CHAPTER 8 THE PARTNERSHIP PYRAMID

Talking with partners and business leaders about why a company should focus on building partnerships led us to draw a new version of Maslow’s Hierarchy of Needs. Using this blueprint, we build a hierarchy of partnerships. Special thanks to Chris Burggraeve for the collaborative spark around this idea during our interview. We still remember the conglomerates and mastodon companies wanting to do everything themselves, in-house. Although some companies still believe that what they do themselves they do better, in most cases, though, buy-or-build decisions are made based on whether a task can be defined as core or non-core, whether it adds to the overall efficiency or costs of processes and whether or not a company has the specialized knowledge itself.

Today, moving from a supplier relation to a preferred supplier or partner relationship is considered as good business practice. But there are a lot more possible levels of intensity possible in a partnership, each with their pros and cons. We’ve identified five possible levels of intensity, from basic partnerships at the bottom to full-blown metasystems at the top of the pyramid. It is our conviction that, the higher up you move, the better you will be prepared for the next decade.

We understand that there are many ways to look at metasystems, and that these heavily depend on your own context, experience and stubbornness (did we say that out loud?). No sweat. Whether you think we’re dreamers or simply overenthusiastic with our plea for metasystems, we believe that we have a suitable argument to refute any hesitations you might have. Or at least most of them.

You’re so naive

If you think we’re naive, building castles (or rather pyramids) in the sky, we’d like to send you back to our disclaimer. What we write or proclaim in this book is a desirable answer to an uncertain future. We, meaning all of the people on the planet, don’t have a clue what the future holds. We never had, and still, we managed to progress as a species, by imagining who we wanted to be, where we wanted to land, how our world could be better, and by acting to make it so. Our talent for imagination is what fuels science, biology, technology, and the arts – the very same disciplines which are the foundations of our man-made societies. So we may be naive, but we did make a lot of our wishes come true.

Will purpose push profit off the throne and rule the economic realm? We don’t know that for a fact. But we wish it to be true, and we’re not alone with this dream. While a profit-first economy only benefits the few – the shareholders, the boards, maybe the CEO – a more than for profit company will sow and spread benefits to a myriad of stakeholders, creating value not for the few but for the many. The customer receives his money’s worth in a transparent and honest transaction, making him co-responsible for the company’s impact. The employee is empowered by his purposeful, meaningful job, going beyond his 9 to 5 duties and stepping up as an ambassador for your brand or product. And even society at large can become a stakeholder that benefits from the wellbeing of your company, because you help fight societal challenges or simply take your responsibility, in proportion with the impact you have on the people and the planet.

Tremens et fascinans

If it’s fear that is holding you back, you might want to reconsider not building a metasystem at all. Closing off, building higher walls around your company and beefing up your legal department was the way to go in the past, but it’s become outdated. And not just because the two of us want it to be, but because the challenges we are facing can no longer be tackled by individuals. As we explained in part one, our world as we know it, is being put to the test by collective challenges. And these collective challenges need collective solutions. Companies that move fast in experimenting with ecosystems can still choose their partners. If you come late to the party, you might be left with the suckers of the class. So, if it’s fear you sense, we suggest you get out of the building. For fear’s sake.

This dream we are on about is an aspirational dream. Definitely a pioneering job, with a lot of hurdles to take if you want to move from the lowest level to the peak of the pyramid. Of course, it’s a pipe dream to think that everybody will be happy sharing all their information, breaking down borders, rejecting profit that is made for the wrong reasons, collaborating to solve the world’s problems together. People still have their limits – in imagination, in benevolence, in motivation. But that shouldn’t be an issue. Metasystems don’t exclude competition, nor do they reject profit. We do not want you to move all the way to the other end of the spectrum. Ours is a plea to incorporate the best of both worlds. Competition, risk, numbers and a fighting spirit, infused with trust, creativity, collaboration and responsibility. Because frankly, if you could have both, why choose?

The government. The governwhat?

You may be thinking we already have a system for working together and letting collective intelligence fix our global challenges: the government. The whole idea behind government, actually, is that we give up part of our freedom so that it can take care of our collective well-being. We’ve agreed to that deal because we acknowledge that we are just a bunch of wolves and if you let us have our way, we’d all be devouring each other. True. But our image of man is slightly more positive than this Wolverine world. Yes, we can be feeble and greedy and unreliable creatures, but we are also positively wired, capable of benevolence, empathy and long-term thinking. Which doesn’t lead us to conclude the government is an unnecessary luxury, by the way.

