Sources of Value

There are four key sources of value in a collaboration. Each can be addressed by a basic analytical question:

1. How good is our resource fit? The basic motive for partnering is to obtain resources that we need and others have, in order to achieve resource complementarity. Each partner provides a resource that fills a gap in the other partner's resource portfolio. The more significant the gaps that can be filled, the greater the potential for value creation.
2. Who provides the resources and how? It is important to understand the direction and magnitude of the resource flows between the partners in order to assess the resource directionality. If one partner provides almost all of the resources, that is a unilateral flow that creates an imbalance that is often not sustainable; a one-way street does not permit two-way collaboration. If both partners are swapping valued resources, that is a parallel and more sustainable exchange. If both partners are fusing their resources in order to create a new constellation of complementary resources, then even greater value creation potential arises.
3. What kinds of resources are deployed? Different types of resources have different potential for value; this is associated with the resource nature. In collaborative value creation we highlight two types of resources: generic resources and organization-specific resources. Generic resources are those commonly available. For example, all companies have money; all nonprofits deliver some socially desirable good or service. These are desirable, yet resources that are specific to the particular organization, such as a brand or technology or clients, are more valuable. Even more valuable are the organization-specific resources that are the key success determinants of a partner's performance. The complication is that the more valuable the resource, the scarcer its availability.
4. What are our shared interests? The greater that the partners' perceived interests are tied together, the greater the motivation to partner due to their linked interests. Partners often seek different objectives; this highlights the importance of understanding what the other party values in order to identify value connections. There are two key dimensions to assessing linked interests: breadth and depth. The more points of connection, the greater the potential value linkages. But many trees with shallow roots can be blown down in a storm. A single key connection with very deep roots can create stability. But a lightning strike can topple a single tree. The goal is to have multiple and deep linkages.

By scrutinizing each of these potential sources of value, collaborators can identify where greater value can be co-generated. Figure 15.2 illustrates the set of sources of value in a collaboration and how, depending on the nature of the sources, they can vary across the Value Creation Spectrum.

Types of Value

The sources of value discussed in the previous section give rise to types of collaborative value generated, which are commonly expressed in terms of economic, social, and environmental benefits. Whereas these general categories are important, it also is significant to analyze value in terms of more specific precursor types. This allows for comparison beyond content and context differences. Four types of value are particularly useful: associational, transferred asset, interaction, and synergism. Not all types of value are equally important to all kinds of partners. Identifying and analyzing each of these more specifically enables one to have a more complete view and understanding of the potential for or actual creation of different types of value. Too often, the full significance of collaboration is undervalued due to lack of specificity.

Synergistic Value

The fourth type of value emerges from the fundamental judgment or rationale that combining partners' complementary resources will enable more to be accomplished together than working separately. The basic premise is that collaboratively creating social or environmental value can give rise to economic value which, in turn, can enhance social or environmental value, and so on. This can become a synergistic relationship, whereby the generation of one type of value gives rise (sequentially or simultaneously) to other types of value, and this creates a “virtuous value circle.” Innovation fuels the synergism and also opens up new avenues for value creation. Figure 15.3 summarizes the four different types of value and how they vary.

Value Mindset

Seven dimensions are relevant to understanding the value mindset. Consideration of each of the following dimensions will enable each partner in a collaboration to assess its own value mindset and also to better recognize and understand the mindset of potential collaboration partners. In effect, this allows potential collaborators to assess the compatibility of their mindset patterns. Figure 15.4 lists the seven dimensions, and each is summarized in the following section of this chapter.

Collaboration Mindset

In addition to understanding the value mindset of the potential collaborators, it is important to understand the mindset of prospective collaborators with regard to the process of collaboration. We have identified six particular dimensions that are relevant to a collaborator's mindset (see Figure 15.5). Assessing the mindset with regard to each of these six dimensions is useful to understanding both your own collaboration mindset as well as that of your potential collaborator. Incompatibility between or among collaborators on one or more of these dimensions is important to recognize and consider. When identified in advance, such assessment presents opportunities for discussion and clarification between the parties before proceeding to develop a partnership strategy.

