That you need to be cut-throat and ruthlessly competitive to succeed in business is an old but powerful stereotype. Market competition gets described in terms that would not be out of place in the gladiatorial arenas of Ancient Rome, where the spoils of victory (and the acclaim of the masses) are only achieved by vanquishing weaker opponents.
Such Darwinian thinking has led to a widespread scepticism about collaboration in business. When it comes to profit, self-interest is seen as too powerful a motivation, and it is assumed that businesses which actually aim to work together will in the end be doomed by their own conflicting agendas.
But how accurate is this? Is the business world really so relentlessly competitive that it makes effective collaboration impossible?
The Need for Collaboration
You do not have to look too far to find collaboration in business. Although it no doubt occurs, most businesses would be horrified at the thought of their staff playing endless games of one-upmanship amongst themselves -working together is praised as one of the highest virtues when it comes to in-house success. And practically no business on Earth could survive without the collaborating with clients and suppliers.
These symbiotic relationships are usually distinguished from the ‘real’ competition of businesses operating within the same markets. Supply chains and client relationships bring different products and services together to create long chains of mutual benefit. Same sector competition pits like against like, gladiator against gladiator.
Yet the idea that supposed rivals for a particular market cannot and do not work together is also disingenuous. Take the example of trade federations, guilds and other industry interest groups which pool resources from companies within the same sector and seek mutual benefits through market intelligence, R&D and campaigning.
And when people bemoan supposed ‘cartel’ arrangements, such as the control the ‘Big Six’ energy firms have on the UK domestic market, their arguments often belie unchallenged assumptions that companies working together somehow represents a restriction on ‘fair trade’, whereas open competition always gives the consumer what they want.
In 1996, Harvard and Yale Business School graduates Adam M. Brandbenburger and Barry J. Nalebuff wrote a book called Co-opetition, which argued that collaboration and competition between rivals go hand in hand for successful businesses. Marquis Cabrera defines three examples of where this routinely takes place:
Information sharing. Memoranda of understanding are a common means of direct competitors sharing information that provides a business benefit to all. Another example are license agreements, where one company profits from allowing a compeititor make use of a product or service it owns the right to.
Shared development. Research and development carries large capital risks often without direct promise of returns. Businesses can lower their own exposure to the risks, as well as share expertise, by collaborating on developing new products which they fully intend to eventually market in competition with one another.
Sharing benefits of different strengths. Even businesses in direct competition with one another have points of difference and unique strengths. Agreeing to share these (for example, sharing expertise in R&D) can ultimately benefit both parties.
Co-opetition might be seen as an attempt to redefine the idea of collaboration to keep it in tune with the dog eat dog world of business. But the point is surely recognising that collaboration and competition are both equally important, and that one does not necessarily preclude the other. Co-opetition is about recognising that businesses can and do work together with the full and transparent intention to still compete.