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| Co-opetition explores a new way of looking at
business which leverages complimentary relationships
between companies which might, on the surface, appear to
be competitors. By applying game theory to business
decision making, the authors suggest that there is a
fundamental problem with the way most companies look at
the markets they play in. Most people see a competitive environment as a win-lose scenario. That is, in order for company A to be successful, competing companies B and C must fail. Under this scenario, the "pie" is imagined as being just so big, with each of the competing companies striving to take the biggest piece possible. Co-opetition proposes that most of the time it makes more sense to look for win-win scenarios in which you strive to get a bigger piece of the pie not by taking share from a competitor, but by making the pie bigger. Sometimes you make the pie bigger by actually bringing a new competitor into the market place. Other times by cooperating with competitors to increase the value of your product to consumers. One example of positive co-opetition is the relationship between Microsoft and Intel. Microsoft needs better and faster microprocessors to power its next generation of software. Intel needs great software so that people will demand more and more of its processors. Microsoft doesn't worry so much about beating Netscape in the Web browswer war, instead it expands the applicability of the Internet to people's everyday computing needs with ActiveX technology. Intel doesn't worry about outselling Motorola's microprocessors, instead it makes more power available more affordably to more people. Both companies benefit the other even when they're undertaking projects which don't directly involve the other. Another example of co-opetition was Parsons' involvement in STEP -- a common electronic publishing format for electronic Bible reference materials. We increased the demand for electronic books by making it easier to move them between competing companies' software. We increased the demand for all of our software by increasing the number of book titles available. We increased the number of titles available by providing an easy, low-cost way for publishers to create electronic books. In so doing, we made the pie bigger. Even if all the companies that were involved in STEP maintained the same relative market share, each piece of the pie was bigger. And the whole thing was predicated on giving the customer what they want: A large selection of electronic books at affordable prices. Parsons wins, our competitors win, our customers win, publishers win. It seems impossible but it works! |
Co-opetition