Chapter Four

Collaboration Stages and Value Relationships

Cross-sector relationships come in many forms and evolve over time. They can pass through collaboration stages that vary in terms of degree of intensity of the relationship, form of interaction, and structural arrangement between the nonprofit and the corporation. It is important to note that each stage has distinct dynamics and potential for collaborative value creation. This provides us with another window through which to view and understand collaborative value creation. We will explore this third component of the Collaborative Value Creation Framework first by explaining the concept of the Collaboration Continuum and then by examining how value is created at each stage along the continuum.

The Concept of the Collaboration Continuum

Austin’s Collaboration Continuum, or CC,1 has been widely cited in the literature on cross-sector partnering2 and is in wide use among practitioners. We will elaborate and expand on the CC in this chapter, with particular focus on the nature of value creation at each collaboration stage. The conceptualization of collaborative relationships as lying along a continuum is important because value creation is a dynamic process that is shaped by the evolving nature of the partnering relationship. Other scholars have also found the concept of a continuum useful, and we have analyzed their similarities and differences elsewhere.3

The original CC identified three relationship stages, and we added a fourth stage (Austin and Seitanidi, 2012a):

Enterprises of all sizes engage in these various forms of collaboration. In Europe, for example, 48 percent of microenterprises and 65 to 70 percent of small and medium enterprises (SMEs) are involved in external actions having to do with social responsibility. In Italy, 51 percent of SMEs have relationships involving philanthropic donations, 83 percent have activities involving employees’ social involvement, and 75 percent engage in transactional sponsorships.4 In Romania, 67 percent of SMEs have formed partnerships with NGOs.5 SMEs are particularly embedded in local communities. Their success is often rooted in collaborative relationships and engagements that foster reputational enhancement, legitimacy, and trust, which are all elements of social capital vital to the success of these enterprises.6

The concept of a continuum enables one to have a more refined understanding of the development of collaborative relationships. The stages along the continuum allow us to characterize four basic types of collaborative relationships, whereas the continuum itself helps us to recognize that relationships do evolve. Some characteristics of a collaboration may more closely resemble the features of one stage, and others may more closely resemble the features of the next. Stages are not discrete points or rigid cells. Therefore, one can analyze the constellation of multifaceted characteristics of a collaboration to identify which characteristics need closer attention and further development in order for the collaboration to move to a later stage along the continuum. The CC is not just an identifier of relationship stages but also a value continuum; the potential for co-creation of value increases as a partnership moves toward the next stage.

There is nothing automatic about progressing along the continuum. In fact, a collaboration can even regress. The collaboration’s movement depends on the actions that the partners take and do not take. Nor is it necessary for a relationship to pass sequentially through all the stages. For example, a business and a nonproft might start with a transactional collaboration rather than with a philanthropic one. Moreover, even at a particular stage there is a range of value-creation potential, and so it is important to identify the value drivers. Our examination of multitudes of cross-sector collaborations has identified three salient value drivers—alignment, engagement, and leverage—each encompassing a constellation of value contributors that are tied to the sources and types of value discussed in the previous chapters. The matrix shown in Figure 4.1 depicts each of these four collaboration stages along with the three value drivers, which we will now proceed to analyze in more detail.

Figure 4.1. The Collaboration Continuum Matrix

Stage 1: Philanthropic Relationships

The traditional and most common relationship is the one between a philanthropic corporate donor and a grateful nonprofit recipient. Corporate philanthropy is significant: in the United States, donations in cash and kind amounted to $14.6 billion in 2011.7 In Brazil, a 2000 study estimated corporate contributions to social projects at $2.3 billion, equivalent to 4 percent of gross domestic product.8 There is no doubt that these flows are important to cash-starved nonprofits and beneficial to donor companies, but the relevant issue to be examined is how a relationship at the philanthropic stage could produce even more value.

Using the CVC analytical elements of sources and types of value, we can characterize a traditional and relatively underdeveloped philanthropic relationship as follows. The resource flow is the company’s unilateral transfer of cash, a generic resource. There is basic resource complementarity in that the company has money that the nonprofit needs, and the nonprofit has the ability to deliver some social good or service that the company deems worthy. Each partner provides inputs, but largely independently of the other. Engagement tends to be infrequent, and interactions are procedural rather than substantive. There is sole creation rather than co-creation of value. The resource transfer enables the nonprofit to sustain or do more of what it has been doing, and this produces some social value. There are some linked interests, but they are few and relatively shallow. A Deloitte survey in the United States indicated that 92 percent of the respondents thought that it is important for companies to make charitable contributions or donate products and/or services to nonprofit organizations in the community.9 Therefore, the mere act of donating will provide some associational value, in the form of reputational enhancement, and can even serve as risk insurance to mitigate negative events that may occur.10 Similarly, having been vetted and selected as a donation recipient can increase a nonprofit’s image in the eyes of other donors.11 The corporation and perhaps the nonprofit harvest some associational value, but it is not necessarily strategically important, and of course those benefits need to be weighed against the costs that both partners will incur in generating them.

The company’s enhanced reputation and goodwill with various stakeholders, including communities and regulators, can positively affect its “license to operate,” which may be at risk in some situations. Reputational enhancement is in part due to the generally higher levels of trust associated with nonprofits, and with the value created for the business when that asset is transferred through association. A McKinsey & Company survey found that 82 percent of European respondents and 84 percent of U.S. respondents trusted NGOs to act in the best interests of society, a level of trust that was twice what the respondents had in companies.12 A survey for the United Kingdom’s Commission on Charities found a mean trust score for nonprofits of 6.3 on a scale of 0 to 10.13 A World Economic Forum study found that almost half the executives surveyed indicated that “protecting reputation and brand” was their reason for partnering.14 The Reputation Institute has calculated that 14 percent of U.S. companies’ reputations are attributable to citizenship efforts.15

The 1992 riots in Los Angeles destroyed a multitude of businesses, but not a single one of the sixty McDonald’s restaurants. Because of the company’s donations to community causes and the good reputation and work of the Ronald McDonald Houses, the community shielded the business from harm.16 A top executive at Duracell has described community service as a form of goodwill banking: “What you’re always most fearful of is bad publicity. Community involvement builds a little bit of a bank account. The benefit will come the day that something unforeseen happens, an environmental accident or a strike, or something that is going to thrust Duracell into the forefront, when we are going to have to start making some withdrawals from that bank of goodwill that hopefully we have built up over a period of years.”17

The key question is this: How can we make the value relationship more robust at the philanthropic stage? The challenge is, in effect, that of achieving progressive value creation as one moves along the Collaboration Continuum, at particular stages as well as across the four stages. Both in the academic realm and in practice, this goal at the philanthropic stage has been characterized in terms of moving toward strategic philanthropy.18

Alignment at Stage 1 (Philanthropic Relationships)

Alignment has linked or linkable interests as its main source of value. The greater the alignment between the partners’ missions, strategies, values, and motivations, the greater the value-creation potential. Alignment does not mean that these elements are identical but rather that they mesh together productively. To begin with, the social or environmental mission focus of the nonprofit should be clearly relevant to the company. For example, several beverage companies, such as Coca-Cola, Nestlé, and Diageo,19 have focused their philanthropy on water conservation. Fomento Económico Mexicano, Sociedad Anónima (FEMSA), the largest distributor of Coca-Cola in Latin America, worked with nonprofits and other community and governmental organizations in Mexico to preserve watersheds by planting 31 million trees between 2008 and 2011. Furthermore, FEMSA established a corporate foundation with an exclusive focus on water conservation. In 2009, Coca-Cola Mexico signed a five-year partnering agreement with a conservation NGO and the government forestry commission to reforest almost 62,000 acres.20

Porter and Kramer would label such an effort “context-based giving,”21 whereby a firm’s donations address some phenomenon with importance to society that is also of strategic importance to the company—in this case, a vital production input. The economic interests of the company are linked to the environmental interests of the nonprofit. A McKinsey & Company survey of 721 top executives around the world found that only about 20 percent considered their philanthropic programs highly effective. The main difference between the more and less effective firms, as the executives described them, was that the philanthropic programs in the more effective firms were addressing the social and political trends most relevant to their businesses.22 This alignment creates the value conduit.