• Attitude. Some business and nonprofit managers harbor adversarial, suspicious, or deprecating attitudes toward each other, and this is likely to breed conflict. Co-generation of value requires mutually cooperative and respectful views.
• Dependency. Perceiving sectors as independent of each other blinds a potential collaborator from identifying the multiple points of interdependence and capitalizing on these linked interests that can be sources of collaborative value.
• Compatibility. There is value in looking beyond mere acknowledgment of the interdependencies that exist; there is growing evidence that the business and nonprofit sectors are converging in terms of goals, activities, and competencies and that this has potential value.

• Role. Collaborations involve the creation and capture of value. In the more successful undertakings, the partners give first priority to creating value for their partners rather than extracting it for themselves. This tends to create a virtuous reciprocity dynamic in which the receiving partner in turn tries to add yet more value to the other partner.

• Participation. If partners have greater openness about options for organizational engagement on multiple levels and alternatives to resource integration, then more opportunities for value creation will emerge. Boundary permeability fosters value discovery.
• Change. If the partners seek and welcome significant change, then the possibilities will be greater for generating innovative and more impactful collaborative undertakings.

The Collaboration Continuum

In the following section, we will describe each of these stages and then examine how each of the three value drivers, alignment, engagement, and leverage, change across the continuum.

• Philanthropic Stage. This is the traditional and most common stage, characterized by nonprofits seeking and businesses giving donations to further the nonprofit's causes. It is frequently a check-writing relationship. These donations can be quite valuable, but even greater value can be added as one moves into the other stages.
• Transactional Stage. This stage involves activities that are more specific, with clearer objectives, defined time periods, and an explicit exchange of resources and value. Examples include cause-related marketing, sponsorships, highly structured employee volunteer programs, certification labeling, and similar projects.
• Integrative Stage. At this stage, the missions, strategies, organizations, and resources merge, and the collaboration takes on the characteristics of a joint venture more than a transactional deal.
• Transformational Stage. The primary focus of the collaborators operating at the transformational stage is on a larger (that is, societal) problem, with the collaboration goal aimed at creating innovative solutions that transform systems, institutions, processes, or attitudes to produce significant societal value. At this stage, organizationally, more institutions and multiple sectors engage in the collaboration.

Value Drivers

• Alignment. As the relationships progress across the continuum (that is, from philanthropic to transactional to integrative to transformative), the alignment among collaborators increases, creating more value. These shifts in alignment draw on linked interests and occur in multiple areas. The collaboration's relevance to the partners' missions moves from peripheral at the philanthropic stage to central at the transformational stage. The strategic importance of the collaboration grows from insignificant to vital. The connection between the partners' core organizational values deepens greatly. The knowledge of the societal problem being addressed moves from a state in which only one partner understands it to a level of understanding that is shared equally by both. Their frameworks for understanding how maximum value is co-generated merge. The focus on benefits shifts from the individual partners to society.
• Engagement. Progression through the stages toward higher value is propelled by a deeper and more multifaceted form of engagement that deepens partner commitment and strengthens collaborative sustainability. Further the emotional connections of the partners with the societal cause and between collaboration members deepens. Partners' interactions shift from procedural activities (for example, grant making) to more substantive involvement (for example, actual problem solving). The involvement grows from a few individuals to become organization-wide top to bottom participation, with an increasing frequency of interactions. This enables trust to build and deepen. The partners discover additional opportunities to broaden the scope of their collaborative value creating activities. As the problems addressed become more complex in higher stages, the structure of the collaboration encompasses more entities. Also, the managerial demands of the collaboration grow as the complexity of creating higher value increases.
• Leverage. This driver is rooted in making the most from available resources. The magnitude of resources deployed grows with progression through each stage, and the type of resources change from generic (at the philanthropic stage) to organization-specific to key success assets (at the transformative stage). The resource link between the partners is not only two-way but increasingly conjoined. The synergism between partners' resources and actions becomes ever stronger with progression through the stages. This is propelled in part by ever more robust continual learning, giving rise to greater innovation. Internal change propels ever greater levels of external change.

