Co-opetition or ‘competitive collaborations’ are alliances formed between direct and sometimes indirect competitors.
The term co-opetition is used by management academics and economists to describe the phenomenon of ‘competing without having to kill the opposition and co-operating without having to ignore self-interest’.
You can think of co-opetition as a sort of ‘if you can’t beat them, join them’ approach. Or if following the game theory tack; if you’re playing a losing game, change the game you’re playing.
For more than two decades now we’ve seen steady adoption in the professional services sphere of the kinds of inter-organisational relationships which were already well-established (think construction and engineering JVs), or well underway in the 1990s in other professional domains (such as IT).
Some successful tech examples include Microsoft Office apps being available on Apple devices; or Amazon, Kindle and Apple (again) teaming up to make ebooks available across iPads through the Kindle iPad Reader App.
Professional service firms which participate in partnering agreements, co-operation memoranda, joint ventures, teaming arrangements and other alliancing activities must balance co-operating with their partners in good faith while continuing to compete vigorously as rivals.
Informal co-opetition has existed forever in formal referral agreements between professional services firms to address disparate needs of a single client.
Many professional services mergers are variants on co-opetition – some started that way, others grew out of desire to remove uncomfortable co-opetitive features.
Most frequently, co-opetition is driven by large and powerful consumers of legal and other expert professional services. Just about every formal multi-provider panel appointment embodies at least some elements of co-opetition, where head-on competitors are expected and required to share a range of basic information, intelligence, resources, and to work together on projects.
Is co-opetition right for your firm?
There is a sound business case for co-opetition when participation in such an alliance directly increases the value your firm can deliver and substantially improves your ability to attract (and keep!) the clients and business you want. You may also be able to defray your costs by sharing project expenses with co-opetition partners, co-design new ‘products’ or services and help each other scale up to resource large pieces of work.
At other times, co-opetition will be forced upon you by a shared client, and to succeed, it’s a game where you need to learn and carefully heed the rules. Our experience is that large consumers of professional services may not quite understand the complex dynamics they’re creating when they impose alliances which require firms to cooperate and compete simultaneously.
Sometimes provider led co-opetition arrangements presented to large consumers will not be well received. Your shared client may not understand the benefits of two (or more providers) joining forces, it may be perceived as risky, administratively burdensome or even collusive.
Whether co-opetition is something your firm has initiated, or had foisted upon it, having an agreement in place with your partner is essential, as are clear ‘go to market’ messages about how the arrangement works and the benefits to clients.
Co-opetition can help your firm gain competitive advantage with certain large clients, or in certain market segments. It works best when there is strong trust founded on shared values and beliefs, reinforced by collaborative activities, where mutual benefit is clear, and where that benefit is constantly articulated and emphasised to keep behaviours fairly within agreed bounds.
It is critical you and your co-petitors present consistent, clear and unified ‘go to market’ messages about how the arrangement works and the benefits to your shared clients. Most important of all is regular check ins with each other to ensure that the co-opetition is still working for mutual benefit.
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