WHAT IF... you eliminated competitors by engaging them in cooperation instead of competing with them?
Every business has competitors. If you are able to lure and engage them this means that you could look at them as potential partners. Competitors are a driving force to push performance and stay ahead of the curve. But collaboration with competitors, which Crack, J. (2019) calls coopetition, is a valuable strategy to improve the performance of all businesses involved and create win-win scenarios instead of win-lose scenarios among competitors.
Businesses enter into collaboration to overcome challenges and achieve common goals. A fruitful cooperation between two or more businesses with allied interests usually targets specific activities and is based on clearly defined roles, assessments that indicate common objectives and regular maintenance of the partners’ relationship.
Turning challenges into opportunities
Being faced with competition might push a business to better productivity. Trying to outrun competition is however almost impossible, requires large amounts of resources and might also lead to performance stress, malicious behaviour and resentment.
In particular small businesses with little resources and limited capabilities often need a strategy on how to compete in markets. Collaborating with competitors can be such a strategy to not only survive, but also grow within markets (RUS & SAGAJ 2019).
Rather than treating each other as competitors, businesses in any industry, including environmental sectors, can create complementary partnerships to improve or build a new product or service together or cross-promote existing products or services (Salesforce 2019). Collaboration can generally improve the performance of small and large businesses and although it is often more critical for small business, large market players can still benefit from specific performance-driving consequences (Quick 2019).
Moving towards a strategy
Choosing collaboration over the status of competition implicates a more relaxed environment with shared responsibilities, but also enhanced capacities, resources, creativity, etc. Although adjustment and compromises are often required in partnerships, the results are bound to be better. Key benefits that can arise from partnerships with competitors include (Salesforce 2019):
- Additional expertise that can be leveraged from the personnel, experience and expertise of the partner that allows to save costs and offer products and services otherwise unavailable
- New customer reach as both partners can reach each other’s customer base, which they otherwise may not have had access to.
- Increased efficiency through complementary partnerships that allows minimizing outsourcing to subcontractors or get better deals throughout the supply chain
- Better or additional financing options can be accessed through powerful partnerships, business ventures, consortia, etc.
- Risks related to entering new markets, investing in specific resources, etc. can be reduced or shared through partnerships
- Collaborating with competitors allows gaining valuable insights to the way competitors act and their information. In return, collaboration does not mean that you need to share all your tips and tricks.
Before entering any partnership, a business needs to clarify the purpose of it. Bottomline questions on the need of a partnership include (Standbra 2019):
- Can you achieve your goal without a partner?
- How much will you have to share (money, information, etc.)?
- What are time and geographical limitations?
- What risks occur when entering or not entering a partnership?
Developing clear answers to these questions will also help determining the boundaries of a fruitful collaboration. The scope of cooperation could range from a small joint research activity or co-sponsored events to year-long implementation partnerships or joint operations to enter new markets. In general, a partnership should be limited to a business’s needs and timeframe (Harisson 2019).
Although every business is unique, there are partners for any business. At the same time, not every competitor is partner material and weak partners can create significant losses or damage reputations.
It is important to understand which value a business and a partner can bring to the table and what both sides stand to gain from a partnership.
Understanding where a competitor stands in the market is crucial to set and manage expectations and test partnerships before entering long-term strategic collaborations. Analyse the targeted competitors with regards to their performance in previous partnerships, their operational weaknesses and strategic goals. Moreover, it is important to consider if business values, organisational beliefs, company culture and mission align, at least to a certain extent (Salesforce 2019).
Besides establishing how you could benefit from a partnership, such an analysis will help you determine what you can offer and what benefits the potential partner stands to gain is crucial before asking for collaboration (Harisson 2019). Similar to selling a solution to a customer, you will need to sell your value to a potential partner.
A match on many levels is needed to enable a fruitful partnership. Already knowing the targeted competitor is an advantage as it helps to evaluate potential gains and shortcomings of a collaboration beforehand. Doing market research and finding ways to actively get in touch and get to know competitors can be a feasible alternative to identifying potential partners beyond a business’ network. And even if new contacts don’t result in partnerships, knowledge about competitors is always beneficial and improves a business’s market intelligence (Harisson 2019).
