Partnership Design in Social Enterprise at MIT’s D-Lab

Late last summer I ran an online Partnership Design workshop with 2 agribusiness social entrepreneurs from Kenya, Peter Mumo (Founder of Expressions Global) and Dysmus Kisilu (Founder of Solar Freeze). In this post, I’ll take you through the process of how a pay-as-you-go irrigation service (Expressions Global) could collaborate with a cooled storage service provider (Solar Freeze). A collaboration which appeared ready to go, but actually wasn’t quite there yet. 

Partnership context
Peter, and Dysmus met as part of the Massachusetts Institute of Technology D-lab project on inclusive partnerships, which is a year-long learning lab on the topic of Co-Designing Inclusive Partnership Models. 

When Peter, and Dysmus were introduced to the Partnership Canvas during the first session as part of the learning lab, they were inspired to collaborate with their 2 companies, Expressions Global (EG), and Solar Freeze (SF). 

They were aiming for the same customer segments, smallholder farmers, and both companies could benefit from connecting their services. More, high-quality produce in stable supply from better irrigation, and trusty cold storage would mean more interest from well-paying (export) traders, and thus more interest from prospective smallholder farmer clients.

A few months after the initial workshop where Peter, and Dysmus met, I checked in on their progress together with Saïda Benhayoune, who is Program Director at MIT D-labs. We proposed an online workshop to apply the Partnership Design process, in order to analyse the current status of their collaboration, identify next steps, and put the Partnership Design tooling to the test at the same time. 

Approach to an online partnership design workshop
Because our aspiring partnering entrepreneurs were based in Kenya, and Saïda was in Boston, and I myself in The Netherlands, we needed to a workshop setup that could operate remotely. 

We chose to use miro.com as a virtual whiteboard, which was accessible to all. We used Skype as a means for talking.

Despite the often tricky internet connection with Kenya, the combination of both tech platforms worked wonderfully for the 3 hours of discussion we had together. Especially the miro board provided a very interactive, and immersive way for virtual collaboration.

During our call, we went through all the steps of the Partnership Design process (see visual below, which can be explored in more detail here). The results themselves are discussed in the next section of this blog.

Partnership Design Expressions Global - Solar Freeze
Output from the remote Partnership Design session between Expressions Global, and Solar Freeze in Kenya. (click here to explore the full virtual board)

The Partnership Design Process

-Understand-

We started discussing both partners’s business models, using the business model canvas. From there we looked at current priorities, and challenges to both businesses. 

For EG the main challenge is to find an well-paying market outlet for the farmers that use their irrigation technology. Without a well-paying market, like a higher-end domestic, or  export market, farmers are less inclined to invest in their crops with irrigation. 

SF is looking to expand their presence in the market, building new units, and connecting with new farmer groups who would use storage for their fresh products. 

-Intent-

Next we explored both partners’ intent to collaborate; why do they need help from a partner to to achieve their priorities?

EG is in need of cold storage capacity in the supply chain of their farmers. That is key to access high-end markets, as it keeps produce fresh during shipment. However, investing in their own cold storage would be expensive, and it would detract from their core business, which is irrigation. It would be better to work with a partner that is specialised in storage facilities.

SF is in need for new farmers to collaborate with. But building those relationships is hard. It would make more sense to collaborate with an organisation that already has those relationships in place.

So it turned out, both EG, and SF have matching priorities, and also need collaboration to achieve them. EG needs cold storage, and access to higher-end marktes, which SF can offer. And from its end, SF needs access to organised farmers, which EG can offer. This is a solid basis for delving further into the design of their partnership.

-Design & Compare-

Using the Partnership Canvas we started discussing the setup of the collaboration. For EG it was clear what value the partnership needed to create. A cold storage unit, on site, near the farmers that they work with. 

One of the key assets that SF needed to realise the construction of their cooling unit was to have land available to place the unit. Peter said that through EG’s relationship with local landowners this could easily be arranged. Also this relationship could provide for security. Operationally it seemed possible to place a functional cooling unit.

The remaining question now was how SF could tie relationships with farmers, so that they would start using the cooling storage facility. Both Dysmus and Peter explained how farmers need to improve their production practice to meet the higher production standards, and how training of farmers was key. 

For that reason they thought that it would be appropriate to design a joint training for export markets for farmers, where Peter’s standard training on Good Agricultural Practices could be combined with a Post-Harvest Management content based on Dysmus’ experience. This training could be a way for SF to acquire new farmer-customers for the storage unit.

The Created Value form the partnership is labelled with yellow on the whiteboard

-Evaluate-

Now that the design for the collaboration was made apparent with the Partnership Canvas, we looked at the big questions that needed to be answered for the collaboration’s business case; the hypotheses behind the partnership (those are labeled in red on our whiteboard). 

For EG, the big question was whether the cold storage unit in combination with the training would lead farmers to dedicate more acreage to high quality (exportable) crops, and supply the (stable) volumes of that product . The needed increase in acreage, and productivity could be achieved through the EG’s irrigation service, which would mean more revenue for the business. Also, Peter expected that EG would be able to generate more revenue from commissions, as an intermediary in the trade between farmers, and exporters. 

SF had questions about how the training would influence utilisation rates of the storage units. The training would need to lead to new numbers of farmers that would use the unit, and an increase in the volume of product that they would store. This would impact revenue growth from the storage service.

These were questions about conversion from the farmer training to paying customers for storage on the one hand, and then on the other hand about productivity, and volumes of product that these customers would actually store in the cooling unit.  

Conclusion
The case for partnering turned out to be clear. The assumptions were reasonable, and if they were to be true, both business would benefit from the collaboration. 

