Co-opetition Ventures in Similar Fields Work Together
Co-opetition: Traditionally, when big companies cooperate it is called derogatory and anti-competitive things like, price fixing, or antitrust. However, coopetition is an increasing behavior among both corporates and entrepreneurial businesses as well. It is a function of competing companies that also cooperate for operational efficiency.
Co-opetition as a business idea was described by Barry Nalebuff (of Yale Business School) and Adam Brandenburger (of Harvard Business School) in their book, Co-opetition (Currency Doubleday, 1997). It means cooperative competition – when industry participants behave in a way that benefits all. They coopetate rather than compete.The authors describe what results as a Value Net.
Enabling greener commerce is a strategic priority for eBay Inc. So one of their initiative is Patagonia + eBay Store where Patagonia helps eBay customers sell and buy high-quality pre-owned gear, reducing their environmental impact by extending the useful life of Patagonia products.You might also say that Amazon and Apple indulge in coopetition through the Kindle app for iPad. One of the more interesting examples is the cooperation between the Government-owned USPS and its commercial rivals, FedEx and UPS, since the latter may be more efficient at the network level, while the former is unbeatable at the ‘last mile’, in many cases.
An example of co-opetition, Care Innovations, has been formed from a combination of GE Healthcare’s Home Health Division and Intel’s Digital Health Group and aims at being a catalyst for changing health care models, describing itself as a clinical, technical, and operational partner for delivering care beyond the traditional walls of medicine. There a growing focus on people taking personal responsibility for wellness (rather than sickness), the US Federal Government is taking steps to see institutional change too.
Using open source licensing for commodity software in cooperation with competitors whilst carefully guarding software that provides a business edge from those same competitors is a classic example of co-opetition. Open source offers significant potential for the reduction of costs for in-house development. Achieving these savings does however require that an organization understands open source and how to operate in a very different development environment.
Co-oeptition is a Mindset a Well as a Strategy
If you are a dolphin you see the ocean as a friendly and fun place to be, where collaboration is a norm and violence is rare. That does mean there are no sharks about, but you assume that they mean you no harm. If you are a shark, you assume that everything is food or foe and that mindset results in that being your reality.
In business, your mindset produces your behavior. If you think, “I’m going to beat the competition”, you will most likely indulge in predatory behavior and think nothing of killing competitors if it gives you a bigger bite of the market. On the other hand, if you think, “I’m going to create new opportunities”, chances are that you will find opportunities to collaborate and expand your collective market.
Such a co-opetition mindset will bring you think about how you can work with others rather than against them. It is not unrelated to the idea of ‘shared value’, a term given new impetus by the strategy guru, Michael Porter.
Creating Shared Value
Michael Porter and Mark Kramer say, “Capitalism in under siege…companies are widely perceived to be prospering at the expense of the broader community…” and then go on to describe how “Companies must take the lead in bringing business and society back together…The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges.”
The two pieces of the jigsaw belong together and since the Industrial Revolution, their has been strong denial of the mutual interests as companies externalized so many costs. The environmental movement has propelled managers into accepting the interdependence.
This is the biggest area of coopetition. Each party has much to gain from the other and if business strategy ignores the fact, not only do mutual benefits result, but sustainability depends upon it.
Financial Bootstrappers Have Known Co-opetition for Ages
Good entrepreneurs find creative ways to minimize their costs. It is frequently described as financial bootstratpping, but the new business just knows it as a means of survival. If a startup needs a new machine, but does not yet have sufficient volume for it to be in constant use, it may decide to see if there are other small businesses in the same field who might share in purchasing the equipment.
Another example of co-opetition among entrepreneurs happens when there is not a full-time job for a bookkeeper, a management accountant or other specialist. Of course you can outsource the bookkeeping or use software, but often you want the regular advice of your own person, so, by finding another venture in the locality in a similar position, you could make a full-time job between the two of you.
You may find such opportunities by joining a local Entrepreneurs MeetUp group. An other example of like-minded businesses co-opeting is The Small Business Web the trade association for companies selling cloud-based software for small businesses. It was started by 5 founding companies Batchbook (CRM), FreshBooks (accounting), Mailchimp (marketing), Shoeboxed (expenses), and Outright (bookkeeping), who began talking about how similar their philosophies were about customer service and making life easier for small business owners.
This example of building informal alliances, or co-opeting, with other ventures like your own mirrors natural relationship building that people do in their private lives.