When diving into alliance-building, keep in mind that developing valuable partnership is a long-term process. Getting to know each other and building trust is a key requirement before taking a confident decision on partnerships. Multiple points of interactions, joint little activities and support gestures (providing introductions to new networks and potential clients, forwarding opportunities) can be important steps to get closer to each other (Shah et al. 2017).
Once businesses enter a partnership, it is crucial to define collaboration principles and boundaries which can be done with the help of agreements and contracts with clear deliverables and responsibilities. Setting the legal parameters for the partnership – including what happens at the end of it – helps both parties define their investments of time, resources and money. This helps to crystallise each company's responsibilities and aids in the planning, launching and running of the endeavour from start to finish (Salesforce 2019). An agreement might include goals, timeline, termination clauses, exclusivity clauses, liabilities, financial contributions, licensing of brands, logos, copyrights, non-disclosure agreements, etc.
Businesses should be aware of their core competences and the ability to work as a separate and stand-alone entity. Becoming too depended on one partner can represent a high risk for a business, similar to dependency on one client. Another company could end a partnership for different reasons at any time. Especially in long-term and in-depth partnerships, it is important to retain some aspects of your business model that differentiate you from competitors and partners (Crick 2019)
Ideally, collaboration creates more opportunities with time. But partnerships are also like long-term relationships. All partners involved need to continuously reassess the relationships and ensure that respect, trust and willingness to cooperate is still established.
Case Study 1
cewas (www.cewas.org), a Swiss Based NGO which was founded in 2010, is an entrepreneurial training platform for entrepreneurs developing and implementing business models in the water-sanitation-food security-climate nexus. cewas is implementing projects and programs in Switzerland, the Middle East, South and East Africa, South Asia and Latin America.
Believing in partnership over competition is part of cewas’ organisational DNA and a core business strategy. cewas has built its experience and reputation within a specific sector focus. However, as a relatively small, agile, decentralised organisation working in multiple countries, cewas alone is only able to provide a certain amount of services and does not have the resources to implement large projects on its own. The organisation has the choice to:
- Grow large, which requires more administrative and managerial efforts and reduces flexibility,
- stay small and only take on small projects in a selected number of countries,
- stay small, but strategically partner up to implement larger and/or more projects while focusing on activities of core expertise.
For many years now, cewas has opted for the third choice and developed numerous short- and long-term partnerships with competitors. cewas’ collaborations essentially fall under at least one of the following categories, but often more than one:
- Partnerships for the purpose of acquisitions, where each partner (or cewas) alone would not be eligible or capable in terms of resources, experience and expertise.
- Partnerships that provides practical resources (e.g. logistic or communication support) to facilitate implementation of activities. In such cases, cewas would provide for instance content in return.
- Partnerships that allow cewas to develop new areas of expertise because partners bring in other core competences and joint project implementation provides hands-on learning.
- Partnerships that are based on sharing information, networks, opportunities.
The majority of cewas partnerships are long-term and the result of an existing and close relationship that has been built over time.
The logos of partners of one cewas programme and a picture of regular network partner meeting
Companies and organizations must cope with the challenge of a demanded sustainability. Collaboration and competition represent a promising approach. The objective of this work is to develop strategies for competition and collaboration which enable increased economical benefit while boosting sustainability issues. The research is focused on value creation strategies, competition, collaboration and their impact as drivers for technological progress. Analysis based on scenarios and forecast reports about value creation in the remanufacturing area of production equipment are carried out. The target is to collect and rank criteria for an evaluation of business strategy regarding sustainability. Existing business strategies for industrial value creation are transferred to the field of remanufacturing analyzed as well as characterized regarding the gathered criteria to support sustainable acting between partners in value creation networks for remanufacturing of production equipment. KeywordsCollaboration-competition-strategies-production equipmentSTEINGRIMSSON, J.G., BILGE, P., HEYER, S. & SELIGER, G. 8th Global Conference on Sustainable Manufacturing Abu Dhabi, UAE (2011): Business Strategies for Competition and Collaboration for Remanufacturing of Production Equipment. Advances in Sustainable Manufacturing. . URL [Accessed: 12.08.2020]