Systems, and metasystems all the same, could benefit from the positive power of governments. They could also benefit from governments with a longterm view, playing the connector and orchestrator and even financing part of the short-term investments. Unwanted side-effects of governments currently being involved are the politics, moving from election to election leading to short-term thinking, slowness and bureaucracy and a lack of perspective on the interconnection of the problems. Yes, the government could and should play a role in metasystems, just like NGOs, universities, or even museums. But we can’t make them. We’ll have to seduce them.

The coalition of the willing

Luckily, not everybody is as hard to convince to climb the pyramid as you are. While researching for this book, we discovered that there are certain types of companies whose DNA makes them more inclined to engage in a metasystem than others. Moreover, companies with the same particular traits proved more likely to succeed. Just like enlightened governments, these are companies able to work towards a big-time horizon. So no swapping seats every two years and no short-term wins over long-term gains. Businesses who excel in this department are more often than not family businesses. They have, by default, a more informal culture and think about the next generation when making decisions. All that is a definite plus when you are looking to partner up.

The same advantage we found in purpose-led companies; those who started from a strong belief and built an empire on it by gathering co-believers around themselves. Companies that are purpose-first by default have more experience with collaboration, thrive on trust and are transparent about their drivers. If you want to go out looking for potential partners, you might want to follow the purpose, rather than the technology or strategy for example. Because while you might want to beat each other to the finish when it comes to growing a customer base, you can perfectly agree on the fact that the plastic soup in the oceans needs to be put to an end. And you might as well strive for that goal together.

INTERVIEW

METASYSTEMS HAVE NO MANUAL

AN INTERVIEW WITH RUDY MOENAERT, PROFESSOR OF STRATEGIC MARKETING – TIAS SCHOOL FOR BUSINESS AND SOCIETY

We were very eager to speak to Professor Rudy Moenaert to see how our ideas would be perceived by an academic who has many insights in literature, on collaboration and networks in business. “I’m a real fan of rock music and I’m currently reading the book Rockonomics. It’s amazing to see how many songs have been recorded through collaboration in the past 20 years. Musicians work together to leverage each other’s skills and networks more and more. Businesses too can hugely benefit from partnerships and ecosystems, especially for innovation, but it’s really not as easy as it sounds. Most companies are driven by the 3 E’s: Efficiency, Effectiveness and Ego. That’s not really the right recipe to engage in partnerships.”

Number of songs on Billboard 100 that are collaborations

Source: Rockonomics. A backstage tour of what the music industry can teach us about economics and life (Alan Krueger, 2019)

In order for metasystems to be successful very strong leadership is needed according to the professor. “Companies are led by people and the question is are people actually willing to be equal? There is a quote saying: We have a similar interest in building the pie, but we have an opposite interest in dividing the pie. To me, engaging in metasystems is therefore really about culture, more than about strategy.” The more players, the more fragile the network becomes. A bigger goal and complementary business models will help to align the interests and to grow the pie for all.

“Working together is a heavyweight responsibility, and that requires heavyweight leaders. Light weight people create heavyweight problems.”

Traditional companies will need to find a way to collaborate more, as the big digital giants have formed their own ecosystems and expand their so-called ‘kill zones’: areas or industries in which they want to dominate. Rudy shared the case of the wolves of Yellowstone with us to illustrate the impact new entrants can have in an ecosystem. Gray wolves were reintroduced into Yellowstone National Park in 1995 (after the wolves were driven to extinction in the region nearly 100 years ago), leading to a trophic cascade through the entire ecosystem. The presence of wolves ultimately changed the course of the rivers in Yellowstone. “This is what is happening today with the rise of the digital tech giants like Amazon and Alibaba that entered different industries. They’re changing the course of the industry.” Just like in Yellowstone, business ecosystems can be impacted heavily by new entrants, and it’s important to constantly monitor what’s happening.

“It’s not only important to know where and how to compete. It’s also important to know when to compete.”

Although the professor is a true believer in the power of purpose, he feels that most businesses are unfortunately not in that stadium yet. “For most companies purpose is an option today, it’s not an economic duty. We might need to break it down in smaller parts to make it happen. Sometimes you need indirect goals to achieve a bigger ambition. It’s the concept of ‘obliquity’ which is described very well in the book by Julian Birkinshaw, “Reinventing Management”. Professor Birkinshaw says, quoting the pioneering Austrian psychiatrist Victor Frankl: “Success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s personal dedication to a cause greater than oneself.”

In the Anglo Saxon world it has always been about value for the company (shareholder) and value for the customer. Rudy believes that there are four value creation layers that companies will need to take into account if they want to be sustainable: the value for the customer, the value for the employee, the value for the company and the value for society at large.