The World Economic Forum study cited earlier23 also found that over 80 percent of the executives who responded to the survey cited “committing to the company’s own values, principles, policies and traditions” as a reason for partnering. This is often expressed as “giving back” or “doing good” that is based more on altruism than on specific utility to the company.24 But even such values-based giving should not be satisfied with good intentions. Random acts of kindness are nice precisely because they are unexpected, but more value can be created when a collaboration’s resources and capacities are focused on and aligned with an important social problem. Doing better at doing good is the preferred value-creation mindset. The global pharmaceutical company Merck developed the drug Mectizan, which can effectively treat river blindness, a serious disease in many African countries, but those afflicted did not have the resources to pay for it. In effect, there was market failure. Therefore, Merck’s CEO, Roy Vagelos, created a drug-donation program, citing the basic values of George W. Merck Jr., the son of the company’s founder: “Medicine is for the people, it is not for the profits.” Merck then identified and partnered with the nonprofits and government agencies needed to deliver the drug to over 25 million people annually.25 Former President Jimmy Carter observed, “Merck showed that the corporate world can, indeed, be committed to the alleviation of suffering. Obviously, Merck doesn’t get anything for these tablets—they give them away free. What they get is the recognition by their own employees and potential customers that Merck has a heart.”26 The rest of what George W. Merck Jr. said reveals an alignment between social and economic value: “The profits follow, and if we have remembered that, they have never failed to appear . . . we cannot rest until the way has been found, with our help, to bring our finest achievements to everyone.”27

Engagement at Stage 1 (Philanthropic Relationships)

One key focal point for engagement is with the social or environmental problem being pursued. One should seek both intellectual and emotional engagement. This requires learning about the problem, its causes, its consequences, and its cures. Thinking of philanthropy with an investment mindset leads to a focus on producing ever-greater returns. Intelligent investing requires being knowledgeable about the investment area and the benefits to be generated. In addition, creating emotional connections with the cause intensifies commitment to the partnership and can stimulate bigger and more durable philanthropic relations.28

Another focal point is the engagement of the organizations’ personnel in the partnership. This can begin by involving them in the identification of the causes to be supported and in the selection of partners. Corporations’ matching-grants programs are one vehicle for such engagement. One survey of 213 major U.S. companies revealed that matching gifts were 11.7 percent of total cash giving, which averaged $695 per employee.29 Through matching gifts, the company is aligning its philanthropy with the social preferences of its employees, thereby creating associational value. Nevertheless, such alignment with diverse individual employees’ preferences will probably not create a coherent action agenda. Therefore, grants matching employees’ donations are useful engagement vehicles but are not a substitute for a strategic focus at the corporate level.

One should strive to move the interactions of company and nonprofit personnel beyond the processes of applying for grants and making donations. Transcending the procedural relationship and moving to a more substantive interactive engagement can deepen mutual understanding. This in turn can lead to more productive use of the donated resources. Corporate employees’ voluntarism is an important vehicle for fostering interactive engagement.30 Almost all major U.S. companies have some form of employee volunteer service,31 with around 500,000 volunteers giving over 9 million service hours.32 Volunteer programs that are relatively informal and marginal to the company’s strategy fall into the category of traditional philanthropy. When these engagements become more highly structured and strategic, however, they progress along the Collaboration Continuum to the transactional stage (discussed more fully in a later section of this chapter).

Consumers are another key stakeholder group, and advertising is the traditional vehicle that companies use to reach them. But who needs the Superbowl? Pepsi decided to abandon that high-visibility advertising venue, with its 100 million viewers, and the company used the $20 million it saved to engage consumers and other community groups through populist philanthropy that leveraged social media.33 Pepsi created an online contest for nonprofits and community groups to nominate their donation candidates, with monthly winners selected by online voting. According to Pepsi’s digital director, “When you use these brand dollars to have consumers share ideas to change the world, the consumers will win, the brand will win, and the community will win. That was a big bet. No one has done it on this scale before.” Respondents used their social networks to garner support for their projects, with almost a quarter of the 77 million votes coming via Facebook. Pepsi saw this not as a way to stimulate short-term sales but rather to cultivate a long-term relationship and brand awareness with consumers and community organizations through this high-engagement philanthropic activity with its ripple-effect dynamic.

The underlying thrust of greater engagement is to begin to create interaction value and to assemble a collaborative constellation that combines the needed complementary resources. Fostering greater engagement requires partners to become more proactive. Rather than waiting for proposals to cross the threshold, one should take the initiative and seek out opportunities. According to a director of the General Mills Foundation, “After so many years of being reactive, we [saw] problems getting worse.”34 Consequently, the foundation began to actively identify specific nonprofits with shared interests and appropriate competencies to address identified problems. As another example, let us turn to the nonprofit social enterprise Goodwill Industries of North Central Wisconsin, which approached the regional newspaper to discuss how the paper might help with Goodwill’s upcoming capital campaign.35 This dialogue revealed that the nonprofit was having problems obtaining enough donated goods during the winter months. The newspaper’s editor offered to help publicize that need, which led to the assembly of a multidonor undertaking. The newspaper printed an insert, created by Goodwill, that described the process for donating merchandise, and a folded plastic bag was attached to the insert. Readers filled the bags and took them to the deposit location, where Boy Scouts, members of the National Guard, and high school volunteers picked them up. This increased and evened out the flow of donated goods to be recycled in the Goodwill workshop, thus avoiding layoffs of the special-needs workers whose employment is the social mission of Goodwill.

Leverage at Stage 1 (Philanthropic Relationships)

Leverage is focused on the nature of the resources as the source of value. As Bob Thust, head of corporate responsibility at Deloitte, has commented, ”The underlying trend is very much [that] corporates want to get more involved through the provision of skills and expertise as well as through traditional forms of philanthropy.”36 Traditional philanthropy largely uses cash as its medium, which is essential to nonprofits’ operations and has the advantage of being applicable to a wide range of uses. Many companies, however, donate their products or services. This moves the philanthropy from generic resource use to organization-specific resource use, which creates greater differentiation for the donor and provides a more specialized asset to the recipient. In one survey, three out of four Americans preferred that companies accompany their cash donations with expertise.37 The regional newspaper mentioned earlier in connection with Goodwill Industries of North Central Wisconsin donated its capacity to publicize Goodwill’s collection campaign. Avon’s Breast Cancer Crusade, a cause highly aligned with the company’s consumer base and developed in collaboration with the National Alliance of Breast Cancer Organizations, used Avon’s sales force to raise donations by selling a range of products, pins, candles, pens, and pink ribbons, and the company organized other fund-raising events as well, generating donations of $740 million over a period of twenty years to cancer programs around the world.38

In the mid-1990s, Microsoft sought to move its philanthropy to a more strategic and higher-value platform.39 While preserving its generous matching-grant program with employees, it decided to create a focused approach that was more aligned with its strategy and that would leverage its specialized assets. The result was a partnership with the American Library Association (ALA) through which Microsoft would donate computers and software to public libraries throughout the country. ALA and Microsoft shared the vision of making knowledge widely available to the public. The donation in kind, combined with the ALA’s technical expertise, provided a technology package that enabled a transformation of services in the libraries that was far greater than would have been possible through a simpler cash contribution. The Libraries Online project garnered Microsoft an award as the most philanthropic company in the country. Furthermore, it stimulated greater use of the Internet by the public, thereby expanding the software market, an example of philanthropy focused on and aligned with demand factors; according to Porter and Kramer, “Philanthropy can often be the most cost-effective way to improve [the] competitive context, enabling companies to leverage the efforts and infrastructure of nonprofits and other institutions.”40

Another avenue for multiplying philanthropic value creation is to leverage partners’ connections, a form of organization-specific intangible asset, so as to engage multiple businesses or nonprofits in a philanthropic project. In 1997, the Beta San Miguel Group, Mexico’s largest private producer of sugar, entered into a partnership with the nonprofit school Colegio de San Ignacio de Loyola Vizcaínas to create the Programa Emalur, with a focus on education and community development in the sugar-producing zones.41 Over the years, success in one initiative led to creation of another as additional community needs and communities were addressed. To support this geographical and programmatic expansion, the partners used their connections to enlist more donors, who often provided in-kind contributions, and additional nonprofits with the needed new capacities. This broadened and leveraged engagement increased the scale and social value of the philanthropic undertaking. The business partner fulfilled its corporate values and also created a healthier and stronger operating environment.

