Three-Party Coalition Design
A design framework for creating stable three-party coalitions by ensuring no two-party sub-coalition is viable.
A design framework for creating stable three-party coalitions by ensuring no two-party sub-coalition is viable. Based on biological observations that three-member coalitions (68% lasting >2 years) are more stable than two-member coalitions (37%) when properly balanced.
When to Use Three-Party Coalition Design
Use when designing coalitions with 3+ members, evaluating stability of existing multi-party coalitions, or restructuring unstable two-party coalitions by adding a third member.
How to Apply
Balance Contributions
Ensure each party contributes unique, non-substitutable capabilities. Each contribution must be essential - no two parties alone can deliver full value. Anti-pattern: Two parties contribute essentials (A and B), third contributes nice-to-have (C). C gets ejected when costs need cutting.
Questions to Ask
- What unique capability does each party contribute?
- Can any two parties deliver full value without the third?
- Is each contribution truly essential or just nice-to-have?
Outputs
- Contribution map for each party
Balance Benefits
Revenue/value distribution must correlate with contribution. Stable distribution: 35-40% / 35-40% / 20-30% (matching contributions). Unstable distribution: 50% / 30% / 20% (B+C could exclude A and split 100% = 50% each > their current shares).
Questions to Ask
- Does each party's benefit match their contribution?
- Would any two-party coalition improve their individual shares?
Outputs
- Benefit distribution plan
- Sub-coalition incentive analysis
Create Mutual Interdependence
Design coalition so no two-party sub-coalition is viable through: Geographic integration (components in different locations), Technology integration (each holds different critical IP), Market integration (each has exclusive regional access), Financial integration (cross-shareholding expensive to unwind).
Outputs
- Interdependence mechanisms
- Defection cost analysis
Rotate Leadership
Prevent permanent hierarchy: CEO/chair selection alternates by member origin every 5-7 years. Alliance board chair rotates annually. No single party becomes dominant over time.
Outputs
- Leadership rotation schedule
- Governance structure
Apply Three-Party Stability Test
For each possible two-party sub-coalition (AB, AC, BC), test: Can they deliver full value without the third? Is their combined share >70%? Would their benefit distribution improve? Stable coalition: All three sub-coalition tests fail. Unstable coalition: Any sub-coalition test passes.
Questions to Ask
- Can AB deliver full value without C?
- Can AC deliver full value without B?
- Can BC deliver full value without A?
- Would any pair's benefit improve by excluding the third?
Outputs
- Sub-coalition viability assessment
- Coalition stability verdict