You might need to change your mindset in order to both compete and cooperate with a competitor, but in some cases, Co-opetition can be a win-win scenario that is better than all other options. This week I read an article in the January-February 2021 issue of the Harvard Business Review by Adam Brandenburger and Barry Nalebuff called, “The Rules of Co-opetition”. In their article, the authors point out various scenarios as well as real-life examples to illustrate when Co-opetition makes sense and when it does not.
Energy Leadership and Co-opetition
As an Energy Leadership coach, I know that most people live their lives at energy levels where Co-opetition is not on their radar.
If you would like more insights into Energy Leadership, I have discussed the Energy Leadership principles of Bruce D. Schneider in my past articles:
At high catabolic energy levels, people are blind to win-win scenarios. Level 1 victims feel helpless in their situation and can’t see a way out. Level 2 fighters believe that their competitor must lose in order for them to survive.
Even at higher anabolic energy levels, some people will have a hard time accepting the idea of Co-opetition. At level 3, people are comfortable competing and do not mind their rival also having success but still might see the situation as a zero-sum game so cooperation is out of the question. At level 4, people are driven by caregiving so cooperation feels good but at level 4, competition becomes an afterthought.
Reaching a high anabolic energy level of 5 will finally allow you to see the win-win scenarios that become available by Co-opetition.
Higher Anabolic Energy levels provide a broader spectrum of options for your business and your life including Co-opetition when it makes sense.
When does Co-opetition make sense?
In their article, Brandenburger and Nalebuff point to agreements between Apple and Microsoft, Samsung and Apple, Ford and GM, Ford and VW, and DHL and UPS as examples of Co-opetition. In some cases, Co-opetition can simply save costs and avoid duplication of effort. In other cases, perhaps one company is better at one component of a deliverable, and another is better at a different component so they collaborate to get ahead of the industry. Sometimes a project might be too risky or too big for one company to tackle alone. The authors point out that perhaps sharing costs but not knowledge or key competitive strengths could be a good situation for Co-opetition. Also, once the benefits of a Co-opetition scenario are revealed, a decision must be made as to whether a different competitor might be approached to take advantage of the situation if the company declines the arrangement.
As I reflected on the Co-opetition option, I thought about restaurants. Have you ever noticed groups of restaurants in one area? Grouping together brings in more diners to the area so that the restaurants divide up a bigger pie rather than worrying about the size of their slice of a smaller pie. Restaurants in the same area can compete while also cooperate to have more customers for all of the restaurants located near that location.
Have you wondered, why does Starbucks sell wholesale coffee to a grocery store like Safeway but also have a licensed coffee shop within the store? Don’t they cannibalize their sales at the coffee shop by allowing Safeway to also sell the coffee in the aisles? In this case the grocery store provides added services to its customers and additional choice of coffee on the shelves, while Starbucks expands its reach by serving two different customer preferences. Starbucks is not an essential vendor of Safeway, and the two are not direct competitors so the arrangement works.
One form of Co-opetition for a small business owner can be achieved by joining a peer group like the Transcendent Peer Boards (see https://jayvarcoe.com/transcendent-peer-boards/ ) that I facilitate. The small business owners in my group meet once per month to exchange ideas, address each other’s challenges and provide accountability to each other as the group strives for success. The whole of the group is greater than the sum of the parts.
Is Co-opetition always the answer?
Is Co-opetition always the right choice? Of course not!
- There are times when you just need to put that competitor out of their misery and take their market share!
- Most of the time, you will need to safeguard your competitive advantages.
- Other times, your competitor will not have the right mindset. As I discussed earlier, some could be comfortable with multiple winners but some can’t imagine it.
- Sometimes the balance of power or control will not be equal. An arrangement can leave one party with no other options if the arrangement is cancelled.
- When the situation really is a zero-sum game and a win or lose scenario is inevitable, pure competition will rule the day.
Risks and rewards must be weighed carefully including an examination of the time horizon from short term implications to long term results. The key is to open up your mind to all of the options before eliminating the option. Think through long term implications before jumping to a conclusion.
Details of Co-opetition must also be evaluated
Even if Co-opetition seems to be a viable option, sometimes the details can make or break the decision:
- What is the scope of the co-opetition?
- How much cooperation is involved?
- How is the power or control shared?
- How do you unwind the agreement?
- How are the costs allocated?
- How are the benefits allocated?
Can Co-opetition work for your company?
Co-opetition can be a huge win-win for the two rivals as long as careful consideration is made for all of the potential hazards of “sleeping with the enemy”.
It makes sense that we all need some help to reach our full potential from time to time but for many, the thought of approaching a competitor would never cross their minds. Learning more about Energy Leadership can help you to see the wide array of strategies that are at your disposal. Please contact me in LinkedIn or at email@example.com if you would like me to help you to unlock the power of Energy Leadership for your business or your life.
Also, if the idea behind Transcendent Peer Boards interests you, I am currently forming a board in the Phoenix Metro area that will be meeting on Zoom. I am happy to provide you with more information and also evaluate if you would be a good fit for the group. You may reach me by message on LinkedIn or e-mail at firstname.lastname@example.org.