Co-Opetition - Adam M. Brandenburger [5]
It is not enough to succeed. Others must fail.
But the way people talk about business today, you wouldn’t think so. You have to listen to customers, work with suppliers, create teams, establish strategic partnerships—even with competitors. That doesn’t sound like war. Besides, there are few victors when business is conducted as war. The typical result of a price war is surrendered profits all around. Just look at the U.S. airline industry: it lost more money in the price wars of 1990–93 than it had previously made in all the time since Orville and Wilbur Wright.2
The antithesis to Gore Vidal’s worldview comes from Bernard Baruch, a leading banker and financier for much of this century:
You don’t have to blow out the other fellow’s light to let your own shine.
Though less famous today than Gore Vidal, Baruch made a whole lot more money. More often than not, we’ll follow Baruch’s advice in this book.
In fact, most businesses succeed only if others also succeed. The demand for Intel chips increases when Microsoft creates more powerful software. Microsoft software becomes more valuable when Intel produces faster chips. It’s mutual success rather than mutual destruction. It’s win-win. The cold war is over and along with it the old assumptions about competition.
So,
“Business is Peace”?
That doesn’t sound quite right, either. We still see battles with competitors over market share, fights with suppliers over cost, and conflicts with customers over price. And the success of Intel and Microsoft hasn’t exactly helped Apple Computer. So if business isn’t war and it isn’t peace, what is it?
A New Mindset
Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up.
In other words, business is War and Peace. But it’s not Tolstoy—endless cycles of war followed by peace followed by war. It’s simultaneously war and peace. As Ray Noorda, founder of the networking software company Novell, explains: “You have to compete and cooperate at the same time.”3 The combination makes for a more dynamic relationship than the words “competition” and “co operation” suggest individually. This is why we’ve adopted Noorda’s word co-opetition, and made it the title of our book.
What’s the manual for co-opetition? It’s not Leadership Secrets of Attila the Hun.4 Nor is it Leadership Secrets of St. Francis of Assisi. You can compete without having to kill the opposition. If fighting to the death destroys the pie, there’ll be nothing left to capture—that’s lose-lose. By the same token, you can cooperate without having to ignore your self-interest. After all, it isn’t smart to create a pie you can’t capture—that’s lose-win.
The goal is to do well for yourself. Sometimes that comes at the expense of others, sometimes not. In this book, we’ll discuss business as a game, but not a game like sports, poker, or chess, which must be win-lose. In business, your success doesn’t require others to fail—there can be multiple winners. Throughout the book, you’ll see many examples of this. In the spirit of co-opetition, we’ll present some cases where win-lose is the most effective approach and others where win-win is most effective. We’ll discuss situations where defeating your competitors is the best course, and present other situations where the best plan benefits several players, including competitors.
Putting co-opetition into practice requires hardheaded thinking. It’s riot enough to be sensitized to the possibilities of cooperation and win-win strategies. You need a framework to think through the dollars-and-cents consequences of cooperation and of competition.
Game Theory
To find a way of bringing together competition and cooperation, we turn to game theory. Game theory has the potential to revolutionize the way people think about business. This is because the fundamental ideas of game theory are so powerful, and because business offers so many opportunities for applying them.
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