P3 governance
A power game without a master
by Gilles Paquet
Basically, the Canadian socio-economic system consists of some 1,000
idiosyncratic ways of doing things, ranging from macro-institutions like
our health care or banking or police systems, to micro-arrangements like
the way in which liquor is distributed.
The broad institutional style of a socio-economy is defined by the
division of labour among three mechanisms: the market, the government and
not-for-profit or solidarity institutions. In some countries, markets are
required to do much of the job of coordination of economic activities, and
government and solidarity organizations play a minor role. In others,
governments or not-for profit organizations play a much more important
role.
In Canada, there was a systematic shift toward more and more government
involvement in the coordination work between the 1930s and the late 1970s.
Thereafter the pendulum swung the other way with much devolution of state
activities onto private and not-for-profit concerns.
It is naive to presume that there is always a perfect fit between
particular tasks and one of the three mechanisms, each of which, in
isolation, often does a poor job. A case can be made that the job would be
dispatched much more effectively if one could creatively mix the features
of the three: the long term horizon and fair stewardship of the public
sector, the creativity and dynamism of the private sector, and the
compassion, commitment and trust in the not-for-profit sector.
This is why there is much experimentation with mixed institutions built
on partnerships. The most interesting aspect of these experiments is the
fascinating evolution in the nature of the linkages that have proved
effective. What were at first mainly opportunistic efforts to take
advantage of certain specific skills of sub-contractors (with the need to
constrain them with strong legal contracts and numerous specific
requirements and penalty clauses) has evolved into true partnering based
on a flexible continuing relationship rooted in efforts to respond to the
expectations and needs of the other parties (with the need to build on
loose arrangements and soft accountabilities).
Governance of these partnerships has created important new challenges:
- These partnerships have blurred considerably the boundaries between
the collaborating firms and agencies. In order to work
collaboratively, the partners have to break down institutional
barriers and shift their focus from process to performance.
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- These partnerships must produce new knowledge - innovate - if they
are to succeed. As a result, knowledge must be shared and traditional
means of controlling intellectual property must be abandoned. The
parties must be mutually accountable. Such accountabilities must
provide the sorts of incentive needed for the parties both to wish to
join the game in the first place and to ensure that they will meet
their commitments, even in circumstances when they cannot be forced to
do so.
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- As the strength of the partnerships (i.e., the degree to which such
dual incentives to join and honour commitments exists) grows, the
underlying conventions require less and less formality. But this
generates an immense problem when it comes to the definition of
performance or the fair sharing of the surplus. Partners need a much
higher degree of commitment and trust, and must develop such
relational capital if it does not exist.
Because of these challenges, at first glance partnerships may appear to
be unmanageable. In fact, in a concrete setting, really committed
partners, each having different frames of reference, always find ways to
co-design viable arrangements. Indeed, it is a result of this very process
of co-design that the intentions and meanings of each partner are revealed
and negotiation in a situated context can be conducted.
This is not the place for an inventory of the vast array of possible
rationales partners may harbour as they enter a collaborative arrangement.
But it may be important to underline a few that have been mentioned widely
in the specialized literature, to help identify the sorts of interfaces
likely to exist where compromises might be sought, and to suggest ways in
which the "proceeds" may be shared. Since the partners may not
be at all after the same sort of loot, sharing the "proceeds" in
specific circumstances may not be as intractable a problem as one might
anticipate.
First, partnership may simply be a device to trigger management reform
or restructuring. In this case, the dominant logic involved is process
reform - simply using partnerships as a way to destabilize the
organization. The partner is an agent of subversion meant to inject new
efficiency in the organization.
Second, the objective may also be to effect a problem conversion -a way
to redefine the business one is in through some reframing. The partner is
an agent of seduction that helps elicit a different way to tackle a task;
for example, brokering a public interest issue like environment protection
into one that is of interest to entrepreneurs.
Third, partnership may be sought for the purpose of moral regeneration
- to inject the spirit of competition and entrepreneurship into a
bureaucratic organization, or from a concern for the long run in myopic
quarterly, earnings-fixated organizations. The partner is an agent of
moral refurbishment.
Fourth, partnership is also an instrument of risk shifting. It is a way
of unloading onto the partner a portion of the responsibility for some
commitment. The partner becomes an agent of risk sharing.
Fifth, partnership may simply be a mode of power sharing. In this case,
the intent is a true partnership because it is recognized that no one
party has the resources, information and power to govern appropriately.
The partner is an agent of cooperation.
Most partnerships are a mix of these rationales - multi-purposed
instruments used for various reasons. If they fail, it is usually because
the partners refuse the basic condition - power sharing. One or the other
partner wants to use partnership as a tool to reform, convert, rekindle,
or shift risk but without paying the price of relinquishing some power,
accepting the need to negotiate fair terms of agreement, developing
relational capital and trust, etc. The result is a phony partnership bound
to fail. Fortunately, partners who know that they are in cohort for the
long run see that this is necessary and appear to be willing to pay the
price.
Gilles Paquet is a professor of
public administration at the University of Ottawa and a founder of the
Centre on Governance.
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