The partnership seemed ready to move into action mode, testing the hypotheses in a pilot project. And an obvious first thing to start with would be the farmers trainings, which could even start before building the cooling units. Implementing the training would answer questions that both EG, and SF were facing. But despite this obvious first step Peter, and Dysmus hadn’t started their joint project yet. 

When digging into the issue, it turned out that Dysmus had made a wrong assumption in his numbers behind SF’s growth. Where initially he thought that SF could finance placement of new cooling units through its own profits, growth actually required external funding. So, SF’s arranging of funding turned out to be a very important missing priority in the partnership discussion, and was the cause for the hold-up. 

This piece of information also increased the importance of utilisation rates for SF’s cooling units, and whether the farmers’ training would actually lead to more farmers signing up, higher productivity of their crops, and more supply to the cooling units. This would be critical for financial viability of SF to bring return on investment of new cooling units.

This additional pressure on the numbers increased the risk to the partnership. Yet even more so, it pointed to the importance of starting of the joint training as that would provide key insights needed to confirm (or invalidate!) the business case in this early stage of the partnerhip. 

We left the conversation there, with a clear next step for Peter, and Dysmus to follow-up on. As for the result of the Partnership Design process, it pointed to the importance that a good preparation by laying out the starting situation of both businesses is critical for achieving momentum in partnering. If information is missing  in this orientation stage, the partnership will likely run into delays.

We’ll be sure to check in again with the EG-SF partnership again soon to see what insights the implementation of the training has brought. 

[PS. Upon reviewing this article, Peter explained that the partnership has run into an additional challenge, namely that exporters demand graded produce. They were assuming that cold storage was their only impediment.

So, despite having the relevant contacts with exporters in place, they still need to work out how to jointly fulfil the exporters’ product, and packaging requirements. The partnership now needs to involve sorting, and packaging facilities, which neither EG nor SF currently has.

Will it be a joint investment? Or will it be assigned as a responsibility to either of the partners individually? What are your thoughts? – Leave them in the comments below 👇]


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What happens when product, and business development people join the same squad?

Product development, and partnership teams are critical for business value creation, and growth. The product development team is key for improving a company’s offer to customers. This attracts more of them, and can also increase value from the lifetime of each customer relationship. Partnership teams aim to achieve company growth; They’re like a SWAT team that opens access for other companies’ resources, and exposes the product to new markets.

Product, and partnership teams usually operate separately. This separation seems logical. Each team focusses on what they’re good at: creating product value, and driving growth. But in this article I’ll show how the separation of functions drives a wedge into the overall business value creation process, and how collaboration needs to change to resolve it.

Product, and Partnership: Better when they’re together.
Instead of looking into ways for improving partnership, and product development teams to function separately, lets take a look at what would happen if we just put these people on the same team.

Product, and partnership teams in tandem, generate more value, than they would separately. A great example of a company that has achieved this is Nespresso. By combining Nespresso’s capabilities on (coffee) product marketing, with the coffee machine manufacturing partners’ capabilities of channel marketing for kitchen appliances, Nespresso achieves significantly more leverage from the partnership than they would from just outsourcing manufacturing.

Another example is Tesla’s (former) partnership with Toyota. By jointly working on developing electric vehicle parts, and electric car manufacturing systems, Tesla learned about mass-production of cars. This was key for launching their famous Model S. So, by not only focussing on combining technologies in the partnership, but also utilising that technology in a new way of production, the partnership actually took product development to a whole new level for Tesla.

These examples show how transgressing product, and partnership team boundaries, broadens the scope for new business value creation. Neither Nespresso, nor Tesla would be where they are today, if they wouldn’t have looked at product development and business growth in an integrative way.

From marriage to divorce…
In a fledgling company you see that the functions of product, and partnerships, are combined within the same, small group of people: the same team. Often the startup CEO takes on both product and business development roles. In this situation, it’s natural to align the functions of product, and partnerships, and make product value creation and growth efforts click.

But the moment the startup starts evolving into a real company, the product, and partnership functions will branch off into separate teams. And that is where the seamlessness of their alignment is lost.

The product team starts focussing on its own resources, and existing product development roadmap, rather than looking out for ways to leverage their work through partnering.

Partnership teams will tend to focus on the existing product and finding partners for that. They have to work with what’s on the shelf, because they’re usually not in a position to tailor the product to growth opportunities themselves.

The upshot is that both product, and partnership people each start tweaking their part of an existing business model. They gradually lose the ability to operate jointly, and invent new ones in a concerted, fundamental ways.

Re-uniting product and growth.
What can we do to put the power of product, and growth back together again?

Firstly, it comes down to a joint understanding between both teams about the process that is applied for product development. Product, and partnership teams need to jointly define, and have visibility on priorities, as well as on the big questions that need to be solved to bring the product forward.

Secondly, the product and partnership teams need to start jointly experimenting with growth opportunities for the product, and make those experiments part of the product development process. It’s not sufficient to start searching for growth once the product is done. The product will also likely need to adapt to the growth opportunities that arise.

Thirdly, product and partnership teams need to start operating in the same rhythm of iterations in product development. This means that partnership teams should be able to shift with changing priorities of the product. The other way around, product teams should also be able to adapt to shifts in opportunity on the partnership end.

To support these 3 points of alignment, visual tools like the business model, and partnership canvas are really helpful. These tools enable all participants to step in and create the alignment that is needed to search for repeatable, and scalable partnership opportunities, that sync with the direction that the product needs to take. Once product, and partnership are able to apply rapid joint framing of priorities, and decision making on what steps to take, then the business value creation process is mended. The company will operate in the mode that is once did as a startup.


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