In the first article of this series we discussed how flat-to-declining public sector budgets are making partnerships more attractive to government agencies. We discussed the concept of “collaborative capital” as a means for the public sector to enhance skills, funding, data, staff, and competencies that it no longer possesses.
Further, we outlined 4 distinct resource types needed by partnerships.
- Intellectual Capital: the data, unique processes, software, and insight that is the basis of each partner’s business model. It includes the ability to confer legitimacy on any of the above.
- Political Capital: the ability of each partner to influence public policy, regulation, law, and public budgets.
- Labor: the staff and volunteers each partner can commit toward ongoing governance, developing solutions, and implementation.
- Financial Capital: the actual dollar funding each partner provides toward the solution.
Each of these 4 elements of collaborative capital are generally required to solve public sector problems. Not surprisingly, financial capital is the element most often in short supply. There are 3 main reasons for this:
- Public sector budgets are flat or have been declining for over a decade.
- Public sector partnership members tend to be from other public sector agencies (federal, state, and local), nonprofit organizations, universities, and quasi-governmental groups like advisory councils and planning authorities. These groups generally have resource elements 1, 2 and 3, but little financial capital.
- There is an ongoing reticence for public sector groups to partner directly with the private sector. The private sector could be a great source of financial capital, but there are concerns about:
- The private sector having different motives – profit motives. Profit motives are generally viewed by the public and nonprofit sectors as preventing altruistic funding. The common view is that few private sector entities define altruism as essential to their business model and the funding they provide has strings attached.
- The motives for partnering are as important as the goals of the partnership. Suspicion of profit oriented motives can lead to mistrust and suspicion of the private sector by other sectors. “What are they after?”, is a question we often hear.
- In the case of nonprofits, partnering with the private sector can be seen by their membership as “selling out”.
- Additionally, public sector partnering with the private sector is complicated by laws, policies, and formal oversight rules that increase the burden of compliance and administration.
It’s all about perceived risk.
There is an inherent risk that all parties in a partnership must subscribe to – mainly the risk that one’s partners will do something negative and the fallout will impact everyone’s reputation. Right or wrong, public and nonprofit sectors often perceive this risk to be higher, or more likely to occur, when working with private sector partners.
Our experience has shown partnerships that include the private sector are no riskier than partnerships between public sector entities and between the public sector and nonprofit sectors.
Partnerships within the public sector – between federal agencies, or between federal and state agencies – have all the same real and perceived risks as partnering with the private sector.
The perceived risk items for private sector partnering listed above are identical to partnering within the federal, state or nonprofit sectors. Money from any source other than the private sector is viewed as a good thing. This aversion by many to private sector funding and participation is the next great hurdle for public sector leaders to address. The decline in public funding for critical programs and priority projects may just be the catalyst that breaks the ice for some.
As public sector budgets continue to decline, access to outside financial resources will, of necessity, become a key source of funding. It will become necessary to seek out private sector entities willing to bring financial resources to the partnership.
Breaking down the perceived risks and barriers to include all sectors in a partnership involves unpacking the elements of business trust. In the next section, we will cover those elements and outline how to apply a model of business trust to expanding beyond the traditional and obvious partners.
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Organizations have internally addressed the problems they can tackle alone, and are now reaching beyond their organizational structure to address problems for which they have only partial control or impact. This means participating in inter-organization bodies with the mission to solve the problem by working collaboratively across partner organizations to create solutions.
Inter-organization problem solving creates huge problems for traditional managers and management theory.
Loss of Control
It is uncomfortable for organizations and managers to give up control and decision-making to inter-organizational bodies. Establishing business trust is THE essential element for real progress and support for the work of inter-organizational team’s to be successfully implemented.
Participation on inter-organizational teams requires that resources be offered up to the team, and people’s time is only the start. Resources go beyond meeting participation and include redirecting each participating organization’s resources to the effort: information and data sharing, re-prioritization of existing effort, communication, and changes to strategy are always part of the mix.
Decision-making and Governance
Determining decision-making models, beyond pure consensus is a new area in management theory. The key questions is: “If we can’t reach 100% consensus, then what level of agreement is necessary for you to support the solution if outvoted?”
Delegation of Authority to Representatives
Participation in inter-organizational teams requires delegation of authority to (often) lower level managers who will have the authority to commit the resources and name of the organization to a solution.
Complexity of Communication
Communicating decisions and progress back to the organization for work that is outside the organization’s structure is not a process that now exists. Until inter-organizational teams are formally viewed as part of the organization’s business model, they remain in a communication gray area with their work effort not well understood by the organization.
In this essay, Holly Green at Forbes discusses 10 roadblocks to innovation.
Organizational success is a wonderful thing. But it’s also a double-edged sword. As organizations experience success, their emphasis tends to shift to protecting and maintaining the status quo versus considering new opportunities and products. Unfortunately, clinging to what has worked in the past puts the brakes on innovation.
It also puts you out of touch with your customers’ changing needs — a dangerous circumstance in today’s highly volatile markets.
If you’re trying to innovate but not having success, see if any of these apply to your organization.
We could not agree more. As the pace of change accelerates these become more critical than ever to check these often. Read on.
A recent article in Fast Company says no, or probably not, or you decide… Great article and thought-provoking for those of us that gather ideas from smart people and help craft tangible business strategies.
In our strategy work, we use decision support tools that allow participants to give simultaneous and anonymous comments using many-to-many networked computers. This totally avoids the crowd-pleasing mentality that inhibits good ideas, as mentioned in the article. Often, WHO says something is more important than the content value of the idea itself. The “who said it” often shuts down the creativity of the group as much as critical challenges to ideas.
The jury is still out, and there are hundreds of studies that show better results for group process over individual ideas than those cited in the article below. We firmly believe that anonymous, technology-assisted group process produces far superior outcomes than produced by people working alone, particularly when the strategy or issue is complex. Effective group idea triggering consistently leads to superior strategies and solutions.
Reminds us of the old African proverb…. “If you want to go fast, go alone. If you want to go far, go together.