RUDY’S TIPS:

•The sooner you observe interesting networks, the more choice you have to which one to join. You create optionality. Be out there and be fast to act. If you are too late you might be left with the suckers of the class.

•Knowing when to compete is as important as where and how.

•Define your four value creation layers: customer, employee, company and society.

All I want is equality

Equal partners. Is that too much to ask? Well. Yes. Even the most enlightened spirits, those ready to propel themselves towards the highest level of the metasystems pyramid, cannot be convinced by the idea that all parties around the table are equal. And they shouldn’t be. We believe, and with us hopefully most people, that all human beings are of equal worth. They are equivalent. That’s what we mean when talking about equality. However, we also believe that no two human beings are equal, as in, the same, similar, interchangeable.

When we advise you to build a coalition of equals as the foundation for your metasystems, we do not want you to collect variations of the same. When we advise you to give every partner of a metasystem an equal opportunity or responsibility, we do not want you to pretend that a startup CEO in his twenties is as experienced as the multinational CEO, or that an NGO can have the exact same share of profit generated, even though they are subsidized and the rest of the network isn’t. We want you to treat every party as being of an equal worth, in its own specific context, experience, weight, and so on.

Look around. You see the house you’re in, the computer you’re working on, the art on the walls, the light from the ceiling? In the history of mankind, what we imagined has become reality over and over again. There is proof of that all around us. So you might say it’s naive of us to imagine what the future should look like, making a plea for metasystems. But we’d rather we believed it’s our duty as a human, a citizen, an employee or a CEO to do just that; to imagine what the future should look like. So, let’s flip your perception once and for all. Are we naive? Maybe. Will the world pass you by if you fail to imagine what you want from it? Probably. Now let’s climb that pyramid.

The five levels of the Partnership Pyramid

Level 1: Preferred suppliers

One level up from the bottom, we find the preferred supplier relationships. Some information or strategic ambitions are shared. The reward here is better or faster innovation, products and services that are better attuned to the company and sometimes a more integrated production, like in the car assembly industry.

Level 2: Defense partnership

At this level, you’ll find multiple companies working together in order to defend against an external threat at the industry level. These companies understand they cannot win alone, and so they set up industry associations who do lobby work or self-regulate to prevent strict and inflexible legislation. The reward comes in the shape of freedom. It’s all about collective intelligence. The World Federation of Advertisers is a good example of a cross-industry association, connecting the world’s biggest brand owners in over sixty countries. The WFA champions more effective and sustainable marketing communications by creating a network that offers expertise and inspiration.

One of the key reasons for its existence (and all national advertiser’s associations, for that matter) is to defend the freedom to advertise and promote the positive impact of marketing campaigns. The WFA has been working on self-regulation in the area of responsible marketing towards children, for instance, or advertising for alcohol.

Another example is buying alliances of retailers from different countries, joining forces to fight the threat of big multinationals overpowering them.

Level 3: Offensive partnership

This type of partnership is driven mostly by the ambition to have a positive impact on society. The reward is on the level of positive company or brand reputation, or being part of a network that fuels interesting contacts or generates state of the art innovation. Collective innovation is added on top of collective intelligence at this level. Also, the fear that if nothing is done, stricter regulations or limitations will be imposed, might play a role. The ambitions on this level lie mostly on the societal or environmental level. A fine example is the Plastic Pollution Coalition. This organization consists of more than 1,200 businesses and thought leaders in 75 countries. Together, they work towards a world that’s free of plastic pollution and of its toxic impact on humans, animals, waterways, oceans and the environment as a whole.

Level 4: Walled garden

Most of us know the 4th level of partnerships from the platform economy and the digital giants inhabiting it. Companies like Amazon, Apple, Tencent and Uber bring together a rich collection of companies in a single ecosystem or platform. A cooperation, yes, but one that is largely controlled by one party. They want to secure collective business models. That’s why we call them walled gardens: out of fear of losing control, the leader defines the rules. These leaders are also privy to most of the benefits (typically, they own all the data) and decide who can enter the ecosystem and who needs to leave. These networks can grow so big that they have a negative impact on society.

Think of Amazon, known as a “category killer”, destroying most of the competition in the categories it dominates. Think of Facebook, whose highly debatable ethical standards concerning consumer privacy and data protection have enabled the US elections to be rigged and allowed extremists to spread hate and violence freely. Although level 4 companies have a huge growth potential, their biggest risk is their lack of intentions to make their societal impact a positive one. The second risk is that their strict rules cripple the innovation potential of their ecosystem. Jeff Bezos tries to counter this with his “Every day is day one” philosophy. Day one he considers as a day full of opportunity, whereas day two is standstill. The idea is to forever be in Day One mode. Whether or not this philosophy works in practice remains to be seen.