Formation

The first step of this phase is to clearly articulate the problem that the collaboration is to address so as to be able to screen candidates as to their likely interest. Then, one can examine possible candidates' experiences in order to assess likely intentions for addressing the problem and doing so collaboratively. Next, one should assess candidates' visibility relative to one's own desire for visibility. It is also helpful to identify individuals who might champion such collaboration. Finally, one can create a map of the possible candidates to assess the fit with one's existing portfolio of collaborations.

Selection

The next phase in the assessment and selection of a specific collaborator candidate should be guided by a set of explicit criteria rooted in the specific organizational needs and characteristics one seeks. Given the importance of fit, an initial point of analysis involves mapping the linked interests. One must assess the candidates' resources, particularly their distinctive capabilities and assets, in terms of their complementarity to one's own resource set. Last, one should weigh the possible risks of the association. Some of these steps involve engaging in a form of due diligence, such as by examining publicly available information or consulting with other collaborators of the candidate. However, significant direct interaction and discussion with the candidate is essential to achieving the mutual understanding and motivation that will be essential to a strong partnership. Taking time to get to know one another is a good investment.

Implementation

This phase involves the joint design and operation of the collaboration. It is useful to acknowledge that there will be initial experimentation and adaptation as the collaboration partners refine the design and smooth out operating procedures. It is useful to incorporate an ongoing operational evaluation process into this phase, to secure feedback aimed at continual improvement.

Institutionalization

Over time one strives to embed the collaboration into the partnering organizations. Indicators of successful institutionalization include surviving a change of leadership at the operating level or at the top of either organization. Another is when the partners talk in terms of “we” rather than “us” and “them.” This institutionalized unity is also manifested by a fusion of the partners' value creation frames. All of this must be grounded in governance processes that involve collective decision making and equitable power sharing.

Who Benefits?

It is important to identify the full range of beneficiaries from a collaboration. The value recipients should encompass three levels: individuals, organizations, and society (also referred to as the micro, meso, and macro levels). It is also helpful to distinguish between the benefits internal to the collaboration (that is, benefits to the partnering organizations and the individuals in them) and the benefits external to the partnership (that is, benefits to the individual clients or beneficiaries receiving the social service or good, external stakeholders of the businesses and nonprofits, and society in general).

Types of Value

The CVC Framework recognizes the importance of using the general categories of economic, social, and environmental value. However, we must stress the utility of specifying the previously described four types of value: associational, transferred assets, interaction, and synergism, each with their multiple manifestations. Such specificity enables a more analytical assessment of the value generated accruing to different beneficiaries from the collaboration.

Assessment Perplexities

Assessing outcomes of collaborations is fraught with complications. To address these complications, it is important that the partners work with a shared mindset that seeks to evaluate the collaboration's ongoing value creation. A second necessity is to have clear objectives for the collaboration, with corresponding performance indicators by which to assess their accomplishment. Accompanying these objectives should be a statement of the collaboration's theory of change and value creation pathways. The partners need to ensure that the resources required to carry out the assessment are available. Too often, funders demand evaluation but do not provide the resources to do it. Measurement is often complicated by the intangible nature of a collaboration's intended benefits, which means that qualitative measures should be employed as well as quantitative measures. Attribution of results to the collaboration's actions may be complicated because of other possible influencing factors. The rigorous approach to dealing with this problem is to employ randomized control trial groups, but this approach often is too costly or not feasible. This is where the theory of change and value creation can provide supportive evidence, as can the use of evaluation studies for similar interventions.