprises, is to pursue partnerships for finance, but not for building the market and enabling customers and businesses to flourish.

I was recently at the Grow Africa Investment Forum in Kigali. The entire premise of Grow Africa is that by building public-private collaboration, more investment and more inclusive investment will flow into agricultural value chains in Africa. We heard about partnerships in crops (cassava, rice and more) and in regions (Southern Tanzania, Beira Corridor in Mozambique) and we did indeed hear companies stand up and report how collaboration had unlocked their investment and new ways of working.

In the Practitioner Hub for Inclusive Business and The Partnering Initiative series on partnership, we can read practical examples of partnerships for a South African brewery, a Filipino water company, Mozambican businesses, a Haitian energy company and a South African supermarket. They are realistic about the challenges but share what they have achieved through partnership.

In agriculture, it’s now common wisdom that smallholder transformation comes from upgrading the entire value chain, linking inputs, finance, skills and markets. This is only achieved through partnership. In a webinar last month, Sean de Cleene with Yara International said as much, and a speaker from Hystra echoed the same for sanitation. Indeed, the same could be said for almost any Sustainable Development Goal.

Connect to Grow, a new support initiative for small and medium-sized enterprises (SMEs), is focused on facilitating business-to-business (B2B) partnership precisely on the assumption that growth of inclusive SMEs is supported by partnerships for innovation, but busy entrepreneurs often can’t do this on their own. The reactions from entrepreneurs suggest the appetite for such brokering support is high.

But just as loudly I hear the challenges and doubts. The participants on the webinar were asking about how to manage expectations, how to keep partners engaged, how to manage the huge costs of investing in partnerships. I spoke to an agro-chemical business a few weeks ago that said it simply wasn’t sufficiently important to its core business to go to Grow Africa – nor worth the time. Tom Harrison, a leading partnership broker for many years and author of some great Hub pieces on partnership, has just published a blog telling corporates to watch out. Too many, he argues, are investing in partnerships that are not delivering the bottom line, so won’t actually work. Facilitating a strategy session with businesses and donors recently, they were extremely frank with each other about the risks of partnership and whether enough progress will be made in the short term to keep them on track to deliver on long-term ambition.

The series on multi-stakeholder partnerships this month includes a blog by Hystra. The team analysed the shortcomings of leading partnerships documented in a 2012 paper by Bezanson and Isenman:

• 64 percent of them lacked a clear strategy,
• 55 percent lacked transparency,
• 45 percent had poor governance mechanism, and
• 36 percent were not financially sustainable in the long term.

So where does this leave us? If anything has been proven in the past decade of inclusive business, it’s that “go it alone” doesn’t work. The enterprises that are going to scale have partners. Renewable energy is one of the buzzing sectors. It’s notable that businesses are specialising more than diversifying: The big names are sorting out where they sit in the value chain, some focusing on products, some on distribution, some on repairs. B2B partnerships have flourished, and the ecosystem – investors, donors and governments – is getting into shape, too. I would suggest that B2B and multi-stakeholder partnerships are contributing to development of the sector.

The other inescapable facts are that partnering is hard and some partnerships don’t work. The problem is perhaps that partnering is assumed to be something that just happens and anyone can do it.  London, Harrison and our partners this month, The Partnering Initiative, disagree: Partnership is something to invest in. Just as you need strategists and planners in a team, you need partnership skills, too.

I’m seeing more and more tools emerge on how to do partnerships well. My Editor’s Choice this month is one, a guide to building multi-stakeholder partnerships. Our new checklist on how to create a partnership agreement is another. I’ve not yet seen a tool on when to step away or end a partnership, but if The Partnering Initiative doesn’t have that yet, we need it.

So the question is not whether partnerships are useful or not. The right questions perhaps are:

• How to decide when a partnership is needed and when it is not. It often is, but check first!
• How to ensure participants invest enough time and skill in a partnership
• How to share the wisdom on partnering beyond the circle of the converted, to those who need it but don’t realise it
• Whether public or philanthropic support is needed to help tip the balance of costs and benefits of partnering, particularly when the benefits are long term and societal, but the costs are short term and private

This blog was originally written for the Practitioner Hub for Inclusive Business and is reprinted here with permission. It is part of a series on partnerships delivering inclusive businesses launched earlier this month. View the whole series for more business examples, research and insights on partnering for impact.

Caroline Ashley is the editor of the Practitioner Hub for Inclusive Business.

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