Co-opetition: A Strategic Approach to Gaining Competitive Advantage and Mitigating Risk
I heard the term “co-opetition” for the first time in business school in the early 2000’s. What an interesting concept. Not every business in the same industry needs to operate in a zero-sum game? Cool.
As a business executive, I'm always looking for ways to stay ahead of the competition while mitigating risk. One approach that I have implemented over the years is co-opetition. In fact, through my experience in the cannabis industry, I have found much more need and more receptive companies than I found in other industries. I am posting this article because I am curious how others think about the concept of co-opetition, its benefits, challenges, and how to implement a successful co-opetition strategy in your industry.
There is also the nagging thought that your business could inadvertently help the competition more than helping your own business. I have heard the question, “Why would we work with company X and help them gain revenue and/or market share?” A fair question, so you certainly want to make sure the benefits outweigh the risks. But if your business is too insular, you may lose out in the market as well.
What is Co-opetition?
Co-opetition is a strategic approach that involves collaborating with your competitors. It's a combination of cooperation and competition, where businesses work together to leverage each other's strengths and expertise while maintaining their competitive edge.
The concept of co-opetition was first introduced by Adam Brandenburger and Barry Nalebuff in their book, “Co-Opetition: A Revolution Mindset That Combines Competition and Cooperation.” It highlights the idea that businesses can achieve more by working together than by working alone.
Co-opetition is not just about collaborating with your competitors; it's about finding ways to create a win-win situation. It involves identifying areas where you can work together to achieve mutual benefits.
The example many are aware of is co-packing in the beer industry. Many breweries have extra capacity. They sell that capacity to competitors. Our own Boston brand, Sam Adams, used co-packers. That’s a win for the factory to offset their fixed expenses and it’s a win for the brand because they don’t have to build and maintain a factory, especially in their early days. I am sure there are risks but this is a tried-and-true option in that industry.
What examples have you experienced and was it worth it?
Benefits I Have Experienced
In the cannabis industry, one benefit of co-opetition I have derived is the ability to bring products to market by sharing resources and expertise. For example, as a cultivation company, we could produce sought after cannabis strains. But as a manufacturer we didn’t have all the equipment or expertise to produce certain types of products. By joining forces with friendly competitors, we were able to elevate our brand and market share while simultaneously our competitor could tout the end product was derived from the popular strains we produced. Co-opetition and co-branding.
Implementation and Measuring Success
Implementing a co-opetition strategy in your business ecosystem can be challenging, but it's not impossible. Once you have identified potential partners, it's essential to establish clear goals and objectives for the collaboration. This will help to ensure that everyone is on the same page and working towards the same goals.
There are several key considerations for successful co-opetition. One of the most important is to ensure that the collaboration is beneficial to all parties involved. This means that each business should be able to achieve their goals and objectives while still maintaining their unique differentiation.
Another consideration is to establish clear guidelines and protocols for the collaboration. This will help to ensure that everyone is aware of the expectations and requirements of the partnership.
Finally, it's essential to monitor the collaboration and make adjustments as needed. This will help to ensure that the partnership remains successful and beneficial to all parties involved.
Co-opetition can be Challenging
Co-opetition can be challenging, and there are several obstacles that businesses may face when implementing a co-opetition strategy. One of the most significant challenges is trust. Businesses may be reluctant to collaborate with competitors because they fear that their competitors will use the information they gain to their advantage.
To overcome this challenge, it's important to establish clear guidelines and protocols for the partnership. This will help to ensure that sensitive information is not shared, and everyone is aware of their roles and responsibilities.
Another challenge is compatibility. Businesses may have different cultures, values, and goals, which can make it challenging to work together.
There are several tools and resources available to businesses that are interested in implementing a co-opetition strategy. One of the most useful is the Co-opetition Scorecard developed by Adam Brandenburger and Barry Nalebuff. This scorecard helps businesses to evaluate potential partners and determine the feasibility of a collaboration.
Is Co-opetition the Right Approach for Your Business?
Co-opetition is a strategic approach that can help businesses to gain a competitive advantage while mitigating risk. However, it's not the right approach for every business. Before implementing a co-opetition strategy, it's essential to evaluate your business's goals, values, and culture to determine if it's a good fit.
If you decide to implement a co-opetition strategy, it's important to establish clear goals and objectives, communicate effectively, and monitor the collaboration to ensure its success. With the right approach, co-opetition can be an effective way to collaborate with competitors and achieve mutual benefits.
What is your opinion of utilizing co-opetition in your business?
