The 5 principles to powerful partnerships
1. Know your partner AND your value proposition:
To make the business case to your potential private-sector partner, NGOs need to understand their partner’s business model. This means understanding their products, services and customers and what drives value, such as profit and customers. This can be done through research, meeting the company’s leadership and employees, and interviews with their customers. This will enable NGOs to align their value proposition to private sector partners’ and help ensure a unified agenda in the early stages. For Ignite, CARE’s value proposition is our expertise on gender and the ability to connect partners to new customers. As a sector, we must never lose sight of our commitment to our program participants or the millions of women business owners we hope will one day have equal access to the capital and support they need to thrive. For this program, that means listening to women entrepreneurs about how products and services can best meet their needs and helping translate that into clear options with our partners.
2. Secure buy-in at multiple levels: from front-line staff to the boardroom
Getting commitment and buy-in from both leadership and those responsible for direct implementation is essential for sustainability. When you work with a bank, that means engagement at the HQ level, but also at the local branch level. Strong commitment from senior leadership from multiple departments (i.e. product, marketing, risk) from the outset is key. Engaging frontline staff, such as branch managers and loan officers, in the design process to ensure they see value in the product is also essential as they regularly interact with the target group, in this case women entrepreneurs. Understanding and influencing incentive structures at the branch level can also lead to tangible buy-in.
Identifying champions within the partner organization is also useful to help navigate their systems, advocate for the partnership at a senior level, and continue to secure buy-in as the partnership evolves. However, teams might consider building “product task forces” with multiple champions to avoid over-reliance on individuals who may move on.
3. Unite your business & social goals:
Engaging the whole team in setting the objective of the partnership is critical and must align with each organization’s strategies. For the Ignite program, CARE is focused on increasing access to finance and support services to help female entrepreneurs grow. The bank, on the other hand, needs to have a strong case for serving these women that aligns with their business goals, as Dao Gia Hung, Deputy Head of the SME Division at VPBank explains, “Women entrepreneurs drive loan portfolio growth. We expect this partnership will support VPBank to increase our women SME customer base from 5 to 10%.” Evelyn Nguyen, CEO of Canal Circle adds, “There is a huge profit potential and low default rates among female borrowers. CARE brings trust, brand power, and grassroots deployment approaches, has a wide reach into the underserved population and a valuable network of partners. Together we can reinforce one another’s effort (nonprofit and for-profit approaches) to enable lasting positive impacts.” With all our Ignite partners we will combine our social and business goals to better serve women entrepreneurs in Vietnam, so that they can grow their businesses.
The best way to unite your business and social goals is to have clear metrics for success. In the case of Ignite, the short-term metrics include: new loan customers acquired, loan repayment and satisfaction rates, improved skills for entrepreneurs, and ultimately, business growth. In the longer term, we want government and financial institutions to adopt a product that can be scaled across the country, reaching 5 million women. The risk of not agreeing on goals from the outset can cost both time and money.
4. Define roles and responsibilities:
Agreeing which individual from each partner is responsible for specific activities is also important and roles will be defined based on the value-add and expertise of respective partners. Be clear who are the decision-makers on each team, as well as secret decision-makers, or those we know we need to say ‘yes’ before major decisions can move forward (these are often the CEOs!). There are different tools that can support the division of responsibilities, including the RACI model which can define who is Responsible, Accountable, Consulted and Informed through each major phase of the partnership work.
As part of this principle, clear governance structures and escalation processes should be agreed, outlining who would get involved at what level and on which activities. If something does not go as planned, both partners should agree in advance who and at what level they should escalate the issue. Over-communication between partners is the key to success!
5. Adapt to market shifts:
While NGOs have a direct footprint within communities and can quickly elevate the voice of communities to the boardroom, one of the greater risks when partnering with the private sector is an inability to quickly cope with market shifts. We are currently living in a time of uncertainty with COVID-19 and many things are happening in a way that we never expected. Private sector partners are often more agile and willing to embrace radical changes to stay afloat. They can be quick to de-prioritize certain products, expand into new markets, or rapidly shift their business priorities to move with the market. Having a mitigation plan and risk analysis in place for the partnership is therefore essential, and being careful to build a partnership that goes beyond one product, rather a portfolio of products, as we have done with VPBank, has helped navigate these shifts.
To improve our agility within the NGO sector we need to streamline our systems, such as finance or procurement, so that we can respond to pivots. We also need to understand that different partners operate at difference paces, whether that’s decision-making, strategy or product development, and work flexibly within those parameters. This means accelerating sometimes, decelerating others and being ready to adapt quickly when needed to keep the end goal in sight.