Harnessing Co-opetition for Sustained Competitiveness In the ‘90s, businesses became increasingly aware of the ecological component of business strategy. Many began to look beyond the simplistic view of raw competition to embrace the concept of “economic symbiosis.” In the process, complexity and speed of change redefined business alliances. The Internet, ERP, and other tools have made the “extended enterprise” a reality, and leading-edge firms began to encourage mutualism.
In 1996, Adam Brandenburger of the Harvard Business School, and Barry Nalebuff, of the Yale School of Management, wrote a book called Co-opetition,1 which was summarized by Audio-Tech Business Book Summaries. It became a Business Week and New York Times best-seller and introduced the concept broadly throughout the business world.
The idea of “co-opetition,” which refers to a business cooperating with its competitor, is not new. But many of the key players in the IT boom and bust of the ‘90s, like Microsoft, AOL, and Apple, are noted for embracing the strategy as they attempted to grow in cut-throat markets.
Experts argued that such collaboration occurred primarily because of the rapid convergence of many high-tech industries, brought on by deregulation and the advent of new technologies. For example, as software companies such as Microsoft expanded onto the Internet, it became possible to compete and cooperate with others at the same time.
Seeing the Internet moguls in action in the late ‘90s, “cooperative competition” seemed to say it all. But the subsequent economic downturn temporarily stressed these eco-systems to the breaking point. The character of many of these alliances changed, causing former partners to turn on each other in the battle for survival.
Nevertheless, the trend toward co-opetition seems to be coming back stronger and better than ever. But this time, the alliances seem to make a great deal more sense than during the freewheeling days of the Internet boom.
For example, consider the Canadian business eco-system led by Canada Post.2 In 2001, Canada Post became the fulfillment house for the Canadian version of Amazon.com. A multi-million-dollar contract with SAP for enterprise resource planning software turned the staid postal company into a trend-setting enterprise.
This would not have been made possible without a full integration of a wide range of companies sharing logistics. Orders come in to Amazon via its Web site. From there, it relies on Assured Logistics, a division of Progistics, which is a Canada Post company, to complete the transaction. That can only happen with the electronic sharing of information between the companies. It requires a significant amount of trust. Each party must be confident its business partner’s system is secure and up for the challenge.
This is just one small example of alliances within collaborative commerce and the changing world of supply chain management. At one time, the supply chain was simple and linear. The firm demanding the service or good called the shots. However, that’s changing as a result of technology.
The linear supply chain is giving way to the “networked environment,” where speed and flexibility drive the relationships. Today, smart companies are forming eco-systems with partners. Linear is out, and supply chain equality will be the norm. It is all about building an “adaptive business network.”
There’s a more open interaction among companies in real time, as they look for ways to reduce the latency within their supply chain and leverage the trading capabilities their partners have.
It is happening in industries, such as electronics and automotive, where outsourcing, just-in-time delivery, and the creation of business-to-business exchanges have changed the way firms build products and buy goods.
The challenge for firms, moving forward, is to either adapt or die. What it means is companies must change the way they collaborate with their counterparts. It is all about developing tighter integration with customers and suppliers to the point where companies must be willing to give up information that would once be considered unthinkable to expose.
Looking ahead, we offer the following forecasts:
1. Alliances and partnerships among firms will once again proliferate during the emerging economic boom. But this time, rather than indiscriminately “linking up” in hopes of getting access to eyeballs or “having one’s hand in every pie,” firms will be much more selective. 2. Those who derive real economic benefits from their alliances will carefully examine the business eco-system, looking for true synergy. As the boundaries blur between businesses ? and between cooperation and competition ? those who find ways to exploit co-opetition will have the opportunity to become winners in the battle for business survival.
References List :1. Co-opetition by Adam Brandenburger and Barry Nalebuff is published by Currency/Doubleday Broadway Publishing Group, a division of Random House. ⓒ Copyright 1996 by Adam Brandenburger and Barry Nalebuff. All rights reserved. The audiotape summary of Co-opetition is available from Audio-Tech Business Book Summaries. Ask for catalog #12962. 2. National Post, March 10, 2003, "Survivor: Business Ecosystem: New Types of Alliances Are Being Formed as Companies Are Told to Adapt or Die," by Jim Middlemiss. ⓒ Copyright 2003 by Southam Magazine & Information. All rights reserved.
