If you can’t beat them, join them.
Yes, this is the latest scenario of corporate globe where two black bugs eyeing for the same prey go ahead with co-opetition strategy to survive. Gone are the days when orthodox philosophies were used by organizations to beat the competition. Today, homogeneous products and services in the market with customers being the ultimate deciders have made organizations landed up in a perplex situation of how to survive and what to deliver in order to create its niche. Thus, the companies have started to adopt this strategy in order to gain more market share by assessing the advantages that competitors have, niche skills that we have joining our forces and working together. As the business environment is becoming more dynamic and highly innovative, this forces enterprises to be more involved in multi-firm alliances (Lavie, Lechner, & Singh, 2007). At the same time the enterprises try to develop various portfolios of relationships in order to become successful and profitable (Bengtsson & Johansson, 2012; Hoffmann, 2007). The endmost aim of co-opetition is that contender organizations should pool their knowledge and skills in order to co-survive, co-grow, co-innovate, magnify their ecosystem and create value. “Co-opetition is a business term for “cooperative competition” whereby competitors share costs and work together on parts of their businesses in which they do not compete” (Combs & Davis, 2010). “Co-opetition describes how organisations cooperate with business stakeholders in order to pursue profits” (Luo, 2004).
According to Robert Keane , “Co-opetition - working with competitors on shared projects where they share common goals - can reduce waste and duplication, expand market access, enhance the impact of shared technologies, promote synergies and enable smart specialization.”
There are big examples of successful coopetion strategies in various sectors:
1. Just have a look at co-opetition in aviation, the way airlines alliances work. Earlier connecting flights or finding a flight that suited a traveler’s requirements was not an easy task. International passengers often had to make multiple reservations individually, rendering the situation irritating at its best. The first one to try and solve that was Pan American-Grace Airways. It formed the first airline alliance in the 1930’s with Pan American World Airways and began a co-opetition to exchange routes between North and Latin America. As the competition in the airline industry continues to rise, co-opetition between airlines will become more than an added benefit, but a necessity in order for airlines to survive. Airline alliances such as OneWorld and Star Alliance mean sharing costs of ticketing, marketing and logistics.
2. Coming to supply chain area, co-opetition as a strategy has been successful within the logistical function of the Irish fresh fruit and vegetable industry as an instrumental method to reduce transport costs and improve efficiency, as well as demand forecasting techniques, storage costs and the potential for new local and international business opportunities. “Effective management of fresh food supply chains is particularly challenging due to the highly perishable nature of the product involved in the process.” (Dabbene, 2008).
3. The technology industry presents many examples of co-opetition, in part due to the heavy investment required to constantly innovate, and it continues to be a smart and aggressive strategy. Two big master houses in the IT sector- Microsoft and Apple. These two are famously known for being savage competitors, and have each benefitted from their rival’s capabilities. The iPod and iTunes originally only worked with Macs, but the portable music player’s mass appeal and success came from Apple launching iTunes for Windows, opening it up to the significantly broader market of PC users. Microsoft Word and Excel first succeeded on the Mac and only later went on to beat WordPerfect and Lotus 123 in the Windows environment.
4. Co-opetition isn’t restricted to technology firms. Lets have a look at the automobile manufacturers who share resources and technology but compete for customers on branding and design. The tie-up between PSA Peugeot Citroën and Toyota being a paramount example.
5. Successful co-opetition strategies are not found in foreign MNCs, but in India as well. Indian two-wheeler motor cycle company ‘Hero’ tied up with Japanese ‘Honda’ to set an example as one of the most successful joint ventures worldwide.
6. Moving towards complementary advantages that start-ups can explore. Every smart startup starts with a focus on a distictive advantage, such as owning a distribution channel. A competitor may have complementary strengths. Here, a partnership, sharing common benefits, might be a growth opportunity by expanding the market for both the companies.
7. In today’s era, most of the big giants, such as IBM and Merck, hardly develop new products internally. They invest in complementary startups, through internal venture funds and partnerships, and plan to acquire the best as they show the right traction.
8. Co-opetition strategy can further be implemented in academics as well. In practicality, management and commerce students can use co-opetition in their studies as different students belonging to heterogeneous spheres of specialization like finance, IT, marketing, retail, and international business can pool their knowledge and expertise in handling internship projects and expanding their area of information.
Co-opetition, the simultaneous pursuit of cooperation and competition, is a growing force in the innovation landscape. For some organizations, the primary mode of innovation continues to be deeply secretive and highly competitive, but for others, a new style of shared challenges, shared purpose, and shared development has become a superior, more efficient way of working to accelerate innovation capabilities and capacity. It is evident that increasing the size of the market or creating a new one, ensuring compatibility and interoperability, risk and cost sharing, efficiency in resource utilization, integration of supplementary resources and improvement in the firm's competitive position are certain targets for companies which adopt co-opetition as a major strategic took. Also over the last two decades, the literature base devoted to co-opetition has gradually expanded which gives a relevant academic back-up to researchers.
I personally feel “United we stand, divided we fall” theory can be mixed with “Let’s have a healthy fight” to explore more opportunities.
Author - Dr. Shiva Manoj
(Dr. Shiva Manoj is a faculty with Lal Bahadur Shastri Group of Institutions having an experience of 9 years in teaching and research activities. Besides being in the field of Commerce and Management, she specialises in German language as well. She has actively participated in seminars and conferences organised by Indian Commerce Association, Indian Accounting Association and other academic bodies.)