Jean Roberts

A Joint Venture becomes the means of bringing a profit-driven enterprise into collaboration with a mission-driven organisation in order to ensure a measurable and beneficial outcome. This means that the focus of the two collaborating parties in this partnership agreement is the joint venture. Collaboration involves such processes and procedures as information exchange, decision-making, risk assessment, monitoring progress and measuring outcomes including specific community benefits and return on investment.

Issues that need to be clarified prior to commencement of such a partnership agreement

Ability to manage organisational growth

Organisational growth can be planned or unplanned, organic or inorganic, driven by demand or lack of competition, or just being in the right place at the right time. When a commercial enterprise and nonprofit organisation agree to collaborate in designing and implementing a joint venture, each must be aware of the need to anticipate and manage the impact of the venture on their usual activity, reputation and public profile or market strength.

Managing growth begins with an analysis of the manner and extent to which the commercial enterprise and the nonprofit organisation are managing their current and known commitments and opportunities. The joint venture will add another dimension to the daily run of affairs of each party. Any new initiative has potential to impact positively or negatively on the growth potential of a commercial enterprise and a nonprofit organisation, and a joint venture is no exception.

The owners or managers of a commercial enterprise and the board of a nonprofit organisation should both be convinced and confident that the timing of a joint venture is the ‘right time’ in the experience of their respective organisations.

Lateral thinking and entrepreneurial energy

It is essential for both parties to agree on a decision-making procedure that allows and encourages lateral thinking and displays entrepreneurial energy in achieving the desired outcomes of a joint venture.

Entrepreneurs use the principles and practices of innovation as a basis for entrepreneurial activity. The Collins Concise Dictionary Plus defines innovation as ‘something newly introduced, such as a new method or device: inventing or beginning to apply methods or ideas: renewing, or creating something new from what already exists’.

A successful joint venture is by definition an entrepreneurial activity for which the principles and practices of innovation have been followed. It should be designed achieve its carefully developed objectives and measurable outcomes. It should add value to the life or lifestyle of the target audience and major stakeholders, including the commercial enterprise and the nonprofit organisation. Additionally, it should provide a satisfactory return on investment for the commercial enterprise.

However, things can go wrong in collaborative working relationships – in fact, they frequently do. So it is wise indeed to enter preliminary discussions with caution, with a clear understanding of the expectations and requirements of the each party to the joint venture, and with a strong intention to raise any concerns or doubts as soon as they occur. Similarly, should either party have a concern or doubt, it is wise to encourage or facilitate discussion to clear the air or clarify the issue as quickly as possible. It may be in the best interest of all parties to delay collaboration, even after prolonged discussion.

It is far better to defer, delay or even cancel plans to collaborate than to proceed with a working relationship that has little chance of being collaborative and less chance of being successful.

Reasons to delay could include:
a) inappropriate timing,
b) key individuals are sceptical,
c) one or both parties are unable to commit adequate or appropriate resources,
d) one organisation is overbearing in its attitude and behaviour, or
e) an organisation that could bring a critical contribution cannot be convinced or persuaded to collaborate.

Critical Success factors in a joint venture

A number of factors exist which, although common to both for-profit and nonprofit organisations, require different ways and means of integrating or ‘bedding them down’. They are critical to the success of a joint venture and therefore are presented here as ‘critical success factors’.

A critical success factor is a factor which, if not functioning or operating satisfactorily, may place an organisation – or, in this instance, the parties to a joint venture – at risk. Critical success factors can include:

• procedures
• documents
• systems
• attitudes, or
• behaviours.

Many collaborative arrangements are being undertaken between for-profit and nonprofit organisations within the theme of a joint venture. However, it is essential that all parties in such a collaborative relationship are mindful of their own needs, interests and aspirations – and protect themselves against misadventure, misbehaviour or misdemeanours through which their valuable reputation, integrity or public image could be sullied or damaged.

It is important to emphasise that the following critical success factors apply equally to each party in a joint venture.

Critical Success Factors

1. A clear understanding of and commitment to the need and opportunity to collaborate
2. Monitoring the constant presence of uncertainty
3. Ability to manage organisational growth
4. Lateral thinking and entrepreneurial energy

The challenge for each party is to work out how to ensure and manage these 4 critical success factors before entering into a formal partnership agreement to achieve an agreed joint venture.

In many cases, ‘someone else’s money’ will be sought to fund the joint venture.

The starting point for each party is to ensure that such funds will be wisely used and managed, with both parties equally accountable for achieving successful outcomes from their collaborative working relationship.