Stage 2: Transactional Relationships

The nature of the relationship at the transactional stage is quite different from that at the philanthropic stage; many of the kinds of benefits generated at the philanthropic stage continue, but they are magnified. The collaborative arrangements are more focused, with explicit objectives and programmed activities, responsibilities, and timetables. There is mutual access to each party’s resources, which, when incorporated synergistically with their nonshared resources, enhance performance capabilities.42 In terms of the sources of value, we see the following shifts:

• Resource directionality becomes bilateral, with explicit reciprocal exchange.
• Resource complementarity is greater, and organizational compatibility is more significant.
• Resource nature is shifted to more specialized assets.
• Linked interests are clear in that creating value for one’s partner is essential to creating value for oneself.

Regarding the types of value, associational value is the predominant benefit for businesses, through its effects on key stakeholders. The magnitude of transferred-asset value increases for nonprofits, and one goes beyond the monetary donation that dominates the philanthropic stage. In the words of Alex Gourlay, CEO of the Health & Beauty Division of Alliance Boots, a U.K. company, “In a world of complex sustainability issues it is our fundamental belief that we can achieve more by working together and sharing our respective knowledge and best practice.”43 New opportunities for interaction value and synergistic value arise for both partners. The benefits to the partnering organizations tend to be clearer and more quantifiable in some ways, although the attainment of greater societal welfare is often less clear.

Types of Transactional Relationships

Transactional relationships can take many forms, but the more common ones include highly structured employee volunteer programs, cause-related marketing (CRM), sponsorships and licensing, certification arrangements, and problem-focused projects.

Employee Volunteer Programs

This form of transactional collaboration is perceived as highly valuable to companies and nonprofits. According to Lim, 92 percent of 131 major U.S. corporations that were surveyed had formal employee volunteer programs.44 A survey of employees found that 75 percent of the respondents wanted to be involved in company-sponsored volunteer days.45 Volunteer engagement is found throughout the world; for example, the Brazilian Volunteer Partners Network works with 2,522 companies.46 Greater value is generated when the volunteer program is integrated into a clearly structured strategic collaboration. According to the Global Corporate Volunteering Research Project, “Planning, setting goals, managing for results, accountability—ultimately these must become routine if volunteering, indeed all forms of community involvement, is to become a core activity.”47 For example, General Electric (GE) focused collaborative efforts on strengthening low-performing school districts near several of its major facilities over a five-year period.48 In addition to GE’s sizable cash donations, the company’s personnel tutored and mentored students, advised administrators, and provided technology, helping 100,000 students improve their math scores by 30 percent. The company was able to leverage its generic cash donation by combining it with the more specialized skills of the company volunteers. That package of transferred assets was aligned with the needs of the partnering schools.

Meaningful and well-managed engagement of employees in community service does not simply produce social value through this transfer of economic resources to the partnering nonprofit. It also reverberates back to the company, with several economic benefits. It is a reciprocal value exchange. There is associational value in the form of greater affinity with the company on the part of actual and potential employees. A survey by the Conference Board showed that 90 percent of 454 companies judged their volunteer programs as helping to attract better employees.49 In a 2010 survey of employees, 57 percent agreed with the statement “My company’s commitment to addressing social/environmental issues is one of the reasons I chose to work there,” and 79 percent felt “a strong sense of loyalty” to their companies.50 Morale in companies with high community involvement has been shown to be three times as high as morale in other companies, and morale can positively affect loyalty and retention.51 Job performance can be enhanced by these attitudinal influences and skill development.52 In a survey of one group of companies with award-winning volunteer programs, 97 percent of the respondents said that volunteering built teamwork, and 74 percent reported improved productivity.53 A survey of multinational companies with international volunteer programs cited skill development and corporate affinity as the biggest benefits.54 One senior executive of a financial services firm said, “It’s important to keep the people within my ranks involved and happy in the community, to avoid being attracted to move elsewhere. If they have ties with a charity, it’s going to be a lot harder for them to uproot.”55 IBM’s Corporate Service Corps places top rising talent as volunteers with nonprofits and government entities in emerging markets, and this practice results in strengthening of their leadership skills, expanded cultural intelligence, and global awareness; almost all Corporate Service Corps members stated that the experience had increased their loyalty to the company.56

Researchers’ observation that greater social value can be created through deployment of the specialized skills of employees is consistent with our concept of leverage as a value driver; for example, if employees have financial expertise, then it may be more productive to let them use it instead of having them engage in manual labor, such as painting a school, if they don’t have much skill in that area.57 Nevertheless, it is important to recognize that significant skill development, attitudinal enrichment, and relational capital are generated through partner interactions in whatever form they take. If employees’ underlying motivations and desire for benefits are satisfied by volunteer experience, and if volunteering is reinforced by strong support from the company and the nonprofit, then there is a greater likelihood that employees will become long-term repeat volunteers, an outcome representing higher transferred-asset value for the nonprofit as well as for the company.58 This is an example of the interaction value arising from mutual engagement. One of the joint benefits of this type of interaction is greater donor “stickiness” and a higher degree of commitment between the partners than would have occurred with only a monetary contribution.

One frequently used form of business executives’ engagement with nonprofits is through their service as board members, usually with support from their companies. This is a form of microlevel-to-mesolevel collaboration, whereby an individual’s resources are transferred to the nonprofit organization. In one survey, 81 percent of Harvard M.B.A. graduates reported being involved with nonprofits, and 57 percent reported service as board members.59 This is a bilateral value exchange. Executives and nonprofits alike state that the greatest benefit comes from the application of their business expertise to strengthening nonprofit governance, with accompanying personal and company donations being of secondary importance. Of course, overcoming the organizational differences between businesses and nonprofits is a significant challenge to leveraging this expertise successfully.60 One CEO board member told the nonprofit’s executive director, “If all I need to do is write checks, I’ll go somewhere else. I want to go where I am needed. You have to involve me, because involvement leads to understanding. Understanding leads to commitment. Unless I’m involved, I can’t be committed, and if I’m not committed, I’m never going to give you any money.”61 The most important benefits perceived by the business board members are satisfaction from making a meaningful contribution, but they also expand their networks, develop their collaborative skills for leading peers, and broaden and enrich their perspectives from the interaction with more diverse colleagues. Greater breadth of view and empathy enhance leadership capability.

Cause-Related Marketing

This form of collaboration enjoys widespread public support. According to Cone Communications, 88 percent of American consumers who were surveyed in 2010 reported that they deemed it acceptable for companies to involve a cause or an issue in their marketing, a figure that was 33 percent higher than the figure reported in 1993.68 Furthermore, 85 percent of the surveyed consumers reported having a more positive image of a product or a company when the company supported a cause they cared about, and 83 percent reported wishing that more of the companies, services, and retailers they used would support causes. For products equal in quality and price, 80 percent of the surveyed consumers reported being likely to switch to a company that supported a cause, 61 percent described themselves as willing to try a new product, 46 percent said they were willing to use a generic brand, and 19 percent said they were willing to use a more expensive brand.69 Another survey, this one targeting 8,000 adults in sixteen countries, found that about 72 percent of the respondents were willing to recommend and promote a product associated with a social cause.70

Companies’ experiences confirm the effectiveness of CRM. American Express’s pioneering 1983 affinity marketing campaign to support the restoration of the Statue of Liberty donated one cent for every transaction and one dollar for every new American Express card application. The company’s similar, smaller effort in 1982 had revealed this potential by raising $100,000 for the San Francisco Arts Festival.71 In the first month of the Statue of Liberty campaign, American Express card usage increased 28 percent, and applications rose 45 percent, generating $1.7 million in donations.72 Coca-Cola’s six-week promotion to support Mothers Against Drunk Driving (MADD) boosted the company’s sales by 490 percent in 400 Walmart outlets and provided the nonprofit with fifteen cents for each case sold.73 To address the additional question of whether consumers would pay more for a product related to a social cause, Hiscox and Smyth conducted experiments in a major retail store in New York City and not only discovered an increase in sales of 12 to 26 percent for products labeled as having been manufactured under good labor standards but also found that when prices for such products rose by 10 percent, demand also rose, and sales increased by 21 to 31 percent.74

