The business case for strategic partnerships with the social sector: A literacy case study

Featured panelists:

James Cleveland, President, Jumpstart
Kathleen VanDernoot, Alliances and Programs, Pearson Foundation
David Murphy, President and CEO, Better World Books
LuAnne Zurlo, Founder and Executive Director, WorldFund

Partnership lifecycle overview: The panel began by exploring the lifecycle of partnerships from birth to exit. The discussion aimed to uncover answers to some key questions: How do partnerships begin? How do they evolve? What kind of tensions emerge in a non profit - for profit relationship, and how are they managed? What happens to partnerships when there is a downturn in the market?

Key insights of partnership lifecycles:
The formation of the Jumpstart and Pearson relationship was not random - it was due to a deliberate search on Pearson's part to find the right organization to partner with. Specifically, they were looking for a "like-minded partner that was aligned with our goals." Jumpstart originally engaged in the partnership with grand plans to form a large Teacher Fellowship program to address the issue of teacher quality in the United States, but ultimately discovered that this goal extended outside the bounds of their core competencies, and their grand goals would likely not be reached. Together, Pearson and Jumpstart evolved their relationship to create a new program, Jumpstart's Read of the Record campaign, which met both of the organizations' objectives and worked well within their key capabilities. A key to success was the combined drive to a solution; the partnership evolved not unilaterally, but rather, with both sides as equal players in making decisions.

The partnership between Better World Books and WorldFund began serendipitously: Better world Books was in need of a credible literacy partner to reach the underserved population in Latin America, and a member of the organization had a common connection with WorldFund. The partnership has seen less evolution since its beginnings primarily due to its relatively short time frame. Better World Books' entire business model relies on the mission of its partner organizations, for it is primarily these partners who drive book donations to the organizations.

Value creation overview: The second key theme of the panel was the exploration of value, and the incremental value provided to each partner organization because of the partnership. Without question, value is not just about money. Money is important, but it can be limiting as a metric. Thus, the panelists addressed key questions that dug into the value creation process of their partnerships: How do the organizations think about value creation? How about value capture? What makes it sustainable? What unique resources do partners offer in collaborations? How do they work with partners that might share their values (literacy) but are organized differently (non profit vs. for profit models)?

Key insights of value creation:
The Pearson-Jumpstart relationship has helped open many new customer relationships for Pearson, which they would not have been able to have without the partnership because of their "big corporate status." Often, when potential customers realize that Pearson is heavily connected to Jumpstart and its Read for the Record campaign, they are far more open to continuing the dialogue than they may have been previously. Likewise, Jumpstart has been able to grow tremendously as an organization because of this partnership with Pearson. Not only has Pearson's resources helped grow a campaign that allows them to reach more children, but they've also provided invaluable strategic support. These intangible means of value (versus just dollars) are some of the most important value areas that allow Jumpstart to have a higher impact in child literacy.

To have a business, Better World Books is faced with the challenge of needing to create a high level of trust among its constituents (the donors of books and the buyers of books). It is their nonprofit partners that provide them the credibility to create the trust with its constituents. Through the integrity created from partnerships with organizations like WorldFund, Better World Books has been able to scale its business to a very high level: they provide $7/minute of donations to their partner organization, which translates to $4M of donations per year. In turn, WorldFund is able to focus its efforts on its programs, its area of greatest strength, and lean on Better World Books to fill its skill gaps on the business side.

Final insights: seven key takeaways to a successful partnership:

• Build strong relationships within and across the partnering organizations
• Foster clear communication between each partner organization
• Be clear on what you can and cannot do; manage expectations and be honest
• Understand the business objectives of the corporation and try to align your own work within those objectives
• Ensure senior level buy-in
• Have complementary skills and objectives
• Focus on values: long-term viability of partnership relies on understanding the values of each partner organization

CSR at IBM?

Given the Smarter Planet strategy of harnessing IBM's core business capabilities toward social ends, what is the necessary role for IBM's CSR department? If the dog catches the car, now what?

