Coopetition - Sleeping with the Enemy

Posted: 4/25/2008 by Norma Watenpaugh

The April meeting of the Silicon Valley/Norcal Chapter of the Association of Strategic Alliance Professionals featured a panel discussion on Coopetition. It turns out to be as hard to pronounce as it is to do. The panel often struggled with every verb and noun form of it: Coopetive, co-opeting. It might have been humorous, but the topic is so difficult. How do companies partner with their arch competitors and why? The panel consisted of some old pros in the alliance area: an IBM Alliance VP for the Oracle Alliance, his counterpart, a VP of Alliances for Oracle charter with managing the relationship with IBM, an Alliance Director from PWC who worked co-opetively with both (hard to spell too). So why do they do it? In a word: Customers. Customers do not have pure play computing environments. They have products and services from multiple vendors and insist that they all work together. Ultimately, these fierce competitors realize they each have more to gain through collaboration than not. Not that it is easy. We asked how they did it? Four key reasons emerged:

  1. Focus on market segments or niches where they can differentiate themselves, where they have a unique value proposition for customers. The traditional partner math: 1 + 1 > 3.
  2. Define clear rules of engagement. Where will they compete openly and where will they cooperate?
  3. And most importantly communicate this clearly to both organizations, especially to field sales organizations.
  4. Escalate conflicts and issues quickly before they can spin out of control and damage fragile relationships. In cooperative partnerships in particular, trust is hard gained and easily fractured.

While the Silicon Valley Chapter of ASAP as the name might imply is heavily technology, Coopetition is a growing trend in many industries and always an uncomfortable proposition but always driven by the promise of greater gains. One very large coopetive relationship exists between the US Postal Service and FedEx. FedEx provides air transport for much of the daily postal service as well as providing the overnight, priority mail service for the post office. Why would they do that? Well it is very lucrative business for FedEx and takes advantage of a very expensive asset, their air fleet. Conversely the Postal Service does not need to maintain an air fleet. And if you have a few grey hairs you may remember a time when the check is in the mail meant you might see it in a week or two.

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