Why Major Corporations Are Focused On Co-opetition

Why Major Corporations Are Focused On Co-opetition

“It’s not enough to succeed. Others must fail.” – Gore Vidal

In 1997, Adam M. Brandenburger from the Harvard Business School and Barry J. Nalebuff from the Yale School of Management co-wrote a book. They appropriately named the book Co-opetition in an effort to showcase the benefits of collaborating with competitors in order to change the sum of the game.

Twenty years later and co-opetition is the buzzword everyone is talking about. We’re going to learn about why co-opetition is important for enterprises and startups alike.

 

Co-opetition is Not Collaboration

While it is often assumed that co-opetition is the latest name for collaboration, the truth is that co-opetition is a conscious shift in strategy and a change in the way companies perceive other key players in their market.  

Businesses often believe that the only way to succeed and take a chunk out of the available market is at the expense of competition, or,Co-opetition is not collaboration as Gore Vidal put this thought, “others must fail.” What this causes is a cycle of tit-for-tat reactions governed by game theory that produces an industry in which companies are driven by reaction and fear of their competitors’ actions rather than operating independently in a way that strengthens and maximizes their competitive advantage.

With co-opetition, on the other hand, failure of others is not the end goal – in fact, it’s the opposite. Contrary to trying to take a bigger piece of the market-share-pie by predicting what your competitors will do, co-opetition is about finding what your competitor can do and what you can do with them in order to make the general pie bigger. It’s about working together to create better outcomes for all. 

So why is co-opetition becoming trendy? As society as a whole is shifting towards a social-sharing one in which the goal of any action should yield a win-win reaction, the business world needs to adjust accordingly. The way business leaders and corporations are doing this is by working with competitors in a way that doesn’t threaten existing operations but strengthens them – this is co-opetition.

 

Co-opetition and Growth

Co-opetition is based on the understanding that leveraging the relative advantages of two competitors will boost an entire ecosystem, increasing the value of both companies, thus yielding a win-win situation.   

One of the best ways in which companies can create growth through co-opetition is by working together to create entirely new products. R&D is expensive – even when you run PoC’s with startups, have a strong team, and have all the cards in your favor – rarely does everything go smoothly from the start. Co-opetition with a competitor in the same industry could reduce the costs and resource allocation strains while ensuring that both companies win from the success of the new product.

Companies looking to work with competitors need to ensure that they chose rivals that have different advantages than they do, for if not, growth may be hindered and the co-opetition will quickly become a competition.

#coopetition means working with competitors to create a win-win situation for all Click To Tweet

The most important thing to remember when joining a competitor is that the win-win situation can only be achieved if both sides truly win at an equal rate. To do this, it is important that both companies agree to share all information and employ complete transparency. Companies worried about their intellectual property are able to protect themselves through iron-clad NDA’s, however, without trust and the mutual desire to achieve something great together, co-opetition will not be successful.

 

Co-opetition for all

The beauty of co-opetition is that it has the potential to work in nearly every industry – we’re going to spotlight a few of those industries in the coming weeks so stay tuned and be sure to subscribe to our blog!

The driving force behind co-opetition is the understanding that even in business, or rather, especially in business, the sum of 1+1 can equal 3 if all parties are on board.