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The Art Of The PPP Deal: Facilitating Collaboration Between The Government And Private Sector

The Art Of The PPP Deal: Facilitating Collaboration Between The Government And Private Sector

The PPP Is One Of The Oldest Business Partnership Models And Has Been Around For Centuries

It’s no great secret that individuals in business and media love to throw around jargon and acronyms. For some, there’s no greater thrill in life than to whip out the latest lingo at a cocktail party to help boost their self-confidence a few rungs.

While there’s certainly a litany of jargon that bubbles up to the surface, when it comes to businesses dealing with the government, there’s no better buzz word than ‘Public Private Partnership’ (PPP). The PPP is one of the oldest business partnership models and has been around for centuries the world over.

On this front, India has had a rather complicated relationship with PPPs given various government forms dating back to even before the British rule.

Leaving history lessons aside, the PPP in India is now trending as one of the hottest partnership forms in the business landscape. Why may you ask?

The answer is actually rather simple: more and more companies are innovating at a rapid pace and are simply developing business models that are years ahead of regulation. While this phenomenon undoubtedly happens globally, India is seeing it in spades largely because robust regulatory frameworks are still rather undeveloped across many industries.

This reality poses a challenge for many companies who have both discerning customers and even more discerning investors to please. The fundamental question for these businesses is how they then work with the government as opposed to against government to help achieve economic objectives and satisfy diverse stakeholder groups. The ultimate answer in many instances is to craft a well-balanced PPP.

The Beauty Of A PPP Deal

The essence of a PPP brings together a government (whether city, state or central) with a company to create a formal framework for that business’ future development. In many instances, governments take the lead with these partnerships because these relationships tend to reflect favourably on the public sector in terms of their vision and business friendliness.

In many PPPs, the government sets forth a clear set of guidelines or rules for the company to follow such that actual implementation of the product or service is smoother. The public sector typically will take a broad, expansive view since it will showcase its wider aspirations in that respective industry.

The beauty of the PPP is that it is largely industry agnostic and this type of partnership is possible across the board. As such, it’s important for companies to understand the ‘How’ in terms of originating PPPs and then ensuring that their implementation is done in a productive fashion that will provide long-term value for both sides.

Just like with a partnership between two businesses, the partnership between a private sector company and the government all starts with aligning mutually shared common interests. It’s essential for the company to take a step back and think deeply about the actual interests of the government in that respective business and how the proposed partnership can help the public sector in achieving them.

This can be easier said than done since Indian governments tend to be multi-layered with sometimes bewilderingly complex bureaucracies whose exact workings are not always clear to the private sector.

The best way to truly understand the government’s interests is to engage across multiple stakeholders to obtain a 360-degree view. Mapping out the hierarchy within that particular part of government is also extremely helpful when considering how the public sector might respond to your company’s potential proposal.

Timing Crucial To The Success Of A PPP

Just like with fundraising, timing is super critical as it relates to originating a robust PPP. If you’re looking to raise money in six months, would you start fundraising after five months? Of course not. The same philosophy must apply to crafting a PPP.

Governments are the voice of the people and they operate at a different timing cadence then the private sector (and they always will!). As such, it’s essential the companies realise that to craft a meaningful PPP, it’s crucial to provide a long enough lead time upfront for the discussion to develop organically.

This should not be rushed by any stretch. More than anything, governments love a great story and showcasing your business’ progress over time will allow the government to gain familiarity and help better sell your story to their various stakeholders.

In the very first discussions with government, listening will be your most important responsibility. The government always gives off hints and subtle clues around what will work and what will not. Oftentimes, companies miss out on these clues since they’re too busy pushing an agenda. Avoid this at all costs because this marks the beginning of a lopsided, one-dimensional partnership that will likely never see the light of day anyway.

After the first few discussions with the public-sector officials, always remember to recalibrate your partnership strategy/value proposition based on the inputs received. This careful recalibration will show that you have in fact listened and that you’re actively working for a mutual win-win.

In reality, these recalibrations might very well take place over multiple meetings across several months, but it’s wise to not lose sight of the larger picture and the ultimate prize. Once the government is truly onboard, they tend to go all in provided you live up to your end of the commitment.

Above all, a PPP must show ROI for both sides. For the private sector that typically means more customers, higher revenue, better profitability. For the public sector, that typically refers to helping introduce products or services that tangibly improve the lives of its citizens (i.e. vote bank).

Along the way, the government will also expect that your PPP will help them to increase revenues (higher tax base) or reduce administrative costs so that their existing tax revenues will stretch even further.

While the numbers game can work with the government to a certain extent, it’s important to never lose sight of the fact that both the private and public sectors are in the people business. When crafting a PPP, this is almost always the least common denominator that works the best in designing a mutually beneficial partnership.

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

Author

Greg Moran

Community

Greg is the CEO & Co-founder of Zoomcar, India's first (and largest) self-drive car rental service.

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