Co-Opetition - Adam M. Brandenburger [20]
Peace and War
Companies are
• complementors in making markets
• competitors in dividing up markets
A Player You Can’t Avoid
The ultimate example of a player occupying more than one position in the Value Net is government, both federal and state. Depending on the aspect of government you’re looking at, it can appear in the role of customer, supplier, competitor, or complementor. It also has an important behind-the-scenes role.
When the government buys goods and services, it’s being a customer like any other—only bigger. In its role as customer, the government commissions new roads, bridges, buildings, and prisons; buys medical care and education; procures vast amounts of military equipment. The government is also a supplier. Among other things, it sells oil and mineral rights, logging rights, and the rights to use radio spectrum.
When people pay taxes, they have less money to spend on other goods and services. In this way, the government “competes” with private business for people’s dollars. Admittedly, the “competition” is rather one-sided, since paying taxes is obligatory. Likewise, when the government borrows money, it competes with companies looking to raise capital. State colleges compete with private colleges. The U.S. Postal Service competes with Federal Express. As the country’s biggest employer, the government also competes with any business looking to hire people.
Meanwhile, the government serves as a complementor to every business activity by providing basic infrastructure and civil order. Virtually every business depends on government for things like protection of life and property, a transportation network, civil courts, a stable currency, and so on. Without these things, people couldn’t do business.
Along with its transactional roles as customer, supplier, competitor, and complementor, the government has the power to make laws and regulations that govern transactions among other players. We’ll talk more about this behind-the-scenes role of the government as a rule maker in the Rules chapter.
5. Friend or Foe?
Michael Corleone: Keep your friends close,
but your enemies closer.
—The Godfather, Part II
In the game of business, who are your friends and who are your foes? Sounds like an easy question. You have three groups of friends and one group of foes, right? Customers, suppliers, and complementors are all on your side, while competitors clearly are not.
In fact, we know that can’t be quite right. People understand, intuitively, that along the vertical dimension of the Value Net there is a mixture of cooperation and competition. It’s cooperation when suppliers, companies, and customers come together to create value in the first place. But when the pie has to be divided up, customers press for lower prices, and suppliers want their slice, too. So it’s competition when it comes time to dividing the pie. In the case studies throughout this book, you’ll see the simultaneous elements of competition and cooperation at work. It’s this duality that best describes your relationships with customers and suppliers.
What about the horizontal dimension? Who are your friends and foes here? You’re pleased when a complementor enters the game, and, most of the time, you’re happier if competitors stay out. So complementors are friends and competitors are foes? Yes. But, again, that’s not the whole picture.
When a complementor enters the game, the pie grows. That’s win-win. But then there’s a tug-of-war with your complementor over who’s going to be the main beneficiary. If your complementor gets less of the pie, that leaves more for you, and vice versa.
This tug-of-war between complementors is evident in the computer business. Since hardware makers complement