Sponsorships and Licensing

A variant of cause-related marketing is a company’s financial sponsorship of a nonprofit’s cause or event, or the company’s licensing the use of the nonprofit’s name or logo. Much of the preceding value analysis of CRM partnerships is applicable to sponsorships and licensing, and so we will highlight only some of the key differences. The financial transfer is not a function of the sales generated but is instead a previously negotiated fee. There are no established standards for such fees, and the preceding discussion of nonprofits’ brand valuation is therefore relevant to the determination. Analogously, the nonprofit needs to enter into its calculations the added value it will receive from the greater visibility accruing to it through the company’s promotion. In one CRM partnership, the Nature Conservancy considered that exposure even more valuable than the accompanying cash payment from its corporate partner, Canon.75

Although alignment is equally important, the engagement mechanisms are different. There is no direct triggering mechanism from consumers making purchases. Nevertheless, event sponsorships provide direct engagement of individuals involved in the activity. Sometimes this involvement can be quite powerful. The Susan G. Komen Race for the Cure began as a 5-kilometer race in Dallas with 800 participants. By 2011 there were 140 races organized by 100,000 volunteers for more than 1.5 million entrants, with 18 races scheduled for 2012 in thirteen countries. These events serve to educate and motivate as well as to fund-raise. Survivors, families, and friends participate with intense emotional engagement to celebrate the struggle, commemorate lost loved ones, and support the cause. The collective engagement creates social capital and valuable support networks. In addition to funds raised from the participants, contributions flowed from the corporate sponsors of the 2012–2013 Race for the Cure Series. These sponsors included American Airlines, Ford, New Balance, RE/MAX, Self magazine, Stanley Steamer, Walgreens, Bank of America, Yoplait, ZTA, and Georgia-Pacific.76

Because there is a wide range of sponsorships, one useful distinction is based on the difference in primary motivation between commercial and social sponsorships.77 Whereas commercial sponsorships place dominant emphasis on generating greater corporate revenue, social sponsorships give priority to meeting social needs. In commercial sponsorships, actions are considered more narrowly as tactics to be evaluated, like other marketing tactics,78 and they carry legal implications for nonprofits.79 Examples of commercial sponsorships would be the sporting events that captured 70 percent of sponsorship dollars in 2012.80 In a social sponsorship, the partners’ interaction has an explicit focus on how the collaboration can most effectively address a social problem. Economic value will be derived through the synergistic links to the social or environmental value produced, but economic value is not the primary concern or the dominant motivating factor.

Certification Arrangements

As pointed out in Chapter Three, one of the more recent forms of transactional collaboration is development of social and environmental standards for various products and practices, with accompanying certification systems to corroborate compliance. These systems have often emerged from confrontations over business practices that were deemed socially or environmentally harmful, but experience shows that conflict can pave the path to collaboration. For two years, the Rainforest Action Network mounted over 700 demonstrations at Home Depot stores and annual meetings, to protest the company’s purchasing of wood products from old-growth forests. Home Depot announced in 1999 that it would cease that practice and give preference to lumber from sustainably managed forests, as certified by the Forest Stewardship Council. The Rainforest Action Network then took out a full-page ad in the New York Times that urged consumers to shop at Home Depot.81 Similar conversions have also occurred, with a wide array of companies agreeing to purchase fair trade products, financial institutions adopting the Equator Principles (see Chapter Three) for socially and environmentally improved lending, mining firms agreeing to the Initiative for Responsible Mining Assurance, and many other examples. These are distinct from other transactional relationships because they are rooted in changing business practices. Seen through our value lens, these relationships have three distinct but interrelated components: standards, certification, and marketing.

Standards of business practice are created and aimed at changing existing ways of operating, to remove deleterious effects and generate positive ones. The development of the standards involves, in varying forms and degrees, the interaction of businesses and nonprofits and sometimes governmental entities. Engagement of the companies has often proceeded more by the stick than by the carrot. Actual or threatened demonstrations, negative advertising, and boycotts have been relatively effective in dragging the affected companies into dialogue. The processes have varied, but the underlying source of value has been linked interests, sometimes by way of forced linkages. On the side of positive incentives was the prospect of capitalizing on consumers’ growing interest in social and environmental causes, or of ensuring a sustainable supply of an endangered raw material, such as depleted stocks of fish. The process of creating the standards leveraged the complementary competencies and knowledge of the companies and the advocacy organizations. The participation of many companies and NGOs multiplied this leverage. Unilaterally set standards would have been either irrelevant or unacceptable. Intensive interaction was essential, and it represents another type of value emerging from the process. Mutual and substantive understanding was broadened and deepened, as was the ability to work with adversaries until they were converted into allies with shared interests.82

Once standards are set (although refinement continues), the certification process occurs. Beyond the value of final approval of practices that meet the standards, the certifying process generates interaction value because it enables the company to identify weaknesses and make corrections in its practices, often with the assistance of an NGO’s proprietary or specialized knowledge.83 It is the change in internal business practices that creates the social and environmental value. Often the new methods produce direct economic value by achieving cost efficiencies, productivity improvements, or product enhancements.

The final value emerges from the market value of the certification label. The company and its branded products bearing the certification label communicate externally to consumers and other stakeholders an enriched value proposition represented by the social and/or environmental benefits produced by compliance with the standards. There is associational value with the certifying nonprofit, which transfers credibility to the company through its logo. The transaction usually also involves a licensing fee to the certifying agency, often a nonprofit. As with the other types of cause-related marketing configurations, the company needs to surround the logo with the appropriate communication efforts to make the worth of the certification visible. As ecolabels proliferate, with more than 400 now in the marketplace, their power to differentiate a brand is reduced.84 In effect, certification standards and labels raise the minimum-performance bar. Partnering must move to higher levels of collaborative value creation.

Problem-Focused Projects

Undertakings sharply focused on addressing a particular problem constitute a somewhat distinctive form of transactional collaboration, one that merits mention here. There are specific goals and project completions, and there is often no cash transfer involved, but core competencies are mobilized.

Alignment at Stage 2 (Transactional Relationships)

There are multiple paths of alignment between a company and a cause. Because consumers’ purchases are the trigger that releases the cash flow, aligning the cause with consumers’ interests is critical.

Engagement at Stage 2 (Transactional Relationships)

CRM has an advantage over traditional corporate philanthropic donations to a cause because it provides consumers with a direct engagement opportunity. One survey found that when respondents chose between two companies that had similar products and supported similar causes, 53 percent preferred the one that allowed them to have an impact by tying a purchase to a donation.102 Buying is a form of active engagement, and the social cause enables emotional connection and satisfaction. It expands the value proposition to the consumer and cultivates a richer relationship with the company. Experiments show that local donations and positive framing of messages increase consumer engagement.103

Danone de Mexico, a subsidiary of the French yogurt producer, discovered through market research that although consumers regarded the company’s products highly, the company was perceived as rather detached from consumers, a quite disturbing finding. A company spokesperson stated, “Danone’s social policy consists of what we call the ‘double project’: our social and economic objectives cannot be separated.”104 Consequently, Danone saw supporting a social cause through a CRM partnership as a potentially effective way to build emotional connection with consumers. After considering many potential partners, the company selected La Casa de Amistad, which provided housing and medical care for children who had cancer and were from low-income families.

As part of the mutual familiarization process, Danone’s president visited the facility and met the children. He was deeply moved, and this emotional engagement strengthened the commitment to the partnership. The partners’ “Let’s Build Their Dreams” campaign was launched with promotional material explaining to consumers that each yogurt product they bought would benefit the children. The company’s product was seen as nutritious and therefore as aligned with the cause of better health.

