Coopetition – please excuse the neologism – is a term created to describe a situation where two or more organizations which would normally be in competition would cooperate with each other in some form or manner.
Coopetition is a key concept for strategic alliance professionals because there are rarely cases where all parties involved in a collaborative process experience an immediate ‘win-win’ situation. Usually, one or more of the parties feels that his ‘best case’ scenario was not fully realized. This does not mean the coopetition was unsuccessful. To the contrary, it may have been a much better result for everyone than the result one would obtain from a go-it-alone effort.
Coopetition (sometimes spelled ‘co-opetition’) business models typically involve four actors. In addition to the usual ones – customers, suppliers and competitors – we also add complementors. Complementors are defined as players whose products and/or services add value to yours, as recognized by the client in the marketplace. In game theory we call this a ‘plus-sum’ game.
In comparison, a competitor is traditionally defined by a business as someone whose product makes your product less valued, or completely unnecessary. Competing head-to-head with a competitor resulting in a win-lose scenario would be called a ‘zero-sum’ game (winner take all).
Coopetition is a model in which a network of stakeholders are cooperating and competing to create maximum value for everyone involved. Complexity increases and the the model is multi-dimensional. The competition occurs in some areas and the cooperation is evident in others. If the budget for a specific project is limited, and one cannot grow the pie, then how it is ultimately sliced can be a subtle exercise in coopetition.
Time is an important element in all coopetition relationships. Short term payback, if the competitive offers overlap, is less self-evident than long term strategic gains from cooperating with competitors. Like in the law of averages, successful coopetition relationships will find an equilibrium if given enough time (and proper executive oversight).
Coopetition is not just a fad or a new concept, but one of the many new ways of working in the networked society where partnerships and strategic alliances will play an ever-increasing role in how a company deals with its customers, suppliers, competitors and complementors.
The ability to understand the dynamics and apply the concepts of coopetition to create maximum value for yourself and others is often a key to successful growth and sustainability.