I was thrilled to speak last week about Nonprofit Megatrends at a conference in one of my favorite cities – Cincinnati. Every social sector conference this fall features trends on collective impact, collaboration and system building. These concepts signify an important shift in the social sector – one toward advancing the cause through a network mindset. But, we have also reported that the social sector has increasingly embraced a for-profit mindset, including the adoption of competitive strategies. Competition has become more intense due to the increased number of nonprofits, competitive bidding contracts and an influx of for-profit practices within the sector. However, while many nonprofit executives will speak openly about their collaborative efforts, few are likely to mention “competition” – a taboo word that lurks beneath the surface of the social sector. At the keynote, I was asked how to navigate this tension successfully.
In an environment with limited resources, competition is inevitable. Let’s take for-profit companies, which are known for their ruthless intensity. A recent survey identified 100 different cases of joint ventures or alliances between two or more for-profit companies. For example, one of the most famous joint ventures occurred in the 1980s when General Motors and Toyota joined forces to co-produce cars in California. Even today, they are working together to develop environmental technology. Recently, the for-profit sector went one step further and introduced a new term – “coopetition.” The word, which is attributed to Raymond Noorda of Novell, refers to a company cooperating with its competition.
Social sector organizations have evolved to build networks to support their causes. Still, we can’t help but wonder – could coopetition be better for the social sector than a singular focus on collaboration? While cooperation is important, isn’t it also important to recognize that competition for funding, attention and talent exists in the sector? This knowledge requires nonprofits to use an approach where each organization can focus on its unique strengths (i.e., unique value proposition).
If we embrace coopetition, what does it mean for the social sector? For a deeper look, we reviewed the bestselling book, Co-opetition, by Adam Brandenburger of Harvard and Barry Nalebuff of Yale, wherein they defined coopetition as “a method that goes beyond the old rules of competition and cooperation to combine the advantages of both.” They use the analogy of a pie – you can either compete for your slice of the pie OR you can cooperate to make the pie bigger. So, if iron sharpens iron, coopetition would then be aiming for a better and bigger pie.
Based on their book as well as our experience, we propose the following “Six Rules of Coopetition” to navigate this inevitable tension in the social sector:
Rule #1: Long-Term Relationships Are Vital
Robert Axelrod’s book, The Evolution of Cooperation, dispels a myth within the social sector that trust is the key to achieving long-term goals. Instead, Axelrod posits that long-term relationships are more important. As he pithily states, “[f]or cooperation to prove stable, the future must have a sufficiently large shadow.” This illustrates that trust, while important, is backward-looking, but sustained cooperation results from the promise of future interaction.
Rule #2: Reciprocate as Your Social Norm
Both Axelrod and noted researcher Dr. Robert Cialdini have studied the concept of reciprocity in humans. We naturally believe that favors must be repaid. However, the best negotiators know that it is important to be the first to give. Being proactive starts a natural process of give-and-take between individuals or groups. In a collaboration, it is important to set the expectation of cooperation and hold others accountable to it. In other words, don’t wait for someone else to do the work.
Rule #3: Remember That Politeness is the Poison of Collaboration
We often choose political correctness at the expense of results. But, with such high stakes in the social space, collaborations – especially effective ones – require forthright conversation and even debate to achieve the desired end results.
Rule #4: Focus on Value Creation
The best collaborations create value not only for the team, but also for each individual. It is also critical to maintain balance and deliver an equal exchange of value (see Rule #2). To do this properly, each collaborator must explain what they value most and how it can be better achieved through the collaboration. Then, the collaboration itself needs to ensure that it creates value for all. This bottom-up approach ensures that every team member gets involved, because each has a stake in the end result.
Rule #5: Start Small and Then Build
Great collaborations are built over time. Forge trust by jointly creating plans that synchronize mission, strategy and values and create a preferred future state (see Rule #1). Once your group establishes the plan, practice working together as a team. Find a small victory you can accomplish together and celebrate.
Rule #6: Create Learning Relationships
As the collaboration evolves, it is important to create an environment of continuous improvement. One way to do this is to conduct an after-action review after each major initiative. If things are working, celebrate success. If things could be improved, acknowledge that fact and find a more mutually beneficial approach.
Charles Darwin famously said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” We believe the social sector has evolved from previous concepts of collaboration, cooperation and collective action to the next paradigm – coopetition. Don’t shy away from competition – embrace it! It is time to resolve this tension, adopt coopetition as our new paradigm and work together to make the pie bigger AND better for us all. These “rules” are a work in progress – as always, we’d love your feedback.