Using Coopetition to Compete Against Your Partner

by David N. Rasmussen, Senior Consultant, Cutter Consortium

Ten to fifteen years ago, a lot was being written about the concept of coopetition. This was just at the beginning of the huge growth in technology -- capabilities, products, companies, and, of course, stock value. Well, things have cooled off a bit since then; however, the concept is just as relevant today, if not more so. We just don't hear much about it because most companies have learned how to better manage their relationships with vendor partners.

Coopetition combines the meanings of "compete" and "cooperate" into a single concept. Literally, it represents a condition in which two business entities may compete or cooperate on business opportunities during the course of their relationship. Here are some guidelines that can facilitate a healthy business environment where the concept can be beneficial to both partners.

Do List

• Do discuss the concept of coopetition with your vendor partner to agree on a mutual definition.

• Do communicate about potential competitive opportunities before you sign a deal.

• Do reinforce your commitment to protecting your partner's proprietary information and intellectual property.

• Do provide opportunities for collaboration and working together.

• Do make sure that your vendor partner understands your commitment to the partnership's success ("skin-in-the-game").

• Do conduct regular meetings to review the strengths and weaknesses of your partnership and performance against mutual goals.

Don't Do List

• Don't ever let your vendor partner be surprised by learning about your competitive project from another party.

• Don't use the same resources on shared and competitive projects.

• Don't share details of why you have chosen a different partner for a particular project.

• Don't assume your vendor partner understands and accepts your competitive deals; communicate and validate.

The common theme through both lists is communication. Your partner may not want to learn that you are going to compete against them. However, if they hear about it from you before you begin working on a project, they will have the opportunity to communicate how they feel. Together, you will have the opportunity to resolve any issues that may arise before the project starts. Once you have begun work, it then should become a nonissue for future collaborative opportunities. Most companies today understand the reality of intense competition and the need for partners to pursue all new opportunities. Advising a vendor partner of a potential competitive opportunity before the deal is done also gives them a chance of proposing more favorable products, services, terms, and/or pricing, if they are so inclined.

This does require some additional time and effort on your part; however, the benefits outweigh the costs of failing to advise them of the potential competitive situation. You have probably invested a significant amount of time and energy to build a strong, collaborative working relationship with your key vendor partners -- you don't want to mess that up now. Keep them informed -- they may not like the news, but they will more likely be willing to continue working with you in the future if they trust that you will treat them fairly.

-- David N. Rasmussen, Senior Consultant, Cutter Consortium