What’s Holding Back Social Enterprise and Multinational Partnerships?

I was excited to read Yasmina Zaidman’s recent blog about the rise of corporate-social enterprise partnerships and even more intrigued to read Acumen’s report, Social Enterprises and Global Corporations: Collaborating for Growth with Impact, released at ANDE’s Annual Conference. The report features compelling examples of multinationals and social enterprises teaming up for mutual benefit.

At its heart, the report is about shared value innovation, a subject that FSG has written about and is really now the burning center of exploration for companies on this journey. The idea of co-creation with partners is a key condition for shared value innovation. After reading Yasmina’s blog and article, I’m left wondering why aren’t there more of these multinational corporation-social enterprise mash-ups.

Enhanced skills and knowledge, more sales, and new products are the prizes to be gained on both sides, as the report details. While these seem like real incentives for collaboration, they may not be sufficient to overcome barriers to long-term relationships: social enterprises and companies often don’t walk in the same circles, there is a David and Goliath power imbalance and a lack of understanding about how each side does business. We’ve learned about these barriers from our work with about 20 of the largest, US-based NGOs over the last 2 years. PSI, Plan International, TechnoServe, PACT, and others are all learning how to broker, build, and grow their shared value partnerships.

We’ve seen 2 keys to success among NGOs and multinationals.

  • The first is strong alignment on the mission of the NGO and the purpose of the company. There’s no surprise that the companies featured in Acumen’s report have a strong understanding and appetite to manifest a social purpose for commercial benefit—Unilever and Dow are standouts here. When a company has not yet articulated how it can address social problems for profit, partnerships between social enterprises and corporates can become ad hoc and less significant to solving a particular social problem or barrier. 
  • The second key to success is the ability of either partner to provide a real solution to reconceiving products and markets, redefining productivity in the value chain, or enabling local cluster development. These are the 3 ways in which businesses and their partners create shared value. In our work with multinationals, we find that companies are constantly facing problems and pain points in these 3 areas. Here lies a great opportunity for social enterprise collaboration and innovation.

Social enterprises offer valuable knowledge of low-income or hard-to-reach customers and nimble structures to develop new products. Beyond the examples shared in the report, social enterprises could offer their product development services to multinationals. Likewise, companies’ value chains often drop off or lose signal in areas where there are fewer lucrative customers. Social enterprises can avail their services to improve access to multinationals’ products. Multinationals can also serve as distribution channels for social enterprise products, such as Unilever and d.light, to solve the problem of poor lighting in Unilever’s retail establishments in Kenya.

The last area—cluster development—is probably the richest for multinational-social enterprise collaboration but the least explored. As multinationals seek to make their products—whether insurance policies or fortified milk packets—available to low-income populations, the enabling environment of customer awareness, trained providers, helpful policies, etc. are ripe for social enterprise innovation.  

Acumen’s report is a great contribution, but it has the feel of just getting started. Imagine taking an issue area, such as affordable, high-quality education and using that as a starting point for social enterprise and multinational collaboration to create shared value along the 3 ways as described above? Pick a problem and geography and many more partnerships would be born, particularly at the local level, among national social enterprises and multinational affiliates.

Perhaps there's a way for Acumen and FSG and the Shared Value Initiative to work together to bring about more social enterprise – multinational mash-ups.

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