The cause had high evocative power for consumers’ emotions and influenced their purchasing behavior and perceptions of the company. Danone’s marketing director commented, “During the campaigns, our prices remain the same. The competition lowered theirs in response, and though we didn’t, we still kept our [market] share.”105 In effect, consumers were willing to pay a premium to support the cause. The marketing director went on to say, “We detect a brand-image evolution in some key attributes related to proximity, as a company that cares about children. We have turned from a cold top-quality brand into a partnering and social-citizen brand.”106

CRM campaigns that are one-shot promotions cannot create a durable relationship; Danone’s partnership went on for six years. One action by Danone’s nonprofit partner, an action of which the company knew nothing in advance, reinforced the relationship by using a huge donated billboard on one of Mexico City’s major commuting arteries to publicly thank Danone for its support. The company’s public relations manager exclaimed, “People remember the campaign every time they see it. No other institution advertises like that.”107 Beyond direct consumers, the public was engaged, and the company reported that new-employee recruits often mentioned the campaign as one of their motivations for being attracted to the company. Cone Communications reports that 90 percent of consumers who were surveyed said they wanted companies to tell them the ways in which they were supporting causes, and that 34 percent of the respondents said they would choose another brand if a company did not offer enough information about how a purchase would affect the cause.108

Communication is critical for engagement, and social media have opened up powerful opportunities for CRM, as revealed by the “Mean Stinks” campaign to combat bullying that was launched on Facebook in January 2011 by Secret, a brand of deodorant from Procter & Gamble. The alignment of the cause with the company and the product was explained by Laura Brinker, a spokesperson for the company: “We’re more than just products and brands . . . we’re actually doing something meaningful for our consumers. Secret as a brand inspires women to be more fearless . . . Bullying is one area that we know is of great concern to our target consumer, both young women and mothers, so understanding how to identify these behaviors and stand up for yourself and your friends is one way to express your fearlessness. On a more simple articulation, Secret stands against things that stink, whether it’s body odor or mean behavior like girl-on-girl bullying.”109 The Secret brand’s Facebook page had more than 1 million fans, and the “Mean Stinks” launch increased their engagement exponentially. In addition, the campaign motivated 10,000 women to trigger $1 donations to the National Bullying Prevention Center run by the Parent Advocacy Coalition for Educational Rights (PACER) in connection with coupon requests and downloads. This kind of engagement is a form of co-creation that taps consumers’ knowledge, passion, and networks.110 Since the campaign, there has been a noticeable upward bump in sales of Secret.

Leverage at Stage 2 (Transactional Relationships)

The associational value central to CRM transactions emerges significantly from the leveraging of partners’ brands. How consumers react to a brand depends on different elements of the marketing mix, including the social dimension.111 Brand valuation is common for businesses but uncommon for nonprofits. This complicates the value exchange and can lead to undervaluation. Brand-valuation methodology for nonprofits has been developed;112 when applied to Habitat for Humanity International, it revealed a brand value of $1.8 billion, equivalent at the time to the brand value of Starbucks Coffee Company.113 Brand value is tightly related to the trust that constituencies have in institutions, and great care should be taken by partners in considering how the cause-related marketing relationship will affect brand identity.114 Leveraging this asset can be a powerful value driver, but protecting it from harm is equally important. In one survey of 30,000 people in twenty-five countries, 58 percent of the informed public considered NGOs, for the fifth year in a row, to be the most trustworthy institutions, a response rate that was even higher in China (76 percent) and India (68 percent); trust in business was lower, but not all businesses were perceived as being the same, with technology companies seen as trustworthy by 79 percent of respondents and financial services companies trusted by only 45 percent.115

A second form of leverage is the use of partners’ special capabilities. The standard CRM arrangement uses the company’s whole set of business operations to promote and sell the cause-related product. An executive from the Nature Conservancy commented as follows on the benefit deriving from company capabilities in a cause-related marketing relationship with Canon USA: “As long as we have some control over how our trademarks appear and how our image is used, we’re very interested in having them take advantage of that right, because it’s garnered us millions and millions of exposures in media that we could never hope to purchase for ourselves.”116 The higher visibility arising from the firm’s media-management skills as it promoted the nonprofit’s brand and mission was of even greater value than the cash transfer to the nonprofit. This was also true of the partnership, described earlier, between American Express and Share Our Strength. There was mutual leveraging of complementary resources.

A third form of leverage is expansion of the CRM configuration into a multiparty undertaking. Kraft Foods’ incorporation of the Five Guys restaurants into its food-donation campaign broadened the set of specialized assets deployed in the endeavor so as to generate more donated meals.

A much more expansive multiparty CRM effort is the (Product)RED campaign launched in 2006 at the World Economic Forum by the musician and activist Bono and Bobby Shriver of Debt, AIDS, Trade, Africa (DATA) and the ONE Campaign. The aim is to leverage private-sector capabilities in raising awareness and funds to help eliminate AIDS in Africa. Over twenty-five leading companies have created a product using the (Product)RED logo, with a portion of the proceeds flowing through the (Product)RED company to the Global Fund to Fight AIDS, Tuberculosis and Malaria.117 For example, Nike sold red shoelaces and donated 100 percent of the revenue. Apple offered a red iPod Nano and donated 50 percent of the profits. Armani sold red sunglasses and a watch and donated 40 percent of the gross profit margin. American Express issued a red card in the United Kingdom and contributed 1 percent of card charges. Starbucks offered holiday beverages served in red cups and donated about 3 percent of the price. The Global Fund reported that by 2012 the (Product)RED campaign had contributed over $195 million. Before then, corporate contributions to the Global Fund had been only $5 million, and the difference shows the leverage of the multiparty CRM configuration. Neither the Global Fund nor the (Product)RED campaign charges overhead, and the funds raised have helped provide life-saving antiretroviral therapy for 220,000 HIV-positive people, placed over 130,000 HIV-positive pregnant women on preventive antiretroviral therapy to reduce the risk of mother-to-child transmission, and provided 13 million people with HIV testing and counseling.118 There have been critics of (Product)RED, however, especially in the campaign’s early days, when the amount that companies had spent on promoting the campaign far exceeded the amount raised for the cause.119 While the advertising expenditures generate economic value for the companies in terms of value derived from association with the cause, most consumers clearly want companies to tell them what causes they support. Furthermore, the advertising serves to raise the visibility of the problem, which is particularly important with respect to social problems in distant countries. Helping overcome the “out of sight, out of mind” problem has societal value.

Stage 3: Integrative Relationships

All the types of transactional relationships examined in the previous section of this chapter are now broadly accepted by the public and widely practiced among businesses and nonprofits. This is highly positive in that it indicates significant progress along the Collaboration Continuum. But the omnipresence of transactional relationships also makes it more difficult for collaborations to differentiate their efforts from those of other collaborations. This is what led Diane Knoepke, vice president for client leadership at IEG Consulting Group, to make the following observation in a 2011 report published by the Association of Fundraising Professionals: “The right transactional cause campaign can make sense if it is part of a well-planned nonprofit partnership strategy. Without a bigger-game approach, however, that campaign becomes background chatter that consumers are quick to avoid or deride.”120 And this points us in the direction of integrative relationships.

A nonprofit and a business can evolve together toward an integrative relationship, building on their interactions at the philanthropic and/or transactional stages. A collaboration has arrived at the integrative stage when “the partners’ missions, people, and activities begin to experience more collective action and organizational integration” and when “the relationship begins to look like a highly integrated joint venture that is central to both organizations’ strategies.”121

Alignment at Stage 3 (Integrative Relationships)

At the integrative stage there is much richer and closer alignment. The connections are deeper and broader. The collaboration is central to the missions and core strategies of both partners. It is no longer a nice thing to do but rather a necessary part of everyday operations, essential to institutional success. The collaboration has become a key success factor for both partners. The partners’ cultures and values are not just compatible but intermingled. There is a reconciliation of their different value-creation logics so as to achieve a viable value-frame fit;122 in effect, they get on the same “value page.” The partners’ collaborative value mindset conceives of value broadly, with different types of value seen as not only compatible but also synergistic. One’s primary role as partner is seen as that of a value adder rather than that of an extractor. Timberland’s former CEO, Jeffrey Swartz, refers to the company’s nearly twenty-five-year integrative relationship with City Year as characterized by a state of “boundarylessness,” saying, “It’s not them and us . . . Our organization and their organization, while not completely commingled, are much more linked. It’s not simply personal; it’s also collective. While we remain separate organizations, when we come together to do things, we become one organization.”123

Engagement at Stage 3 (Integrative Relationships)

Engagement intensifies, and the scope expands. Internally, the participation is top to bottom and spans all areas and departments. Externally, engagement is throughout the value chain. For example, as Kanter notes in connection with one welfare-to-work collaboration, “While Marriott provides uniforms, lunches, training sites, program management, on the-job training, and mentoring, its partners help locate and screen candidates and assist them with housing, child care, and transportation.”124 Each partner’s full range of stakeholders is engaged, either directly or through communication. The mindset is one of inclusiveness and interdependence. The intensified process of working together creates even greater interaction value. The repeated discovery of linked interests and of synergistic value creation motivates still closer collaboration to co-create even more value.

