Coopetition – Working With Your Competition and Liking It

Coopetition in small business

Dave was ready to expand his successful BerksCountyWeddings.com into TampaBayBrides.com. The trouble was, other wedding websites were already established there. He knew that to compete effectively, he’d need targeted search engine optimization (SEO) positioning to get top billing in that competitive market. His website provider, Echo Valley Graphics, provides topnotch, impactful graphics, but not SEO. Dave asked Echo Valley to work with Search Troop, another website designer specializing in search engine optimization (SEO). But Echo Valley and Search Troop are competitors, aren’t they? Two website designers working on the same account, bringing their best skills to make Dave’s business succeed. That’s coopetition.

In a growing business, the business owner competes for projects against competitors daily. It’s a fact of life. We spend so much time fine-tuning our proposals to bump-off our competitors we begin to think that’s the ONLY path to success. Yet, learning to work with our competition can yield many benefits.

Here are a few:

•Build your reputation for putting client’s needs first

•Complete the whole job with quality even when you have only partial skills

•Handle jobs larger than your current workforce

•Create a reputation in the business community for fair dealing

•Observe your competition in action

•Build your satisfied client base

•Bring two companies respective strengths against a larger problem

•Combine skills to develop new products and markets

•Adopt early a future trend in our increasingly interconnected society

Examples of Coopetition

Coopetition can expand way beyond a project by project basis. On a permanent basis, it becomes an alliance, a partnership, or an ownership interest. The Multiple Listing Service MLS used by Real estate Agents is an example of permanent cooperative listing of properties so competitive realtors can efficiently find properties for their clients. In computer companies, long term partnerships, such as Sybase and IBM help them to innovate and ensure that software works the way customers expect it to. In an alliance of HP, IBM, Microsoft, Oracle, and Sun, they cooperate on standards but compete on implementations. Every time a retailer helps you find an item at a competitor’s, that’s coopetition. You remember you ‘found it’ at the place that was so helpful.

Coopetition and Profits

Sticking with your core competency is the best way to maximize your profits and hone your business skills. So you can’t always provide all the skills inside your company for whatever a customer can think up. Hiring or training an employee for what may be a single customer need is also, of course, not profitable. Making the customer look elsewhere for a company that can handle the ‘whole’ project can lose an ongoing client, or miss a new one, if you could do an otherwise good job. So finding a competitor with the skill you are missing may be just the solution to keeping a majority of the profits in the project, while giving up a piece of the profits to a qualified skilled resource, AND creating a satisfied customer. That sounds like a win/win situation to all parties involved, especially the customers.

Rules of Conduct

Of course you need to be wary. There are a few practical rules to observe. So before you begin, remember:

•Your best competition is worthy of respect and deserves yours

•Keep conversations about common projects open but respect mutual privacy regarding other projects

•Make clear contracts regarding payment terms, work efforts, privacy, non-compete, and non- recruit

•Begin by cooperating on a project or two before discussing a longer term partnership – that’s a marriage

•Clearly define who owns the client relationship, who is the subcontractor, who is the manager for the client engagement – and keep it efficient

Bottom line, by adding coopetition to your repertoire of skills, you are keeping your profit making options open. You’re delivering better customer service by providing more options for your customer, solving their whole problem, and saving them legwork. Your customers will remember who found the solution and the quality of the whole job, further enhancing your reputation. And, reaping the profits when you’re granted and complete those coopetition-based projects (and your larger competitors don’t) is the biggest silver lining of all.

Are you getting back what you put into your business? Merra Lee Moffitt learned the hard way while building her own 40-person consulting practice. Now, as a SCORE counselor, small-business profitability consultant and Certified Financial Planner every day is spent giving back. She directs business owners in techniques that make, keep and grow more from their businesses. Your first question is free. Call her at 888-920-2030 or email her at merralee@captureprofits.com. © Copyright 2005 Merra Lee Moffitt