Co-opetition – Collaborate With Competitors to Get Ahead

Originating from game theory, co-opetition describes how competitors can cooperate to get ahead, or reach a common goal, by working together. Despite its benefits in the prevailing business climate, competitors are – as you might know – often hesitant to collaborate, and as a result, they miss out on favorable opportunities. 

Keep focus on core competencies
By collaborating and utilizing each other's strengths, companies can focus on their core competencies. As an example, when Ford exchanged their 10-speed transmission for GM's 9-speed transmissions, both parties were able to reap the rewards of each other's strengths while saving time and money in addition to freeing up resources to work on new strategic initiatives to gain a competitive advantage.

“Cooperation is an overall win-win, but splitting the gains is a zero-sum game”

One of the biggest obstacles to co-opetition is the fear of strengthening your competitors more than you're gaining yourself. Although greater value could be created by cooperating with your competitors, splitting the difference is a zero-sum game. Power imbalances, lack of trust, and uneven workload distribution can lead to one party gaining disproportionately more than the other.

Succeed with Co-opetition
Co-opetition can create positive-sum games by collaborating with competitors that have complementary strengths. Bringing different assets to the table increases the chance that the collaboration is beneficial for both parties. To succeed with the collaboration, its crucial that the right people with the right mindset are onboard to handle the duality of collaboration and competition. Furthermore, clear contracts and agreements are required for a fair split of the potential gains.

“Competitive renewal depends on building new process capabilities and winning new product and technology battles. Collaboration can be a low-cost strategy for doing both.”

Collaborating with a competitor may seem complicated and require substantial considerations, but it is necessary for businesses to remain competitive and gain advantages by focusing on their core strengths in the fast-changing business environment. By building new process capabilities or gaining new product and technology through collaboration, businesses can renew their competitive edge. Could your competitors help you get the more out of your business?