Next wave of innovation will come from coopetition
You can read this article in 5 minutes
I was surprised a few months ago, when I read an article headlined “Daimler and BMW Plan $1.1 Billion Uber Battle”. These two German carmakers are some of the toughest competitors in the world, but they have agreed to partner on mobility (Reach Now, Share Now, Park Now, Charge Now) in order to compete with companies such as Lyft, Uber, and China’s Didi Chuxing.
It’s a great example of a concept that nowadays we call ‘Coopetition.’ Or: the collaboration between business competitors, in the hope of mutually beneficial results.
During my career, I have worked with many people who consider their competitors as the enemy. For some reason, I have never felt the same way and always taken the view that competitors are a great way to push you to be better. Even though the best way to be better is to focus on pleasing your customers, I have always believed that competitors help us become a better organization, better professionals, and better partners. Aside from anything else, imagine working in an industry without competitors. Where would the fun and the excitement be?
The concept of competition is not a new one and has for some time been popular in the technology sector, particularly between software and hardware firms. However, we are now seeing some major trends which are impacting the way I believe we should look at competition… and consider “coopeting” ourselves!
The future of a large organization is no longer about winning 1% or 2% of the market share per year, but rather about creating new markets where you can grow and win 50% or more of a new industry or business model.
Here are some of the main reasons why companies are moving to coopetition:
1. Acceleration of technology
It’s very hard for established companies to keep pace with emerging technologies. Partnering with competitors can help them to make bigger investments r and have a stronger impact on newer companies that are fueled by venture funds.
2. New entrants and new business models
Many expanding companies are supported by huge funding from Venture Capitalist investments at an inflated valuation which allows them to invest, innovate, and create in a way that is difficult for established organizations to compete with.
3. Convergence of industries
While technology is everywhere now, we are seeing multiple industries converging – making it difficult to know where your next competitor is coming from. One good example is the automotive industry, a sector where all the new players have a strong technology background (for example, Tesla and Google), in contrast with those from the traditional auto manufacturing world.
4. Coopetition is happening across multiple sectors
In the last few months, we’ve seen some notable agreements between companies who are fierce competitors, yet are partnering in order to create synergies, add value, and achieve a competitive edge.
And it’s been happening in sectors such as these:
Daimler and BMW announce $1.1 billion partnership in a bid to take on Uber. Partnership objective: Mobility. Target competitor: Lyft, Uber, Didi, GrabNB. BMW even made a nice video to mark the retirement of the Daimler CEO.
Ford, VW confirm plan to expand collaboration to include autonomous and electric vehicles. Partnership objective: electric and autonomous vehicles. Target competitor: Tesla, Waymo, and the wider auto industry in the race for electrification, and self-driving cars.
JD Turns to Google, Walmart to Build Global E-Commerce Empire. Partnership objective: E-commerce. Target competitor: Amazon.
Kroger and Walgreens Expand Their Strategic Partnership. Partnership objective: Increase footprint and strength for both companies in the convenience store market. Target Competitors: CVS, Wholefood, proximity, and convenience grocery chains.
HEALTH, LIFE SCIENCES & PHARMACEUTICAL
Advil meet Excedrin: Pfizer and GSK are merging their consumer healthcare businesses. Partnership objective: Create a global leader in “Over the Counter” products (OTC). Target Competitor: Other OTC companies.
Sanofi & Abbott Partner to integrate glucose sensing and insulin delivery technologies. Partnership objective: Enhance Diabetic patient experience. Target Competitors: Other diabetic providers.
Boxed Partners With Grocery Chain Lidl. Partnership objective: Lidl competition in race for online grocery shopping . Target Competitors: Lidl, Trade Joe, Instacart, all major grocery chains.
LOGISTICS & SUPPLY CHAIN
Flexport, SF Express join forces. Partnership objective: Enhance technology access for SF while China footprint expansion for Flexport. Target Competitors: Other major logistics players.
Dropbox partners with Google. Partnership objective: Enhance customer experience in cloud services. Target Competitors: AWS, Box, IBM.
It’s worth noting that recently we have seen the end of cooperation between Amazon & Fedex, so it’s clear that not everybody believes in the value of coopetition. It will be interesting to see how this kind of decision will impact the companies during the coming quarters when it comes to shareholder value, innovation, and company results.
Personally, however, I believe that it’s time to re-evaluate our mindset on this topic and consider more initiatives that involve coopetition, given that it can enable consumer benefit and the creation of mutual value.