Co-opetition – Why You Should Collaborate With Other Businesses

The power of partnership between business can transform and disrupt industries. Co-opetition, or sometimes co-opetition, is a portmanteau of cooperative and competition, and describes the concept of collaboration between businesses who may otherwise be considered as competitors.

While on the surface, it may seem like these are two opposing concepts, competitors can often benefit from strategically and creatively cooperating with one another.

What Is Co-opetition?

Co-opetition was first discussed and studied in a book from the late 90’s titled Co-opetition, and academic institutions were among the first in the world to utilise it when collaborating on research. As a business strategy, co-opetition has been used most often by large and often multinational companies, where they pool their resources for mutual gain.

Rather than a zero-sum game where there is a winner and a loser, companies are joining forces, competitors are becoming collaborators, and they’re combining their expertise to create a more complete solution for their customers.

Businesses that are looking to increase sales or adapt to changing markets should certainly look for the right opportunities to work with other firms in their industry in order to provide a more complete customer solution. In the networked world of today, the concept of co-opetition has never been easier to implement and it’s a strategy that actually makes great sense for all kinds of organisations.

What Are The Benefits Of Co-opetition?

The perceived risks of collaboration with rivals might seem daunting, but there have been numerous studies that have found the benefits are highly likely to outweigh the possible disadvantages. In fact, these studies found that this kind of collaborative competition reduces mutual company costs well over half the time.

Smart entrepreneurs realise that when multiple companies are competing for business with a bigger competitor, sometimes they have to fight against their natural instincts of considering their competitors as the enemy. By utilising co-opetition strategy, especially in the start-up and tech industries, companies can integrate and become larger entities who can ultimately close the deal together as a team.

Co-opetition can work between all kinds of companies, whether they are direct or indirect competitors on both a vertical basis such as partnering with distributors and suppliers, as well as on a horizontal basis between direct competitors by teaming up to expand the market or to improve their standing against more well-placed competitors.

By keeping their customer’s best interest as their first priority and working together, co-opetition can pay big dividends when it comes to winning individual contracts, overall company growth, as well as with customer relations.

When only one company wins, often it’s the customers who lose the most, getting inferior products that could be much better if companies were to work together. Co-opetition provides a wide range of benefits to all companies involved, such as extended market reach, distribution efficiency, increased cost-savings, as well as product integration, bundling, and up-selling. Co-opetition also has the propensity to eventually lead to smart company mergers.

So, just how common is co-opetition, and how exactly does it work in the real world?

What Are Some Examples Of Co-opetition?

Co-opetition in the tech industry is prevalent since it’s common for two competitors to work together towards a common goal while forming a much stronger entity. One of the best-known examples of co-opetition in this industry is the working relationship between Intel and Microsoft. Microsoft is able to create more powerful and faster software which increases the demand for Intel chips, and when Intel produces faster chips, Microsoft, therefore, becomes more valuable as a company.

There are also plenty of co-opetition examples where multiple companies work together in the real world on the same project where it is beneficial for all. For example, when a customer with a disability needs a fibreglass swimming pool installed. A mobility equipment manufacturer would work together with a swimming pool builder or installer and an equipment hire company to ensure that the project is safely accessible with powered wheelchairs.

Another good example is a local mortgage broker teaming up with online technology such as comparison sites to provide a superior home loan experience to their customers. As many people browse on Google to research and compare home loan options before committing, therefore working cooperatively with comparison sites (while still operating as competitors) is mutually beneficial for both the businesses to build the potential client’s trust and convert them into actual customer.

Co-opetition is even being used by nonprofits in order to combat the depletion of ozone and resolve issues like global warming. An NGO called Refrigerants Naturally was established by Red Bull, Coca-Cola, Pepsi Co, and others drink companies who are usually well-known to be fierce competitors. Together, they are working together to develop new sustainable refrigeration technologies that will eventually replace fluorinated gas with natural and greener refrigerants.

While capitalism inherently requires competition by its very nature, co-opetition suggests that competitors can also work together in business without ignoring their self-interests. A perfect example of this is a bathroom renovation business teaming up with a local plumber. While they may sell the same products and offer some of the same services, teaming up is mutually beneficial to both businesses.

How you might be able to use co-opetition in your business is only limited by your imagination. Just remember to ensure your intellectual property is fully protected by a two-way non-disclosure agreement. Be cautious, but not paranoid.

Final Thoughts

If you really want to succeed in business, look at co-opetition as a way to change the rules in order to win. Just remember that the game you are playing is only a matter of perspective, and there’s always someone else thinking outside the box who is ready to play differently. It’s up to you to join the winning team or simply get left behind.