It’s called coopetition – or in other words, cooperating with your competition. And it takes buying local to a whole new level.
The idea of coopetition has been around for a long time, with variations of the term occurring as early as 1913, according to Wikipedia. In many aspects of life, we accomplish more by cooperation than we do through competition.
What about in the business world?
Coopetition, a current best-selling book by Adam Bradenburger and Barry Nalebuff, describes some of the roles and terms that might be helpful in understanding your company’s position as you interact with your competitors and other players like suppliers and customers.
Cooperation among business competitors isn’t new. Real estate multiple listing services and broker agreements that have been around for many decades demonstrate the best of coopetition. Competing brokers, clients and service providers all benefit from the cooperation of competing brokers.
How can you truly embrace this idea?
First, you need to challenge the notion that your success must come at the other’s expense. This might be a shift in your thinking, but it might be a shift worth considering. Realize that the easiest form of cooperation is often with a complementary business, taking many forms including shared marketing, cross-referrals of your customer and shared email lists.
The success of many area businesses is helped with buy local concepts. In many respects, our local economy is the “us” against the national and multi-national “them.” On a local level, we’re all competing with the global market, in one form or another. Take our local farmers for example. They’re competing with global food suppliers as much as or more than they are with each other. Our tech companies, too, have a very definite global arena they’re competing in.
Perhaps it’s time to consider working with your local competitor and adopt an “us against them” attitude. It might help you see the benefits of cooperation.
How can this be?
Your business is not likely to be all things to all customers. We provide our customers and suppliers greater opportunities when they don’t have to choose just one. A familiar example is the success of the auto mall, where several different vendors are in close proximity and pulling customers in because of the greater options customers have. This is true as well for restaurants, bars, clothing stores and many other retail businesses.
In this era, most industries have pressure from external factors in one form or another, some of which exhibit important clues in how to benefit from cooperation. Consider one of the benefits of participating in franchising: the discount of purchasing from central warehouses. A little cooperation with your locally owned competitor can lead to lower input costs if you coordinate your purchases.
Many examples of very large competitors cooperating on parts, designs, or specific projects abound. Sometimes it ends messily, but usually clearly defined terms and objectives can limit the potential damage.
Reconsider the idea that your business can win only if another loses. If you’re in that mentality, you likely see a shrinking amount of customer dollars and believe every dollar spent at your competitor’s is a dollar out of your pocket. This isn’t necessarily so.
Let’s revisit how to go about cooperating with your competitor.
First you have to say hello, then consider your competitive advantage. The area where neither you nor your competitor has a competitive advantage, that’s where you can cooperate. From supplies, to employee training, to distribution, there may be common costs that can be lessened through cooperation.
Beyond sharing supply deliveries, employee training is an example of an opportunity to benefit from cooperation with your competitors. Most major training groups would be glad to have one larger training event to set-up over multiple smaller events.
When you do approach the point of working with your competitor, there are some items that need to be discussed up front: trust, communications and exiting.
Trust is an important component to a successful coopetition experience. It can help when agreements and terms are clearly expressed in a document jointly developed. Privacy and confidentiality are inextricably tied to trust.
Clear, detailed understandings are critical. Frequent communication and set expectations are just good business sense, whether for customers, vendors or partners. It’s absolutely necessary for coopetitive ventures.
Finally, like any business venture, have an exit strategy. Define the length of the agreement and how it can be terminated or renewed.
Cooperation with competition can be a good idea and every business success in our community is a success for us all.
Lynn Krogseng is the factotum at Neighbors Market, located at 1707 Main Street in Vancouver. You can reach the market at 360.448.6120.
