Co-Opetition - Adam M. Brandenburger [12]
A player is your complementor if customers value your product more when they have the other player’s product than when they have your product alone.
Thus, Oscar Mayer and Coleman’s are complementors. People value hot dogs more when they have mustard than when they don’t. And vice versa. The way to identify complementors is to put yourself in your customers’ shoes and ask yourself: what else might my customers buy that would make my product more valuable to them?
Competitors are the reverse case:
A player is your competitor if customers value your product less when they have the other player’s product than when they have your product alone.
Coca-Cola and Pepsi-Cola are a classic example of competitors. So are American Airlines and Delta Air Lines. If you’ve just had a Coke, you value a Pepsi a lot less than if you’ve yet to quench your thirst; Coke doesn’t add life to Pepsi. Likewise, if you have a ticket on Delta, American is something a little less special in the air.
The traditional approach defined competitors as the other companies in your industry—those companies that make products similar to yours in a manufacturing or engineering sense. As people think more in terms of solving their customers’ problems, the industry perspective is becoming increasingly irrelevant. Customers care about the end result, not about whether the company that gives them what they want happens to belong to one industry or another.
The right way to identify your competitors is, again, to put yourself in the customers’ shoes. Our definition leads you to ask: What else might my customers buy that would make my product less valuable to them? How else might customers get their needs satisfied? These questions will lead to a much longer, and more insightful, list of competitors. Thus Intel and American may end up as competitors as videoconferencing takes off and becomes a substitute for business trips.
As Microsoft and Citibank each work to solve the problem of how people will transact in the future—whether it be E-money, smart cards, on-line transfers, or something else—they might end up being competitors. This is despite the fact that they come from different “industries” as traditionally defined—software and banking.
Phone companies and cable television companies are both working to solve the problem of how people will communicate with each other and access information in the future. Again, different industries—telecommunications and cable television—but increasingly one market. Today European banks are selling insurance, and European insurance companies are selling tax-advantaged savings vehicles. It’s no longer the banking industry or the insurance industry—it’s one marketplace for financial services.
So far we’ve been stepping into customers’ shoes to identify who complements you and who competes with you in attracting customers’ dollars. But that’s only half the game.
The Supplier Side
The top half of the Value Net deals with customers, the bottom half deals with suppliers. And, just as with customers, there are two sides to the game with suppliers. Other players can complement you or compete with you in attracting suppliers’ resources. Here are the definitions:
A player is your complementor if it’s more attractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone.
A player is your competitor if it’s less attractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone.
Competition for suppliers often crosses industry boundaries. Capital providers are suppliers, and the competition to attract their funds takes place in a global market. Employees, too, are suppliers. People don’t usually look at it that way, but follow the dollar: the company pays employees to provide a valuable resource—namely, their expertise, labor, and time. Competition for employees crosses industry boundaries. For example, companies from very different industries compete for the supply