Better Partnerships

Non-profits form partnerships for a number of different reasons. They provide resources, knowledge and skills, improve cost efficiency, speed time-to-market, open new markets, gain market share, and develop innovations, new products or complementary products.  

There are vertical partnerships and horizontal partnerships.  Vertical partnerships are

between supply chain members, like manufacturers and distributors or buyer-supplier, or service providers.  These partnerships can assist with accessing materials, collaborating on product innovation, open new markets and communication market information.

Horizontal partnerships are formed between firms that operate at the same level of the supply chain.  Often called complementary alliances, they can be with organizations that offer different components of a given solution. This partnership will allow each non-profit to focus on its own core competency and stimulate demand through greater value. Competitive alliances allow two firms to compete in some domains yet collaborate in others.

With both types of partnerships, the risks are the same:

Trust issues,

Loss of trade secrets,

Less autonomy and control,

Increase project complexity,

Lack of resources in managing the relationship,

Incompatible cultures

To mitigate these risks and ensure partnership success, develop a few critical core values. Focus on high-interdependence, governance structure, commitment, communication and trust.  Shared and even dependencies provide motivation for both parties, whereas asymmetrical dependence leads to vulnerability and maybe even exploitation.  

Decide early upon bi-lateral control over terms, conditions and processes with mutual expectations over activities.  The control of governance needs to match the partnership’s risk level; and more skin in the game means more control.

Commitment needs to come from both sides of the partnerships with willingness to continue into the future. No one party should sabotage the partnership or take advantage. This is demonstrated by making investments for the sake of the partnership alone.

Effective communication requires frequent sharing of credible, reliable and proprietary information. It also means using proper use of legal contracts, which can clarify obligations and expectations, but may also spoil the ‘spirit’ of the cooperation. 

The foundation of all partnerships and outsourcing is trust in the partner’s decisions, actions and intentions.