It is at the integrative stage that interaction value emerges as an even more significant benefit derived from the closer and richer interrelations between partners. Bowen, Newenham-Kahindi, and Herremans assert that “value is more likely to be created through engagement which is relational rather than transactional.”125 The intangible assets that are produced—for example, trust, learning, knowledge, communication, transparency, conflict management, social capital, sensitivity to social issues—have intrinsic value to the partnering organizations, to individuals, and to the larger society but are also enablers of integrative collaboration.

John Garrison, former CEO of Easter Seals, said that his organization’s ability to develop deep relationships with several companies was greatly enabled by the establishment of an emotional connection between the Easter Seals children and the CEOs and their employees.126

Psychological bonds foster cohesivenessin a partnership. The deeper mutual trust and commitment also mean that when your partner encounters difficulties, including attacks by others, you try to assist rather than flee. During the Timberland–City Year integrative alliance, there have been two distinct instances of each partner coming under external fire. In both instances, the other partner offered solidarity and assistance in dealing effectively with the problems. As one manager of a health care company puts it, “You weather those storms, and I think that’s a sign of a good partnership, that unforeseen things happen but you respectfully and mutually work through them with a sense of urgency.”127

Responsiveness to a partner’s needs is an essential element of an integrative relationship. The executive director of United Way of Seattle, which had a long-standing and deep relationship with the retailer Nordstrom, recounted such a situation when Blake Nordstrom called him and said, “ ‘We’re looking at our community programs nationally. Can you help us?’ We put a lot of work in on this and gave them some good recommendations. You have to be prepared to give that level of effort, because when you’re in a close relationship, they will always be coming to you for advice.”128

Leverage at Stage 3 (Integrative Relationships)

The partners deploy and combine their specialized and key success-related resources. This intermingling of high-powered complementary assets creates an entirely new constellation of productive resources. This holds potential for co-creating greater value for the partners and for society through synergistic innovative solutions. Synergies are often emergent rather than immediately apparent. The harnessing of synergism emerges from close and continual interaction of the collaborators. In a collaboration that IBM undertook with schools, the company’s employees had their offices in the schools, and they interacted constantly with the teachers in a continuous co-creation process of learning, feedback, and development. Whereas collaborations at the transactional stage tend to be clearly defined and to last for a specified period, innovative co-creation has a different dynamic at the integrative stage. Kanter notes, “Like any R&D project, new-paradigm partnerships require sustained commitment. The inherent uncertainty of innovation—trying something that has never been done before in that particular setting—means that initial project plans are best guesses, not firm forecasts.”129 The integrative mindset sees collaborative innovation as an investment process with a long time frame.

The nonprofit Alliance for Environmental Innovation worked with companies in collaborations in which the partners integrated their respective expertise to co-create innovative solutions aimed at environmental improvement of the companies’ products and processes. These collaborations’ larger aspiration was to create best practices that would be emulated throughout a sector, thus multiplying the creation of social value. The alliance collaborated with UPS and its suppliers in integrated, cross-functional teams that combined their respective technical expertise in material-usage life cycles to form a collective discovery process that “created new designs and technologies, resulting in an almost 50 percent reduction in air pollution, a 15 percent decline in wastewater discharge, and 12 percent less in energy usage.”130

In connection with the evolution of Base of the Pyramid (BoP) undertakings, Brugmann and Prahalad highlight co-creation that “entails the development of business models in which [a company] become[s] a key part of [an] NGO’s capacity to deliver value, and vice versa.”131 Aravind Eye Hospital’s nonprofit Aurolab, in India, manufactures low-cost intraocular lenses to restore cataract patients’ vision, sells to 109 countries, and holds 8 percent of the global market. It partnered with the social entrepreneurship nonprofit Ashoka, the International Agency for the Prevention of Blindness, and Deutsche Bank to set up a $15 million loan fund to enable eye-care groups to expand their services through this new “hybrid value chain.”132 Collaborative entrepreneurship is a central strategy and tool used by what Ashoka’s Bill Drayton labels “changemakers,” who aim to create powerful social innovation.133 According to Drayton and Budinich, who see the alliance of business with nonprofits as imperative, “If you’re not thinking about such collaboration, you’ll soon be guilty of strategy malpractice.”134

Although partner benefits are a priority at the integrative stage, producing societal value also takes on greater importance. Until social value has become an integral part of a company’s value system and operating strategy, the company cannot undertake an integrative collaboration. As discussed in Chapter Two, the collaborative value mindset synergistically integrates economic, social, and environmental value. According to Googins, Mirvis, and Rochelin, one of IBM’s values is innovation that matters for the world, with the corollary that collaboration matters; the company takes the approach that in its “socio-commercial efforts, the community comes first,” these researchers say, and that “only when the company proves its efforts in society . . . does it . . . leverage marketing or build commercial extensions,” and they cite Sam Palmisano, then the company’s CEO: “It’s who we are; it’s how we do business; it’s part of our values; it’s in the DNA of our culture.”135 The more institutionally embedded CSR is, the more powerful the value co-creation process will be.

Stage 4: Transformational Relationships

The new stage that we have added to Austin’s original Collaboration Continuum (Austin, 2000) represents the most advanced and still-emerging type of partnering relationship. While generally building on and carrying with it the characteristics of a highly developed integrative collaboration, the transformational stage sees alignment focusing primarily on societal problems, engagement broadening to more complex collaboration configurations, and leverage arising from system-changing innovations. This stage represents collaborative social entrepreneurship that, in the words of Martin and Osberg, “aims for value in the form of large-scale, transformational benefit that accrues either to a significant segment of society or to society at large.”153 In this connection, another good source is the work of Nelson and Jenkins on corporate investment in social investment.154 While the locus of the transformation is external, internal transformation is a prerequisite. The degree of difficulty at this stage increases significantly. As McKinsey & Company’s experts put it, however, “The rewards of success can be large and lasting. Companies that can meet difficult environmental, social and governance (ESG) challenges will be positioned to succeed in the years ahead, especially in markets that require new business models and untraditional partnerships.”155

Alignment at Stage 4 (Transformational Relationships)

The partners direct their collaboration toward having an impact on significant social or environmental problems. Co-creating societal betterment is the partnership’s principal orientation. This requires reaching agreement on what Selsky and Parker refer to as a “social issues platform” for the collaboration.156 There is joint learning about the problem and its relevance to the partners.157 The linked interests are focused more on the connections between the partners and on the societal problem than on the partners themselves. Similarly, the alignment has to do with how the conjoined efforts of the partners can effectively address the selected problem. This focus graduates from narrower organizational interests to ever-higher levels of system change.

Kanter observes that in highly successful enduring companies, “articulating a purpose broader than making money can guide strategies and actions, open new sources for innovation, and help people express corporate and personal values in their everyday work,” and she notes that these companies “undertake actions that produce societal value—whether or not those actions are tied to the core functions of making and selling goods and services. Whereas the aim of financial logic is to maximize the returns on capital, be it shareholder or owner value, the thrust of institutional logic is to balance public interest with financial returns.”158 Institutional logics also shape cross-sector social partnerships.159 This entwining of public and private interests will require organizational science to use more interdisciplinary approaches to understanding the value creation generated by collaborative structures.160

A further alignment involves creating one’s self-identity as an agent for transformational change. Guilherme Peirão Leal, CEO of the leading Brazilian cosmetics company Natura, states, “We need to stop thinking of our firms as business enterprises and begin thinking of them as social transformation agencies.”161 The multinational pharmaceutical company GSK spearheaded a multisector global alliance aimed at eliminating lymphatic filariasis; the company’s CEO later made the even more socially transformative decision to put all the company’s patents for neglected tropical diseases into the public domain.162 Societal betterment was deemed a higher priority than intellectual property rights. Howard Schultz of Starbucks also reflects on this new phase: “The conversations we’re now having about the impact that we could have in the world, around our responsibility that goes beyond making a profit, have us all pretty excited. And maybe Starbucks could be a role model for others. We need to selectively speak out, as we have been, on these issues and take these issues on and not hide behind them. One issue is how we can leverage the brand not only to sell things but leverage the brand to create an ongoing message about what we stand for and ask others to help us, partner with us.”163

Engagement at Stage 4 (Transformational Relationships)

