Book Summary Preview :
CO-OPETITION

The Big Idea

Co-opetition combines the advantages of both competition and cooperation into a new and dynamic framework to generate more profit and turn things in your favor by changing the business environment that directly affects your company.

Part 1
How does one go about changing the game of business?

• Change the elements: from players, to added values, rules, tactics, and scope.
• Remember, nothing is ever set in stone. Take advantage of change and be a quick and agile company that moves and responds as needed.
• Business strategy and the concept of co-opetition is designed to provide a framework by which companies can gain sustainable competitive advantage by changing the game to their own advantage.
• When companies work together they create a larger and more valuable market than they could by working individually.
• The objective is to maximize your return on investment regardless of how other companies perform.

To change the game of business, you have to alter one or more of these basic elements:

Players
By changing the mix of competitors or complementors for your company. A complementor is a provider of products or services that add value to whatever you are offering. For example a computer hardware company and a software company are complementors. Their products are worth more when combined.

Added Values
The company that holds the most value to the value net holds the power. Change the added value of the various players and you change the game itself.

Rules
In business, the rules are negotiable.

Tactics
Alter the player’s perceptions, and you change the outcome of the game. Perceptions are shaped by tactics.

Scope
Understand how other commercial games influence yours, and take advantage of any implicit boundaries other parties are using to improve your own competitive position.

“You have to be able to compete and cooperate at the same time.” — Ray Noorda, Novell founder

“You don’t have to blow out the other fellow’s light to let your own shine.” — Bernard Baruch

Part 2

“If you don’t have a really tough competitor, you ought to invent one.” — Bill Smithburg, CEO, Quaker Oats

Players
The Value Net is composed of customers, suppliers, competitors, complementors, and your company. Before you enter any new value net, stop and ask yourself, “Which of the current participants in this value net has the most to gain by my participation?” Get that player to pay for your participation.

To increase the number of customers in the value net, companies must work together or individually to:

• Educate the market about product benefits
• Be prepared to lose money on early customers in order to build market momentum.
• Subsidize customers who buy complementory products — the more they buy from a complementor, the more they also buy of your product.
• Become their own customers — by setting up new companies to buy and use their own products.

To increase the competition, customers can:

• Offer to subsidize any capital investment required for a new company to enter the industry
• Provide a guaranteed sales contract if a new company commits the resources required.
• Supply a potential newcomer with a price at which he is prepared to give them business.
• Offer a provision in which a company can match whatever is the best price offered by a competitor.

To increase the number of complementors, companies can:

• Form a buying coalition to steer customers toward lowest priced complementors or towards new ones.
• Pay companies to develop complementory products.
• Become your own complementor by establishing operations for an appropriate product.

To increase supplier numbers companies can:

• Pay companies to establish operations in that supply industry. This offsets capital costs.
• Form a buying coalition to pool together orders and establish a viable market for a new supplier.
• Become your own supplier! Set up a new company.

Added Values
The central challenge of business is to find ways to create additional added value, either by making a better product or by using resources more efficiently. Sometimes the best way to maximize your own added value is to create solid relationships with your customers. Apart from saying “Thank you” to your customers, the loyalty program is a tangible and effective way to also:

• Reward customers with products or services they value rather highly than cash.
• Offer better deals to loyal long-term customers than new customers.
• Say Thank you by offering discounted complementory products or services, complimentary passes for them to bring-a-friend.
• Say thank you once a solid relationship is built
• Reward loyal customers and loyal suppliers because both are essential to your company’s operations.

“If everyone can do it, you can’t make money at it.” — Sharon Oster, Yale School of Management

If your customer loyalty program is copied by competitors for short-term gain, you can:

• Use customer feedback to put out a product which is tailor-made for your customer group.
• Create a strong brand identity.
• Increase your production volume as quickly as possible.
• High volume in your market will give you an economy of scale your competitor may not have. . . . . .