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Of Rethinking & New Possibilities: 'Co-opetition'

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When times get tough, enterprising small business owners rethink their strategies and MOs in order to survive and thrive. Apparently, the old adage: "there's strength in numbers" has taken on a whole new meaning these days. A recent LA Times article points to exciting possibilities if business owners–even competitors--are willing to break down barriers and share their strengths and competencies.


The article, For three fragrance firms, joining forces sometimes makes scents, offers valuable insights for all of us in business. It points out that in times like these, collaboration makes great sense, saves money and taps into valuable expertise small businesses don't have access to otherwise.

The story:
Business owner Neal Harris wanted to create a new fragrance because he saw an opportunity for more work. He developed the fragrance by working with a competing firm that provided the raw materials at reasonable cost, and a third firm that assisted with packaging the fragrance. Harris: "Together we are accomplishing more than we could have ever imagined."
Small business expert James Blasingame gets the credit for coining the word "co-opetition" for this emerging trend. "It's a highly intelligent survival strategy, and they wind up helping each other get more business. They're also providing customers with a better product than they could provide as individual companies," states Blasingame in the article.

What's great about it:

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These alliances are less formal than working under contract.
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Each participant's business saves money on hiring additional personnel, and outside resources for competencies it doesn't have.
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Each participating company can help land more business for all concerned.
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Added "brain power" and insights.
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A chance to build solid, trusting relationships that enhance each business's opportunities for future success.
I've recently blogged about the outreach large consumer product companies are making these days, launching new web sites and soliciting ideas for new innovative products from entrepreneurs.
Since so much of the business landscape is populated with small, entrepreneurial businesses more than large corporate concerns, this is an idea that I think really merits consideration by companies all across the country.
The article points out that in order for this to work, one person has to be "nominated" as the point person for collaborative projects. Trust is paramount. Egos have to be checked at the door. Give and take of ideas and openness are essential ingredients for co-opetition to be effective. But think about the potential upside.
Questions:
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Are you in a business, or do you know of a business that has collaborated with other companies in this manner? If so, was it successful or did it fail? Why?
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Do you see potential for your company if management would consider joining forces with competitors or other businesses?
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Do you think a loose collaboration rather than a formal working agreement could potentially lead to problems, or do you think avoiding legal terms might be more advantageous in the long run?
I'd love to hear from you.


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Ted Mininni is president of Design Force, Inc. (www.designforceinc.com), a leading brand-design consultancy to consumer product companies (phone: 856-810-2277). Ted is also a regular contributor to the MarketingProfs blog, the Daily Fix.

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  • by Paul Barsch Tue May 5, 2009 via blog

    Hi Ted, in the field I work in (high technology) we have no choice but to engage in co-opetition as M&A activity has really blurred the line between competitor and alliance. Your friend today on deal X might be competing with you on deal Y tomorrow. And this is just the technology side, I haven't even mentioned services yet! As industry players consolidate in this recessionary economy, I believe you're going to see a lot more co-opetition.

  • by Ted Mininni Tue May 5, 2009 via blog

    Paul, I hope we will see more co-opetition. Given the extraordinary times we live in, it would be great for businesses, large and small, to take a step back and reassess a few things. We all have plenty of competition. Regardless, forming alliances to share various disciplines, areas of knowledge and expertise make strategic sense. Glad to see this is taking place in your industry. Let's hope others see the potential in this. Thanks, Paul. Your insights are always appreciated.

  • by Neal Harris Tue May 5, 2009 via blog

    Hi Ted, Thank you for your comments on the recent LA Times article about my business strategy. My companies : Harris Fragrances,LLC and Scentevents are built around mutual collaboration. We have numerous alliances with other small businesses (and large) and often work with competitors to help them achieve their goals. Teamwork without Ego's getting in the way is the key to our success,this strategy is proving to be very doable and we are actually having fun in the process. Again thank you , Neal F. Harris Founder : Scentevents and Harris Fragrances, LLC

  • by Ted Mininni Tue May 5, 2009 via blog

    My pleasure, Neal. Good ideas should be spread, in my view. I'm hoping your collaborations with a competitor inspire other small business owners to think about doing the same. All the best to you and your business for continued success, Neal.

  • by Claire Ratushny Tue May 5, 2009 via blog

    Good post, Ted. I think besides sharing competencies to launch cost-effective products, businesses might work together to develop truly innovative new products undreamed of today. Entrepreneurial businesses might even work within their communities to solve local problems. There's nothing like having a local grasp of issues and taking a grassroots approach to solving them, is there? Here's the thing: innovative ideas often come from entrepreneurs with real vision--rather than more risk-averse big businesses. Bringing those ideas to fruition is very time consuming and costly. But a willingness to collaborate and form a real "think tank" might lead to exciting new possibilities, and be cost effective to boot. It's also true that economic downturns have been great incubator periods for innovation and new business ideas in the past. So what about now? How about it, people?

  • by Ted Mininni Wed May 6, 2009 via blog

    Good points, Claire. I can see a lot of applications for this new "business model". Creative thinking leads to innovation if various disciplines come together to realize it. Sharing resources in this manner is definitely the way to go. Any other ideas, DF readers? I know you have some. . . Thanks for weighing in, Claire.

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