Coopetition 3: When competitors succeed in friendly matches

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Reylito A.H. Elbo

Reylito A.H. Elbo

SO, which is a better strategy—working alone or doing it in strategic partnership, even with a competitor or competitors? I don’t know, except that I’m always agitated, excited, and at the same time mesmerized whenever I read stories of fierce competitors partnering with one another.

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A case in point is Ayala Corporation, which has won lucrative deals with Metro Pacific Investments Corporation for a common ticketing system for Metro Manila’s elevated railways system and Cavite’s railway extension under the current administration’s Public-Private Partnership (PPP) initiative. Ayala is the parent company of Globe Telecom while Metro Pacific holds the controlling interest in Smart Communications Inc.

Last February, Ayala revealed that it was pushing ahead with its strategic partnership with other competitors like SM Prime Holdings, Aboitiz Equity Ventures, and Megaworld for another PPP project, this time to complete an expressway dike and land reclamation project called the Laguna Lakeshore Dike Expressway project. Why not? There are so many dimensions we can learn from “coopetition,” a buzzword coined by Adam Brandenburger and Barry Nalebuff to harness the positive energy from the symmetry between competition and cooperation.

This is the third time that I’m writing about coopetition in this space. Looking back, it appears that Brandenburger and Nalebuff were looking for something different to write about. They were looking for the antonym of the word “competition.” Doesn’t the word “partnership” fit the bill? Well, of course, the term “partnership” is too generic, if not a lame and dumb substitute for a management buzzword. Also, the buzzword “freenemy” is already taken.

The term “partnership” can refer to anyone. They can be the supplier, customer, government, or even an ordinary man on the street who says nothing bad about your product because he has not seen it, tasted it, or experienced it.

Nalebuff, working with Ian Ayres in their book “Why Not?—How to Use Everyday Ingenuity to Solve Problems Big and Small” (2006), offers an explanation: “To turn the idea of a competitor around, it helps to start with a precise description of what a competitor is all about. It is a firm whose product or service makes your products less valuable to the customer. The obvious switch to make here is to turn the word ‘less’ into ‘more.’ What type of firm makes your products more valuable?” The obvious answer is “a firm whose goods and services complement yours,” even if it comes from the devil.

I read nearly everything that I can get my hands on—if it’s listed in the non-fiction, bestselling category, I will surely buy it. That’s what I’m doing to defeat the nasty maxim about a consultant—like a priest who can tell you a thousand things on how to make love, and you wonder where he’s coming from.

Theories and buzzwords are great feed for learning. But they’re not worth that much if they have no practical application in the real world. Really, the proof is in the pudding, as cooked here by Ayala and other conglomerates that are similarly situated.

The pundits among you may ask some real, intelligent questions. Why can’t Smart and Globe work on a real coopetition strategy to make our internet faster, if not achieve the level of what other countries are enjoying? Or maybe, they should simply give away free text messaging as a complimentary service to customers?

Indeed, that’s a valid proposition. Anyone who argues against it will appear to us as doubly crazy as any space alien you will ever see on Star Trek. But my point here is not directly related to Smart and Globe, although it is a lot of fun telling them how to do coopetition.

My point is that, pound for pound, the most dramatic and yet problematic example of coopetition that has gone wrong is in the case of the oil industry, when the players act like family members than friends in calculating gasoline prices, resulting only in a price differential of three centavos that you don’t care anymore if they can spell the term “oligopoly.”

The idea of wanting to go beyond the traditional “win-lose” business competition model has remained in my cranium since I can remember. Competitors must work together to change the way they think about business partnering. Rather than simply being afraid of losing customers, everyone must bring solid ideas that, when implemented, would make the market bigger for everyone. That is better than turning into a lone ranger constricted by a small pie.

Rey Elbo is a business consultant specializing in human resources and total quality management as a fused interest. Send feedback to elbonomics@gmail.com or follow him on Facebook, LinkedIn, or Twitter for his random thoughts.

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