“Big Tech have to look at things from a Meta Eco-System perspective. As they become de-facto regulators and winner takes all monopolies in their markets, they cannot continue to put stakeholders at the service of shareholders. The larger the company, the bigger the responsibility to the wider social system and the social contract that they operate within. The bigger they are, the bigger their duty of care as the world continues to wake up to the massive inequalities in health, wealth, safety and opportunity. The future will belong to those that embody a Who Cares Wins principle. If they don’t, society will do it for them.”

SAHER SIDHOM, FOUNDER
HACKMASTERS LONDON

An inspiring example is the Port of Antwerp. The POA has certainly many characteristics of a level 4 system, being the landlord and the regulator of a massive ecosystem of almost 1,000 companies. They have decided, backed by the city of Antwerp, to play a pivotal role in solving long term societal challenges in the portal area of 120 km2. We think of mobility, sustainability, security and innovation. They are definitely in the running to become a level 5 partnership, a metasystem.

INTERVIEW

PARTNERSHIPS ARE AN INVESTMENT IN THE FUTURE

AN INTERVIEW WITH JACQUES VANDERMEIREN, CEO AT PORT OF ANTWERP

Port of Antwerp is the biggest economic engine of Belgium. It is an enormous ecosystem covering an area of 120 km2, 900 companies and providing jobs to 144,000 people. POA wants to be the home-base for its partners and a lever for a sustainable future.

We asked Jacques Vandermeiren what is the magic glue to manage a big ecosystem with that many players, big and small together, with sometimes very different interests. Jacques explains that POA originally had three roles: the landlord to maritime and industrial companies, the regulator and finally the provider of essential services such as bridges, locks and tugboats. “We created a 4th role, becoming a pro-active partner in solving societal problems for the local ecosystem such as mobility, sustainability and safety. POA enhances its natural position as orchestrator and invests for the long term to create a sustainable future for the port.”

“We evolved from a passive landlord to an active community builder.”

It has taken some time to build up trust in the ecosystem. A few years ago, a stakeholder analysis showed that the POA was perceived as a strong, mighty but dangerous animal. Jacques explained that they wanted to evolve to a more serving role, connecting and inspiring the different stakeholders. POA also wants to be part of the solution for societal problems. “Win win partnerships between commercial companies are fragile, because not all parties get a similar part of the growing cake. POA has the possibility to invest in the long term and create a ‘lose-win’ situation: the partners are winning in the short term and everybody wins in the long term.” A good example is project Beacon. POA invests in the Beacon to bring together major technology providers in IoT, flexible start-ups and leading scale-ups at a single location. Partners are the City and University of Antwerp, IMEC and Agoria.

“The view from the top should be more than the bottom line.”

Asked for advice on how to build trust, Jacques shares a strong insight. “Creating trust is very difficult and fragile. Sometimes it is better to select a group of partners that trust each other, instead of spending a lot of time and effort to make people trust each other.”

JACQUES’ TIPS:

•You have to share your purpose to find the right partners. You need to be out there so people can find you.

•In partnerships, ego destroys everything. 2 people that don’t trust each other in a group of 10 will make this group underperform, especially in business-critical situations.

•Creating trust in a group is very difficult. Trust is difficult to earn and easy to lose. It is easier to select a group that trusts each other.

Level 5: Metasystem

It doesn’t get more fun than the party going on at level 5. Here, partnerships become metasystems. They are open systems; more than for profit networks built from scratch by equal partners. Wild gardens, inspired by natural ecosystems like the forest or the Great Barrier reef – by far the most magical places on earth. A rich variety of species work together and create a constant stream of surprising solutions. Interdependence is the key concept.

The best example we found in level 5 partnerships so far is B Corp. “Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” B Corps believe that society’s most challenging problems cannot be solved by governments and nonprofits alone. Their community works towards reduced inequality, lower levels of poverty, a healthier environment, stronger communities, and the creation of more high-quality jobs with dignity and purpose for all.

B Corps use profits and growth as a means to a greater end: positive impact for their employees, communities, and the environment. B Corps have a clear reward: its members become part of a bigger community whose members inspire one another. They are granted easier access to key decision makers across industries. And of course, the B Corp seal counts as positive leverage for their brand or company.

Move on up

With every level you move up the pyramid, you can see how interactions between players transform from being purely transactional to more relational. Also, the higher up in the pyramid you go, the more the importance of time reveals itself. This makes sense, because building trustful relationships takes time and the relationships we need to build a coalition of the willing – those who put in the effort needed to build such a complex system – are entirely based on trust. If you want to harvest these benefits, you’ll have to put in the work and take the long-term route.

