04 Jan 2017

When contracts are not enough: adaptive management and private sector engagement

Kevin Robbins

5 ways the team at iDE practice adaptive management when they partner with the private sector. 

Adaptive management icon

Inevitably in market systems development, we find ourselves in the position of negotiating agreements with various kinds of market actors. There’s a tension here. On the one hand, we want to lock in certain aspects of the partnership, but we also want to retain enough space to adapt as new opportunities arise or our understanding of the system in which we are working evolves.

How do we navigate this tension? I don’t believe there’s a 'silver bullet' answer to this one. But over the course of our work in Bangladesh, the team at iDE has some approaches that have helped us practice adaptive management when we partner with the private sector.

Memoranda of Understanding (MOUs) capture general interest in partnership

When we start building a relationship with a like-minded private or financial sector actor in the market, we co-craft an MOU to articulate our broad interest to collaborate. These MOUs describe, at a high level, the mutual interests of both parties and the benefits we imagine will result from our partnership. In this initial document, we try to capture the spirit of the partnership without getting bogged down in more contentious detail such as who is going to pay for what and when certain milestones will be achieved (we do the latter through joint venture agreements, JVAs).

We try to co-craft the MOU so that both parties feel comfortable evolving the partnership over time through a series of discrete collaborations. For example, with RFL, (a large, national conglomerate in Bangladesh) we started with an institutional MOU, and now have various project - and technology-specific joint venture agreements (JVAs) with them to guide distinct collaborations. In the CSISA-MI project (a USAID-funded agricultural machinery commercialisation project where we partner with lead implementer CIMMYT), we have co-developed six JVAs with RFL, covering two different technologies (each JVA covered one technology for one sales season). We’ve created space between each JVA to practice adaptive management, to adjust our partnership strategy based on the learning of the previous collaboration and the overarching goals of our partnership, as expressed in the MOU.

Joint Venture Agreements (JVAs) guide specific collaborations

When a specific opportunity to partner with a company, bank, or other market actor arises, we use a JVA to act as a guideline for that partnership. The JVA includes objectives, responsibilities, timelines, budgets, resource sharing modalities, amendment processes, and other relevant considerations such as intellectual property rights. JVAs for different projects can look slightly different, even though they are based on a common template.

JVAs are written with legal considerations in mind. It’s important for partners to know, for example, that our contributions to research and development work (R&D) must remain in the public domain; but the companies want to ensure that we do not publicise any of their confidential data, branding and promotions strategies, future business plans, or other sensitive information. However, JVAs with companies - from our perspective - are different than the contracts we sign with consultants or other organisations. That is, we see them as good faith commitments to one another and the JVAs include a process for arbitrating disagreements and/or sub-par implementation. This approach has worked for us with several donors, but we recognise that this method may not work for all donors or all project contracts.

JVAs require co-investment. They can also include risk mitigation and/or capacity building. We always include a mechanism to amend the document so we can act on insights gained over time. Minor amendments - such as a shift in deadline - can be agreed verbally and cemented through a more informal email exchange. More serious amendments - changes in budget or deleting/adding milestones - are made in writing and signed off by two staff from each organisation (a process described in the JVA).

Where appropriate, we also try to ensure that through this adaptive process our investments in the JVA, whether in-kind or monetary,  gradually reduce as our partners adopt new market opportunities and begin independently planning for further investment and/or expansion.

The spirit of the agreement balances the letter of it

As we start implementing JVAs, inevitably unexpected challenges and opportunities arise. We have not always found the written "words of the agreement" sufficient to address these situations. In fact, despite our best intentions and forward thinking, the wording of the agreement can evolve into an unforeseen constraint. We therefore balance the letter of the agreement (the literal words on the page) with the spirit of the agreement (the intention behind the words), which can also evolve over time, if necessary. The spirit of the agreement allows us to say to one another: "we share a common goal but the strategy we’re using isn’t quite working, so let’s figure out another way to approach this."

This is not easy. And sometimes when we think we’ve captured the right spirit, we’re wrong. With one company, we went through the process of developing both an MOU and JVA over a series of meetings. We thought both parties saw this as a co-investment in a technology that interested us both (for the company, it would be profitable; for us, it would increase production and income for poor farmers). But over time, it became clear that they were mostly interested in easy access to development funds and had different expectations.

The journey from problem to solution in a situation like this is far from linear. We tried many approaches to resolve our differences, and I can’t tell you how to resolve such a situation within your particular context, but based on our experience it was essential that we were willing to relentlessly adapt, to scrap one plan after another and try a series of varied approaches, including being willing to end the partnership (which, at one point, we thought was on the horizon, but ultimately did not happen).  

In our experience, building a collaborative and productive spirit only happens when regular and honest communication transpires between us and our partner. This can happen in formal spaces such as meetings and informal spaces such as Iftar dinners,  shared cups of tea, and joint visits to the field. It takes a special skill set among your team to navigate such nuanced spaces of relationship building and management.

Integrated communication channels increase the likelihood of success

For us, MOUs and JVAs are negotiated and signed at a high-level, usually with senior management of a company at their head office. We find that regular contact with these managers (usually quarterly) is important to ensure we are both happy with the evolution of the partnership. But additionally we assign a mid-level manager from our side to work with one or more mid-level managers from the company’s side to oversee the day-to-day implementation of the JVA. Usually the collaboration is a higher priority for us than for the company, so our manager has to be skilled at client relationship management (CRM) and cultivate a network of contacts throughout the company who can help her/him in different ways as various issues arise.

We also link field-level project staff with field-level company managers, dealers, sales representatives, and others to ensure that efforts are coordinated at all levels of the company. These integrated, multi-level communication channels support better coordination and faster troubleshooting than relying just on higher-level communication channels. It generates the feedback loops we need to know when and how to adapt and facilitates the relationship building that makes managing adaptation easier and quicker (although it is hardly ever easy or quick!).

Experience over time builds trust and willingness to take risks

We’ve found that companies are not necessarily interested in jumping quickly into a collaboration with us, even when incentives and cost-sharing resources are available. We have much better luck with companies that we have worked with repeatedly and know what it is like to pilot and scale with us - overcoming failure, misunderstanding, and frustrations along the way (the classic "performing" after "storming" model).  

At iDE Bangladesh, we have some longstanding private sector partners. But new projects consistently provide opportunities for us to explore new partnerships. Especially with these new partners, we’ve become strong advocates of pilots. Pilots give us a chance to test ideas with partners, to adapt, and to only move forward once we both better understand the risks and mitigation strategies and have a clear, mutually understood vision of the opportunity ahead.

Our experience in Bangladesh suggests that written agreements are necessary, but not sufficient. We’ve tried to develop additional approaches which - among other benefits - create the space for practising adaptive management with our partners. We’d be happy to share more of our learning and would appreciate hearing about your initiatives too!

Kevin Robbins is the Director of Programs at iDE Bangladesh. Professionally he enjoys mentoring members of the iDE team and is interested in the technical areas of private sector and market systems development, scaling strategies, marketing, and systems thinking. Personally he’s focused on an active toddler and the preparations for a baby on the way. Before iDE, Kevin’s career included workers’ rights advocacy, organisational development, and research in agricultural market systems, nutrition, and food systems - plus a brief, but rewarding stint cooking in restaurants and working on farms.

This blog is part of our series on adaptive management.
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