While not a new idea, competitor collaboration has become one of the central tenets of business strategy.
The thinking behind this is twofold; businesses must consider expanding their circle of potential collaborating partners by joining forces with their biggest competitors, and, even if a business remains committed to a conservative strategy by keeping clear of collaboration with competitors, it still must find ways to compete against this new form of competitor. That is, businesses is now likely to compete against, not a single competitor at a time; but rather against collaborative alliances.
In any case, strategy has moved to a new field – one which is more ambiguous – more complex.
In its February issue, Harvard Business Review (HBR) has made that exact development its cover story.
The story’s authors, two business professors from New York University and Yale, Adam Brandenburger and Barry Nalebuff, remind us that the concept of competitor collaboration has gained more traction since its first appearance three decades ago. They guide the reader through a finely structured argument of how business leaders might approach collaboration opportunity. Clearly, and understandably, they are not arguing for abandoning the ‘go it alone’ approach because that too is a strategy that can, and often does work. What they suggest is to starting paying more serious attention to a real fact: collaboration between competitors works for a host of good reasons.
There hasn’t been a great deal of writing on this topic, which in part is a reflection on a slow process that has not produced enough data to answer all the questions that competitor collaboration poses. Nonetheless, one doesn’t have to be a ‘cut above the rest’ kind of strategist to sense that complexities and disruptions in the business world (think climate change, technology, global pandemic etc), have helped nudge business thinking into areas that were largely ignored and, at times, dismissed as unrealistic.
I am particularly pleased to see this kind of assertion by HBR as I have long argued for collaboration as being a far more powerful competitive strategy. I have written regularly on how businesses can start getting their head around it. In my first book on collaboration The Collaboration Instinct, I explore this in a number of areas. In one chapter I argue for the idea that collaboration and competition actually need each other: “One habitually omitted feature of collaboration is that it can push competition to a new level…..collaboration allows each party to reflect more critically at themselves because the proximity of a relationship with competitors can easily cut through the usual spin.”
What has been apparent for a long time in regard to attitudes to collaboration is that there is of a notable difference between senior management and remainder of the organisation. Seniority is often synonymous with a less than enthusiastic embrace of collaboration. Guarding a company’s ‘secret sauce’ (to use Brandenburger and Nalebuff’s phrase) inevitably means being less open to the possibility of collaboration. Brandenburger and Nalebuff examine that particular aspect of competitor collaboration in more detail and one of my favourite parts is their response to what could quite probably be an immediate question to every business looking to collaborate with a competitor: will collaboration give away our competitive advantage? The answer is that this may not be an automatic outcome. It depends rather on the nature of the relationship, and the strategy and conditions agreed by parties. In other words, your business can compete effectively and retain its competitive advantage while still collaborating with fierce rivals.
There are number of things that your business must consider initially before it can clearly embark on collaboration with rivals.
Who in your company is best suited, skilled, and most confident to manage such transformation? Let’s not forget that your leadership team is probably made up of ‘winners’, people that the business recruited and nurtured because they knew how to beat the competition. Their developed skills for that kind of approach are not necessarily a natural match for the skills needed to balance competition and collaboration. Hence the question: How well prepared is your company to perform this delicate function? Furthermore, how resilient is the business to what may be a new form of disruption brought on by the combined skills, capabilities and innovation of a collaborating group of competitors working together?
One of the easiest mistakes a business can make is to rush into responding by acting as if it is ready to collaborate without giving collaboration due time to be understood, not as a simple partnership, but as a radically different way of creating value.