Posts Tagged Coopetition

The concept of coopetition is one I’ve heard a fair amount of over the last few years.  It is a word-mash of cooperation and competition that implies just that, a level of cooperation with your competition.  A recent post by Startup Professionals Musings gives a little insight into the idea and a few thoughts on doing it effectively. Here are some examples given there.

Cost sharing and scale economies. A common type of coopetition is where companies work together on parts of their business where they believe they can minimize common costs, and not jeopardize their unique attributes. For instance, many car companies share major components to reduce costs, yet compete vigorously on the end product.

Best of both creates a new market. Your competitor has strengths (maybe sales), and you have a different strength (maybe technology), appealing to overlapping segments. A strategic combination can win in a third segment, which neither of you could do alone in the same timeframe, or at the same cost.

Up-sell related products after the initial sale. If your customers would benefit by having both of your products, you might negotiate the opportunity to include your competitor’s product inside your own box, or vice versa. This is called up-selling, or cross-up-selling, and both parties share the profits.

Integrate products and services. If your competitor has a similar product that could complement your own, you might consider arranging a deal where both you and your competitor would offer an integrated bundle, or new product. This, like an up-sell, increases the sales volume of both parties.

Cross endorsement. If your “competitor” isn’t really competing with your direct market, you can refer business to each other without anyone losing customers. Affiliate marketing might actually be one of the more effective (and easier) ways to partner with someone else in the industry. Online, this starts with link exchanges.

Possible investor. Once you have established your credibility and value, a strategic partnership may lead to other business relationships. They may have the finances you need, and be ready to invest in a business area they know. Also this competitor will have become a prime exit strategy alternative.

Some organizations a groups lean on a more cooperative model while others are more competitive.  I have been parts of entrepreneurial groups that continually sought cooperative solutions in the marketplace which, in many cases, created new, open-minded, relatively creative opportunities for those involved.  Sometimes, however, you will still compete at some level.  This is not a bad thing of course as it pushes all to continually improve the offering as to performance and cost alike.  The beauty of coopetition is the opportunity to elevate both companies through common strategy, in other words, no loser.  Wikipedia gives a few examples and explanation here.  There are also books such as:

“Co-Opetition” found here.

These are all good resources and I would say all entrepreneurs ought to look at cooperative opportunities that may enhance their growth, open up new possibilities, and ultimately increase your bottom line.