(credit to Harry for the good question)

IBM's Iwata on Toyota

In a small group roundtable, a Tuck student asked Mr. Iwata how he would advise Toyota in its current crisis. He cited a top communications official at Domino's Pizza, following their handling of their own social media crisis:

"People want to watch you put the fire out"

Even though a company's first instinct is to investigate internally and get the facts straight, today's consumers want to witness more of the internal process. Is this realistic? Can companies manage their response in a more transparent way, even as they are figuring out exactly how to respond?

The Commercialization of Microfinance: From Muhammad Yunus to J.P. Morgan

Panelists:
Caroline Allen (Vice President, Creation Investments)
Dana Dakin (Founder/President, WomensTrust)
Shedd Glassmeyer (Assistant Fund Manager, Developing World Markets)
John Wilson (Analyst Frontier Investment Group: ACCION International)

Moderator:
Richard McNulty (Adjunct Associate Professor of Business Administration, Tuck)

The Microfinance panel provided a lively discussion surrounding the spectrum of approaches to serving the micro-lending need. The panel started with with thoughts about the profit-driven approach to micro-lending employed by Compartamos in Mexico as opposed to a non-profit model. Questions got at the issues of usury rates, transaction costs of a local institution, the education and training involved, and the impact of the financial crisis on microfinance.

The panel represented a diversity of vantage points within the microfinance "value chain" and highlighted the importance of different micro-lending models to meet the array of needs. The issue of "scale" was raised on several occasions during the conversation. While there was agreement that the non-profit model is important to support the on-the-ground education and ultimate success for communities, however, the for-profit institutions facilitate growth and have been vital in helping to provide increased access to funds.

"Smarter Planet: A Leadership Agenda"

Tuck's eighth annual Business & Society Conference kicked off this afternoon with a keynote address from Jon Iwata, senior vice president of marketing and communications at IBM.  Mr. Iwata spoke about the new realities of global business today, the requirements for businesses to meet those realities, and how IBM is changing the game through it's Smarter Planet initiative.

We have all heard of the two big new business realities of the past few decades, namely globalization and the digital network revolution (Internet, technology, or however one chooses to define it).  The third new business reality is stakeholder empowerment, or the ability of stakeholders to exert influence over the actions of companies.  Not surprisingly, this increased empowerment of stakeholders has been enhanced and perhaps influenced by the other two realities of globalization and digitization.

These drivers of change have key implications for businesses across the globe.  The first is that the new competitive battle between companies will be based on experts and expertise.  As companies find themselves no longer in complete control over the messaging and communication around their products or services, they will begin to expose their own experts and expertise to the outside world.  The second implication is that there will be a shift from marketing to audiences to creating constituencies.  These customers must be defined, built, and fed.  Apple, for example, doesn't just market products to consumers.  Rather, the company teaches consumers how to get the most out of their Apple product through the "genius bar" in their retail stores and through online video tutorials.  In so doing, Apple creates a customer who will champion the product and company.  Finally, the third implication is that every business will become a "technology company" and must face new policy challenges because of this.

IBM has faced these new implications and challenges head on, with the creation of their Smarter Planet initiative.  Smarter Planet represents the intersection of economic comparative benefit with social issue and technology.  Essentially, IBM is helping large customers become "Smart" by both improving their business and, at the same time, doing good for society.  One example Mr. Iwata cited was a project to create a "Smarter Train", where a company knew that operating their trains at 1 MPH faster would generate greater profits while also creating significant social benefits.  With improved transit time, the company could take 250 locomotives and 5,000 train cars off the tracks, and could redeploy hundreds of employees.  It was unable to do so, however, because at that speed a single "wobbly" wheel would derail the entire train.  IBM is collaborating with this company to create sensors that would track heat and vibration on all the wheels of these massive freight trains, enabling the train to drive 1 MPH faster with the confidence that problems could be spotted early and derailment averted.  With this, the company will be reducing its carbon footprint, decreasing energy usage, and improving safety for employees and others.

Smarter Planet is a perfect example of a company doing good by doing well.  IBM estimated that its addressable market could increase by 40% with this initiative, which is substantial considering the company plays in a $1.3 trillion industry.

In all, Jon Iwata's keynote speech set a great tone for the Business and Society Conference.  Watch this page for summaries of the discussion and key learnings from all of our interesting panels and speakers over the rest of today and tomorrow!