At the transformational stage, because the change agenda and aspirations are much more ambitious, collaborations need to be correspondingly broader and more complicated. Larger-scale change dictates expanded engagement. Consequently, the partnering-dyad format often morphs into a multiparty configuration, within sectors as well as across business, nonprofit, and government sectors.172 Dealing with climate change, for example, requires engagement with local, national, and international government organizations, companies, and NGOs.173 Kania and Kramer, on the basis of their examination of several successful multiparty collaborations, assert that “substantially greater progress could be made in alleviating many of our most serious and complex social problems if nonprofits, governments, businesses, and the public were brought together around a common agenda to create collective impact.”174 Eggers and Macmillan refer to these collaboration constellations as “solution ecosystems,” whereby organizations from all sectors form close relationships and combine their complementary capabilities to effectively address such complex global problems as affordable housing, access to electricity and potable water, prevention of fatal diarrhea and other diseases, and human trafficking.175

Central to attaining significant transformation is having a collaborative mindset that places higher priority on what can be achieved collectively than on the narrower interests of individual institutions’ interests. In transformational collaborations, the end beneficiaries also take a more active role in the transformation process.176

The GE Global Innovation Barometer 2011 found that 86 percent of the respondents agree that “21st Century innovation is about partnerships between several players more than the success of an organization alone.”177

Leverage at Stage 4 (Transformational Relationships)

Transformational innovation is the fulcrum of leverage at this stage. Although innovation is also central to the integrative stage, at the transformational stage the aim is to create what Christensen and colleagues call “catalytic social innovations” that disrupt existing systems.194 Phills, Deiglmeier, and Miller define social innovation as “a novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions.”195 The Centre for Social Innovation defines social innovation as “new ideas that resolve existing social, cultural, economic and environmental challenges for the benefit of people and planet. A true social innovation is system-changing—it permanently alters the perceptions, behaviours and structures that previously gave rise to these challenges.”196 The GE Global Innovation Barometer 2011 revealed that 86 percent of 1,000 executives who were surveyed in twelve countries strongly or somewhat agreed that innovation in the twenty-first century will be about partnerships among multiple players rather than about the success of single organizations, and 77 percent expressed the belief that the greatest innovations will be those that help meet human needs rather than those that bring the greatest profits.197

The essential and ever-present question that each of the groups in the following case examples must ask themselves and each other in designing their collaborations is this: What is the distinctive and significant value that each organization can contribute toward the attainment of the collective transformational goal?

Reviewing the Collaboration Continuum

The third component of the CVC Framework enables us to understand how value creation changes as partner relationships evolve through the philanthropic, transactional, integrative, and transformational collaborative stages. In different ways and degrees, each stage taps into the four sources of value (resource directionality, resource complementarity, resource nature, and linked interests) and generates the four types of value (associational value, transferred-asset value, interaction value, and synergistic value), creating economic, social, and environmental value for partners, individuals, and society.

The three interrelated value drivers—alignment, engagement, and leverage—propel the collaboration to greater and greater value co-creation across the Collaboration Continuum. We have demonstrated how each value driver encompasses a constellation of value contributors that change in their nature and significance from one relationship stage to another. Each of these value contributors serves as a useful descriptor of the different stages, but, what is more important, each one also represents variables for analysis and managerial action. Let us summarize the three value drivers and how their respective value contributors evolve across the stages from philanthropic to transformational, as depicted in Figure 4.2:

Figure 4.2. Collaboration Continuum Value Drivers

In Chapter Five, to convey a still deeper understanding of value creation, we scrutinize the key underlying partnering processes.

Notes

1. Austin, 2000b; Austin, 2000d.

2. Schiller and Almog-Bar, forthcoming; Ross, 2012; Vaschon, 2012; Edmond, Raghavan, and Smith, 2011; Jiang and Cai, 2011; Selsky and Parker, 2010; Le Ber and Branzei, 2010a; Le Ber and Branzei, 2010b; Seitanidi and Lindgreen, 2010; Bowen, Newenham-Kahindi, and Herremans, 2010; Seitanidi, 2010; Kourula and Laasonen, 2010; Jamali and Keshishian, 2009; Peloza and Falkenberg, 2009; Seitanidi and Crane, 2009; Glasbergen, Biermann, and Mol, 2007; Brickson, 2007; Googins, Mirvis, and Rochlin, 2007; Seitanidi and Ryan, 2007; Galaskiewicz and Sinclair Colman, 2006; Selsky and Parker, 2005; Berger, Cunningham, and Drumwright, 2004; Rondinelli and London, 2003; Wymer and Samu, 2003; Margolis and Walsh, 2003.

3. Austin and Seitanidi, 2012a; Bryson, Crosby, and Middleton Stone, 2006; Rondinelli and London, 2003; Bowen, Newenham-Kahindi, and Herremans, 2010; Googins, Mirvis, and Rochlin, 2007; Galaskiewicz and Sinclair Colman, 2006.

4. Perrini, 2006.

5. Lakotos and Candea, 2012.

6. Fuller and Tian, 2006.

7. Giving USA Foundation, 2012.

8. Sonia de Avelar, 2002, quoted in Sanborn and Portocarrero, 2005, p. 3.

9. 2004 Deloitte Volunteer IMPACT Survey, 2004.

10. Godfrey, Merrill, and Hansen, 2009.

11. Galaskiewicz and Wasserman, 1989.

12. Oppenheim, Bonini, Bielak, Kehm, and Lacy, 2007, p. 8.

13. Opinion Leader Research, 2005, p. 3.

14. Nelson and Prescott, 2005, p. 26.

15. “Global RepTrak® Pulse Complimentary Reports—2011,” 2011.

16. Ross, 2012, p. 84.

17. Austin, 1998c, p. 42.

18. Porter and Kramer, 2002; Sagawa and Segal, 2000.

19. Nelson and Prescott, 2005, p. 26.

20. “Coca-Cola Aids in Mexico’s Reforestation,” 2009.

21. Porter and Kramer, 2002.

22. Chênevert and Bonini, 2008, p. 9.

23. Nelson and Prescott, 2005, p. 14.

24. Galaskiewicz and Sinclair Colman, 2006.

25. Austin, 2006.

26. “Health Authorities Plan and Pledge to Overcome River Blindness,” 1997.

27. George W. Merck Jr., quoted in Weber, Austin, and Barrett, 2001a, p. 1.

28. Austin, 2000b, pp. 173–175.

29. Committee Encouraging Corporate Philanthropy, 2012, p. 4.

30. Seitanidi, 2009.

31. Lim, 2010.

32. Points of Light Foundation, 2007.

33. Preston, 2011.

34. Sagawa and Segal, 2000, p. 58.

35. Goodwill NCW, 2005.

36. “Corporate Philanthropy More Strategic, Deloitte Report Reveals,” 2011.

37. Fleishman-Hillard/National Consumers League, 2007, p. 4.

38. “Avon Foundation for Women Announces Avon Walk for Breast Cancer’s 10th Birthday Season,” 2011.

39. Sagawa and Segal, 2000, pp. 48–56.

40. Porter and Kramer, 2002, p. 6.

41. Beta San Miguel and Colegio San Ignacio de Loyola Vizcaínas, 2008.

42. Liu and Ko, 2011.

43. Alex Gourlay, quoted in Business in the Community, 2012.

44. Lim, 2010.

45. Cone Communications, 2010.

46. Parceiros Voluntários, 2011, p. 17.

47. Allen, Galiano, and Hayes, 2011, p. 7.

48. Kramer, 2009.

49. Conference Board, 1993.

50. Cone Communications, 2010.

51. Steckel and Simons, 1992, p. 25.

52. Bartel, 2001; Jones, 2006; Sagawa and Segal, 2000; Aguinis and Glavas, 2012.

53. Points of Light Foundation, 2007.

54. CDC Development Solutions, 2011.

55. Austin, 1998c, p. 39.

56. Bonini, Koller, and Mirvis, 2009.

57. Kanter, 1999; Vian, Feeley, MacLeod, Richards, and McCoy, 2007.

58. Grant, 2012.

59. Austin, 1998c.

60. Epstein and McFarlan, 2011; McFarlan, 1999; Korngold, 2005.

61. Austin, 1998a, p. 47.

62. Austin, Leonard, and Quinn, 2004, p. 4.

63. Cone Communications, 2010, p. 20.

64. Frisk, 2012.

65. Tariq and Tenneyson, 2009.

66. Austin, 1998c, p. 41.

67. Austin, 1998c, p. 39.

68. Cone Communications, 2010, p. 4.

69. Cone Communications, 2010, p. 5.

70. Edelman goodpurpose® Study, 2012.

71. Gourville and Rangan, 2004, p. 56.

72. Andreasen, 1996.

73. Gray and Hall, 1998; “Proving That Cause Marketing Is a Win-Win,” 2010.

74. Hiscox and Smyth, 2008.

75. Austin, 2000d.

76. “Race for the Cure National Sponsors,” 2013.

