Introduction
At Moore ClearComm, we know that no two businesses are the same. This conscious view enables us to build strong, lasting, and bespoke partnerships across various business sectors. Whether a Channel, Strategic or Network Partnership – each of our partners is equally valued and reinforced by our passion for data protection and cyber security.
Why does partnering help your business and your clients?
“Two heads are better than one” is an adage that applies firmly to business, even more so if the heads are other companies with whom you can build mutually beneficial relationships.
Strategic business partnerships allow us to grow our respective businesses and offer better and broader support and services.
Partnering with other companies that provide different services or products within the same or similar markets will help us reach new targets and expand customer reach, building on our existing reputations, giving you access to new products and increasing customer loyalty.
Partnerships In Numbers:
- 82% of B2B leaders plan to increase their partnerships (Source: DemandGen 2022 Survey)
- 75% of world trade flows indirectly – meaning that partnerships and alliances are critical to business success and growth (Source: Forrester)
- 57% of organisations use partnerships to gain new clients (Source: BPI Network)
- 74% of companies would consider partnership automation to make it easier for them to scale their partnership programs (Source: BPI Network)
“Collaboration and augmentation are the foundational principles of innovation.” – Vaclav Smil (Canadian economic analyst)
However – what if your prospective partner offers services that are so much like your own that you might ordinarily consider them a competitor?
This is often referred to as “Coopetition”, defined as a collaboration between two or more similar business entities (typically, they might be competitors in the same market).
The word “Coopetition” combines the words cooperation and competition.
What makes coopetition different from conventional partnering is that the organisations working together usually sell products or services to the same audience.
The benefit of Coopetition:
Coopetition partnerships can be highly effective if done well and with transparency on both sides.
Benefits can include:
- Boosting your business reach
- Lowering your costs
- Increasing your organisational resources
- Expanding your network and
- Making your customers’ or clients’ lives easier
The term “coopetition” was coined by Ray Noorda (former CEO of Novell) in the 1990s. Its concept is based on the idea that (while competition is a necessary component of any market) collaboration and cooperation can also benefit all parties involved.
“You have to compete and cooperate at the same time.” – Ray Noorda, Novell
Its principles and practices are often credited to New York University and Yale business professors Adam M. Brandenburger and Barry J. Nalebuff. They introduced the principles and practices of coopetition in their book Co-opetition, first published in 1996.
The premise is that businesses can achieve significant success by working together rather than competing against each other. Each party can achieve benefits (shown below) by cooperating on specific aspects of their businesses, such as research and development, marketing, or distribution:
- Shared strengths
- Distribution of workload and overhead
- Combined efforts to compete with larger entities
- Improved market performance
- Collaborative technical innovation
- Entry into new markets and strengthening position in existing spaces
Some examples of coopetition:
- Intel and Microsoft: Microsoft’s Windows operating system runs on Intel’s processors, and both companies work together to develop new technologies and standards, such as USB.
- Samsung and Apple: Samsung supplies components, such as displays and memory chips, to Apple for its iPhones.
- Airbnb and hotels: Some hotels list rooms on Airbnb, and Airbnb offers a feature called “HotelTonight” that lets users book hotel rooms through its platform.
- Toyota and Tesla: Collaborated to develop electric vehicle technology, and Toyota invested in Tesla in 2010.
- Coca-Cola and PepsiCo: these rivals work together on industry-wide initiatives, such as reducing the environmental impact of their products
What makes it work?
There are some essential ingredients required to create and maintain a successful coopetition-based partnership:
- Shared values and goals
- Business, cultural and values) alignment
- Sustainable time and energy commitment
- Mutual ability to meet the agreed deliverables
- Customer crossover/similarity
- Product reciprocity
- Appetite to collaborate
Summary
Partnerships work, and for most organisations, will benefit them in various ways, especially in scenarios where (for example) Partner A offers something that Partner B cannot, and vice versa, for the benefit of (and access to) their mutual clients.
That said, “coopetition” requires a slightly different mindset and consideration and may not be an approach that suits every organisation.
However, the benefits are significant and well worth further consideration. We conclude this week’s Insight with a helpful quote:
“Nowadays, the best partner might be your direct competitor. Competitors tend to face similar markets and use similar resources and technologies. They typically must deal with similar challenges at large.
Thus, with rising costs of R&D and globalising competition, it often makes sense to collaborate with competitors on product development, innovation, and joint manufacturing.”
Paavo Ritala (Professor of Strategy and Innovation at LUT University of Technology, Finland)