MASLOW PYRAMID OF PARTNERSHIPS

A closer look also reveals that in levels 1, 2 and 3, most parties operate in the same industry. Moving further up, industries mingle, new value creation systems arise, and new business models blend with a colorful collection of unusual suspects.

Saher Sidhom, Founder of Hackmasters London, underlined in our conversation that the industry you’re playing in might change once you move through the levels of the pyramid:

“At level 4 and 5 you’re talking about a different industry than level 1. The higher you move through the levels, the newer the systems become, the more different things will be. Imagine you’re in the automotive industry and you make cars. You would still be in the car industry up to level 3. But in level 4 and 5 you’re no longer in the car industry: you are now active in energy, communication, shared mobility. You’re not just selling a car brand anymore, in the metasystem (level 5) you’re part of the smart city, you’re part of open standards, you’re providing data services to new players. You’re no longer operating in an industry as you know it, you’re operating in a new industry with a new profit structure. It’s a different game altogether.”

A challenge is like climbing a mountain; the benefits get better and better when you move closer to the top. The closer you get to the top, the more you sweat, but the better the views get. The same goes for building a metasystem. You start off at the bottom, sharing information and then creating collective intelligence, growing from something that is limited in time, scope and number of participants to full-blown sharing and multiplying whatever value is brought to the table. From there onwards, collective innovation is added to the mix. On top an offensive partnership requires the courage to contribute to society without an immediate financial benefit. Collective business or business models start from level 4. And on the 5th and final level we can add the highest reward for all this hard work: a collective imagination. Because in the end, imagination is what you need to build the future.

COLLABORATION FOR COLLECTIVE SURVIVAL

The give, give, give, take strategy

Trust and partnerships are about reciprocity. So if you want to go to the table with a potential partner, be transparent, explain and share, invite them to talk about it. You can expect them to do the same, as long as you’re not counting on a successful outcome.

“Stop wanting it, and it’ll come.” It’s the advice your aunt gives you when you can’t seem to find a good boyfriend. Wanting potential partners at the other side of the table to be as open as you are, can be tricky. It’s not a request that can be put down in numbers or contracts. However, since you’re rooting for the same cause and a shared future, it does make sense for everyone to show their hand. Sadly, wanting things to happen doesn’t mean they will. Regardless, you persevere. Because the big things in life are worth being stubborn about, whether or not you’re rewarded for your determination.

You don’t stop being friendly because nobody compliments you on it, do you? You believe being friendly is the right thing to do, and so you smile to that sourpuss of a neighbor downstairs. Building a partnership works the same way. You don’t stop being trustworthy and transparent just because the others don’t reciprocate. You do it because you believe it’s the right thing to do.

It takes patience, though. You give, and give, and give, and keep on giving without wanting anything in return. You give without expectations, not knowing what the outcome will be, but you keep on honestly communicating your desires. You are transparent about your intentions, because they are a part of you. Meanwhile, you have faith that your impulse to be transparent will attract other trustworthy businesses. They will come to you, wanting to engage in a partnership that is true and honest. At last, your efforts pay off.

While this isn’t a tactic that comes with scientific graphs and timelines, it does describe a very human dynamic that shouldn’t be underestimated. Businesses are made up of humans, in the end, and we are fickle creatures. Ignore this and you’ll only fool yourself.

One day, after lots of giving, you will find yourself sharing a table with like-minded kin. Having been honest, every party involved will know just what the situation is today, and what a possible future could look like if you were to team up. That’s as solid a foundation for a partnership as they come.

To the next level, baby

At some point, you will have to convert your relationship into a structural partnership if you want to move up the pyramid. Nothing too rigid, always allowing for changes whenever they occur, but nonetheless crystalline in its intentions. One bright morning maybe you’ll draft a declaration of intent. It might be a charter that names the non-negotiables, the crazy dreams, the contours, or a definition of the minimum conditions under which you can kick off. We’ve tried to work out a methodology to help you do just that. It’s a blueprint that entails the minimum of information that has to be put on the table before you can move forward, together, or decide right then and there, this match wasn’t made in heaven.

You feel how the world is changing, how your attitude co-constructs reality and you want a better future. Metasystems are the business-translation of this attitude, of this shift towards the new metaparadigm. They are the way forward, or upward, your way of tackling the challenges confronting us, your watchtower from where you can start to see the horizon again. That trust is a vital ingredient in this shift comes as no surprise to you. You know you have to walk your talk, start with yourself, set up a quest for self-reflection and betterment as if it was a perpetuum mobile. Well then, if you’ve gotten this far, you’re ready for the next stop: writing your MVP.