77. Seitanidi and Ryan, 2007; Galaskiewicz and Sinclair Colman, 2006, pp. 191–193.

78. Ukman, 2012.

79. Chansky, 2010.

80. Ukman, 2012.

81. Conroy, 2007.

82. Yaziji, 2004.

83. Arya and Salk, 2006.

84. Watanatada and Mak, 2011.

85. Nelson and Prescott, 2005, p. 27.

86. Maon, Lindgreen, and Vanhamme, 2009.

87. Peter F. Drucker Foundation for Nonprofit Management, 2002, p. 61.

88. “McDonald’s and Environmental Defense Fund Celebrate 20 Years of Partnerships for Sustainability,” 2010.

89. “McDonald’s and Environmental Defense Fund Mark 20 Years of Partnerships for Sustainability,” 2010.

90. Couchman and Fulop, 2009a.

91. “McDonald’s and Environmental Defense Fund Mark 20 Years of Partnerships for Sustainability,” 2010.

92. “Proving That Cause Marketing Is a Win-Win,” 2010.

93. Sagawa and Segal, 2000, pp. 117–120.

94. “Kraft American Cheese Teams Up,” 2012.

95. Cone Communications, 2010.

96. “Walmart Giving in Last Fiscal Year Exceeds $1 Billion for the First Time,” 2013.

97. Gourville and Rangan, 2004, p. 49.

98. Haddad and Nanda, 2001; Bartling, 1998, p. 12; “Broken Deal Costs AMA $9.9 Million,” 1998.

99. “KFC Presents,” 2010.

100. Schwartz, 2010.

101. “Save Lids to Save Lives,” 2012.

102. Cone Communications, 2010.

103. Grau and Folse, 2007.

104. Austin, Reficco, Berger, Fischer, Gutierrez, Koljatic, Lozano, Ogliastri, and the Social Enterprise Knowledge Network (SEKN) Team, 2004, p. 38.

105. Austin, Reficco, Berger, Fischer, Gutierrez, Koljatic, Lozano, Ogliastri, and the Social Enterprise Knowledge Network (SEKN) Team, 2004, p. 134.

106. Austin, Reficco, Berger, Fischer, Gutierrez, Koljatic, Lozano, Ogliastri, and the Social Enterprise Knowledge Network (SEKN) Team, 2004, p. 138.

107. Austin, Reficco, Berger, Fischer, Gutierrez, Koljatic, Lozano, Ogliastri, and the Social Enterprise Knowledge Network (SEKN) Team, 2004, p. 167.

108. Cone Communications, 2010.

109. Neff, 2011.

110. Zwick, Bonsu, and Darmody, 2008; Prahalad and Ramaswamy, 2004.

111. Keller, 1993.

112. Doyle, 2000.

113. Quelch, Austin, and Laidler-Kylander, 2004; Quelch and Laidler-Kylander, 2005.

114. Laidler-Kylander, Quelch, and Simonin, 2007.

115. Edelman goodpurpose® Study, 2012.

116. Austin, 2000d, p. 97.

117. “Our Story,” n.d.

118. Dybul, 2013.

119. Rosenman, 2007.

120. Knoepke, 2011.

121. Austin, 2000d, p. 26.

122. Le Ber and Branzei, 2010b.

123. Austin, 2000d, pp. 26–27.

124. Kanter, 1999, p. 129.

125. Bowen, Newenham-Kahindi, and Herremans, 2010, p. 311.

126. Austin, 2003a.

127. Le Ber and Branzei, 2010a, p. 161.

128. Austin, 2000b, p. 80.

129. Kanter, 1999, p. 130.

130. Rondinelli and London, 2003, p. 72.

131. Brugmann and Prahalad, 2007, p. 83.

132. Drayton and Budinich, 2010.

133. Drayton, 2011.

134. Drayton and Budinich, 2010, p. 58.

135. Googins, Mirvis, and Rochelin, 2007, p. 122.

136. Conservation International and Starbucks, 2011.

137. Conservation International and Starbucks, 2011.

138. Orin Smith, personal interview conducted by James E. Austin, June 10, 2002.

139. Austin and Reavis, 2002, p. 1.

140. Austin and Reavis, 2002, p. 3.

141. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

142. Christopher, 2012.

143. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

144. Austin and Reavis, 2002, p. 9.

145. Austin and Reavis, 2002, p. 9.

146. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

147. Perez-Aleman and Sandilands, 2008.

148. Austin and Reavis, 2002, p. 13.

149. Perez-Aleman and Sandilands, 2008.

150. Prahalad and Hammond, 2002; Prahalad and Hart, 2002.

151. Peter Seligmann, quoted in Austin and Reavis, 2002, p. 12.

152. “Coffee,” 2013.

153. Martin and Osberg, 2007.

154. Nelson and Jenkins, 2006.

155. Oppenheim, Bonini, Bielak, Kehm, and Lacy, 2007, p. 6.

156. Selsky and Parker, 2010.

157. Waddock, 1989.

158. Kanter, 2011, pp. 74, 67.

159. Vurro, Dacin, and Perrini, 2010.

160. Mahoney, McGahan, and Pitelis, 2009.

161. Guilherme Peirão Leal, quoted in Salamon, 2010, p. 103.

162. Business in the Community, 2012.

163. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

164. Austin and Reavis, 2002, p. 13.

165. Austin and Reavis, 2002.

166. “Starbucks Coffee Company,” 2013.

167. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

168. Howard Schultz, personal interview conducted by James E. Austin, February 7, 2007.

169. Austin, 2000b; Austin and Elias, 2001; Austin, Leonard, and Quinn, 2004.

170. Austin, Leonard, and Quinn, 2004, p. 10.

171. Cikaliuk, 2011, p. 292.

172. Peloza and Falkenberg, 2009, p. 107.

173. Wittneben, Okereke, Banerjee, and Levy, 2012.

174. Kania and Kramer, 2011.

175. Eggers and Macmillan, 2013.

176. Austin, 2000d.

177. General Electric, 2012.

178. Starbucks, 2012.

179. Orin Smith, personal interview conducted by James E. Austin, June 10, 2002.

180. Conroy, 2007.

181. Conroy, 2007.

182. Peloza and Falkenberg, 2009.

183. Kohl Kaufman, 2005.

184. ISEAL Alliance, 2009.

185. Potter, 2006.

186. Austin, 2000d.

187. Austin, 1998b.

188. Nambisan, 2009.

189. Crosby and Bryson, 2010.

190. Weber, Austin, and Barrett, 2001a, p. 1.

191. Balderston, 2012.

192. Yeatman, 2012.

193. Zedlmayer, 2012.

194. Christensen, Baumann, Ruggles, and Sadtler, 2006.

195. Phills, Deiglmeier, and Miller, 2008, p. 38.

196. Pol and Ville, 2009, p. 880.

197. General Electric, 2012.

198. Zadek, 2004.

199. Deiglmeier, 2012.

200. Holmes and Moir, 2007.

201. Bojer, 2008, p. 3.

202. Samuel J. Palmisano, quoted in Corporate Citizenship and Corporate Affairs, IBM Corporation, 2012.

203. Corporate Citizenship and Corporate Affairs, IBM Corporation, 2012.

204. Corporate Citizenship and Corporate Affairs, IBM Corporation, 2012.

205. William Foege, quoted in Weber, Austin, and Barrett, 2001b, p. 2.

206. Ramiah and Reich, 2006.

207. Barrett, Austin, and McCarthy, 2000.

208. Waddell, 2011.

209. Nambisan, 2009.

210. Nambisan, 2009.

211. Patricia Hoven, quoted in Austin, 2000c, p. 49.

212. Brainerd, Campbell, and Davis, 2013.

213. Cozzolino, 2012.