Mind Your Own Business! The Beauty of Coopetition

Don't compete, cooperate. It's a new business strategy that is sweeping the entrepreneurial and startup world. Instead of focusing on beating out the competition, entrepreneurs have begun to work with their competitors, rather than against them. But why? And how can you do it effectively?

What is coopetition?
Coopetition is a neologism coined to describe cooperative competition. Coopetition happens when companies work together for parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs. Entrepreneurs, startups, and small businesses have found that coopetition is extremely beneficial for business and for the growth of the startup community in their particular areas.

Why use coopetition?

• Coopetition with suppliers, customers and firms produce complementary and related products
• Coopetition leads to the expansion of the market and the formation of new business relationships
• Coopetition could lead to the expansion of a creation of new forms of enterprise

Why is coopetition happening?
Coopetition is happening because of the rapid convergence of many high-tech industries brought on by the deregulation and advent of new technologies.

How can I tell the difference between a competitor and a complementor?

• A complementor is another company, startup, or entrepreneur that could act as your competition, but actually benefits you when you have their services alongside yours (and vice versa). A different company becomes your complementor if it's more attractive for a supplier to provide resources to you when it's also supplying the other company than when it's supplying you alone.
• A competitor is another company, startup, or entrepreneur that does not benefit you whether you are working together or not. A competitor is someone who has only their interest in mind, and not yours or your company's. A company is a competitor if it's less attractive for a supplier to provide resources to you when it's also supplying the other company than when it's supplying you alone.

Are there rules to coopetition?
Coopetition is all about working with another business that will benefit you. Therefore, when working with others, it is important to be friendly, kind, and loyal. Loyalty is of upmost importance in the coopetition world. The best way to create loyalty is by rewarding it. In addition, in order to use effective coopetition, be sure to say thank you in kind, not in cash, and to save the best thank yous for your best customers. Allow your competitors or complementors loyal customers as well.

To learn more about the specific rules of coopetition, check out this Powerpoint by Barry Nalebuff of the Yale School of Management: http://users.uoa.gr/~atsaoussi/Nalebuff.pdf.

Is coopetition for you?