An Introduction to coopetition

Contents
Definitions
Brandenberger and Nalebuff’s ‘Value Net’
Effective coopetition
Supply chain coopetition
Applying the Value Net
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Coopetition defined
Cooperation and competition.
Based on the theory that in addition to businesses that
compete for suppliers and customers, there are providers of
complementary products and services.
Relationships in business don’t have to be win-lose.
Sometimes both parties can win.
Coopetition occurs when companies collaborate in areas of
their business where they do not believe they have
competitive advantage and where they believe they can
share common costs.
Closely related to Game Theory.

Coopetition
the ‘Value Net’
Brandenburger, A.M. & Nalebuff, B.J. (1996)
Co-opetition. London: Profile Books capacify.wordpress.com

Definitions
A business is your complementor if customers value your
product more when they have a product from the other
business.
A business is your competitor of customers value your
product less when they have a product from the other
business.
Simple examples:
Computer hardware and software; if you update one, you
will find you have an incentive to update the other.
Radios would be pointless without radio stations... and
vice-versa.

War and Peace...
Two airlines are rivals: they compete for the attention of
customers, and they compete for ‘slots’ at busy airports.
When the same two airlines both order Boeing’s 787
‘Dreamliner’ (or any other new aeroplane) they are
complementors because they both pay towards Boeing’s
development costs.

Main principle
Don’t just fight for a bigger slice of the pie.

Main principle
Work in partnership to make the pie bigger.

Main principle
Then fight for a bigger slice.

Effective
Coopetition
Have a cooperative attitude.
Be careful who you cooperate
with, and the information you
provide.
Treat your partners like your
customers.
Get creative: be prepared to work
in new ways.
Be transparent: trust is a ‘two-way
street’.
But, in the example... eat as much
hay as you can.

Another airline example
Competition between airlines offering internal flights in the
USA was intense. The normal response to having empty
seats on a flight is to slash fares.
In a price war, everybody loses.
One operator decided to remove one row of seats instead.
They compete on seat pitch (“leg room”) instead of price.
Their rivals saw this working, and did the same.
They ‘stole the idea’?
Yes... but by copying, excess capacity in the
industry is reduced. The price war ended,
and everybody could make a profit again.

Supply Chain
Coopetition
Co-warehousing – make use of facilities that you share with
another business.
Load consolidation – transport your goods together with
those of another business:
Reduce costs for partial loads.
Increase power in negotiations.
Standardisation – make use of common components that
you design in partnership with other businesses.
Shared Research & Development costs.

Shared development cost
What do these cars have in common?
Quite a lot, actually.
Having common components in their ‘city cars’ allowed
Toyota, Peugeot and Citroën to drive supply chain costs
down, and the lower retail price expands their market...
...but they still compete for their share of that market.

Applying the Value Net
Think about the context of your own business...
Who are your
competitors?
How might you
turn them into
complementors?
Think of potential
completementors
as the ‘6th force’
in Porter’s Five
Forces.

Want more?
My blog: http://capacify.wordpress.com
On Twitter: @Capacified

An Introduction to coopetition

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