Strategy RSS

  How to forge alliances in the social economy 

IESE Insight
Print Share

The social economy -- made up of cooperatives, foundations and other organizations striving to have a positive social impact beyond profits -- is gaining momentum in Europe. In 2016, 6.3% of the EU's workforce was employed by the social economy, according to a study by the European Economic and Social Committee.

Joan Cavallé, managing director of the Spanish credit cooperative Caixa d'Enginyers, confirms that "companies with a social calling are very in demand these days," though he admits that in his particular case the cooperative has to face "low economic growth, negative interest rates and digital disruption." Meanwhile, Eduard Brull, CEO of the social housing foundation Grup Qualitat in Catalonia, says that "private savings are progressively more open to engaging with social projects, such as housing, which tend to provide a reasonable return."

In this context, the search for alliances within the social economy to fuel growth makes sense. "Everything is possible with time, money and luck. But who has those? When resources are scarce, strategic alliances are a wonderful opportunity," says IESE's Africa Ariño, who holds the Joaquim Molins Figueras Chair of Strategic Alliances.

Letting go of fear, but not common sense
"We need to evolve, and understand that collaboration and competition can coexist," Ariño explains. When forming alliances with competitors, learning from the experiences of companies in other sectors can help prevent conflicts between partners. Josep Maria Serra, who is CFO and corporate development director of the auto parts company Ficosa, recommends thinking over each alliance carefully, "because the cost of failure can erode away as much as a few years of losses." It's also fundamental that partners' objectives are aligned, he adds.

If and when alliances work, it's likely that benefits will be asymmetric in the long run. In this regard, "if both [partners] have the same strengths, that can become a source of conflict down the road," Serra warns. So, choosing an enterprise with less experience in a market or a different strength can be a positive move for a healthy alliance. In international alliances, for example, an organization with a depth of experience in one industry may be wise to choose a partner that really knows the particularities of a targeted region.

Prudence is also key when it comes to forging alliances in the social economy. "Among three cooperatives, we decided to establish Suara to facilitate an education model that was closer to our values," explains Àngels Cobo, the CEO of the resulting cooperative which helps thousands of people in Catalonia. "We prepared for four years before enacting this idea" of merging three entities into one.

Consistency, cohesion and an open mind
"There are alliances that mislead you, not because they fail, but because they get distracted from their primary objective," says Maravillas Rojo, president of the cooperative Abacus, which sells educational materials in Catalonia. She emphasizes that it's essential to keep focus on a project's heart and soul, so that it does not become distorted as it grows.

And yet, even when alliances make strategic sense, other factors can damage a budding partnership. "We joined forces with a technology company to undertake a digital transformation," says Cobo of Suara. "But it failed after three years because we didn't understand each other...we might as well have been speaking different languages." In other words, a cohesive element was missing.

The basis of any alliance "is the people," from the management team to the technical staff who must work side by side each day, concludes Cobo.

Article source: "Alliances and cooperation: the challenge for the social economy," was a conference at IESE's Barcelona campus organized by the Joaquim Molins Figueras Chair of Strategic Alliances. It was hosted by Esperanza Molins, director of the Joaquim Molins Figueras foundation, and Xavier Lopez, director of Oncolliga.
This article is based on:  Cómo aliarse con éxito en la economía social
Year:  2019
Language:  English
More articles from IESE Insight