February 2002   

Then those toddlers mature into adults, and enter the business community, where cooperation sometimes loses its allure. The commercial world is highly competitive, so cooperating with competitors can be viewed as losing one's competitive advantage at best, or selling secrets to the enemy at worst. There doesn't seem to be room for cooperation in today's business environment.

There's no room, that is, unless you're an entrepreneurial spirit looking for a new way to expand your business. Then cooperation with the competition becomes not a business taboo, but a new, sanctioned modus operandi known as coopetition.

Cooperating While Competing

Coopetition isn't new. The real estate industry caught on to the concept earlier than most when independent agents/firms banded together to create the Multiple Listing Service. Before the MLS, realtors who didn't have a suitable property for a client in their own listings had to scavenge their way through properties for sale among their competitors. The MLS created a cooperative way for them to compete in an equitable environment.

Now, realtors aren't the only ones discovering the practical uses of coopetition. Matthew Turner, marketing manager for NxTrend Technology, a supplier of software solutions for supply-chain management, sees coopetition as a growing solution for many industries.

"Coopetition evolves out of the need to provide whole products to customers," says Turner. "To offer a whole product, companies must re-evaluate their relationships with their competitors. You cannot survive the new B-to-B-to-C model alone. Companies that once fiercely competed must now form cooperative alliances to provide their customers with a whole product. This is coopetition at its best."

Coopetition in Action

Auren Hoffman, president of the competitor-to-competitor exchange company BridgePath, agrees that companies will need to think cooperatively rather than competitively in the near future. BridgePath is an exchange for members of the staffing industry, allowing them the ability to place applicants in jobs across many individual companies, rather than relying on only in-house openings. Hoffman says it's similar to the realtors' MLS. "It encourages competitors to work collectively," he says. "It gives the staffing companies a way to fill gaps. One staffing company has a job it can't fill; another has an employee it can't place. Coopetition through BridgePath gives them both a solution."

Hoffman and Turner both say that any coopetition arrangement must be carefully planned. Before entering into such an agreement, it's critical to consider the following points:

• Digital reputation system -- "We create profiles of the member companies that include objective and subjective ratings, so recruiters know the trading reputation of any company when they're conducting a search," Hoffman says.

• Efficiency -- "Whatever system is developed to manage the coopetition, it needs to be highly efficient," says Hoffman. "It's got to be easier and more efficient than manually seeking alternatives." Turner notes the importance of technology: "A trusted intermediary with an open platform will be able to communicate with all members of the community without forcing each member to use the same platform."

• Legally binding contracts -- "We have legal contracts all parties must sign, with clear stipulations against approaching other clients of other companies, stealing candidates, and not paying their bills on time," notes Hoffman.

• Privacy -- "Privacy and control of information must remain in the hands of the consumer," says Turner. "Each transaction should be traceable to limit abuse of information, and the customer will only give the information willingly, based on the privacy controls they exert."

• Trust -- "Competitors are wary," says Hoffman. "We created a trusted community by stringently qualifying every partner, including credit checks, then developing a privacy policy backed by TRUSTe and BBBOnline [Better Business Bureau]."

Of these tips, Hoffman says the number one factor is trust. "The competing companies have to build trust, or coopetition will not work." But the payoff for building trust is potentially very high. "What companies sometimes don't realize is that this makes them more efficient, not less," he says. "They're actually delivering better customer service by providing more options for that customer, without the customer having to do the legwork. Maybe part of the profit goes to someone else, but the customer remembers who found the solution. It keeps brand loyalty strong."

Coopetition in Cyberspace

Brand loyalty is a major concern for e-commerce players, and Turner feels that coopetition will grow rapidly for online businesses. "Internet-enabled commerce makes monopolization difficult," he says. "It's easy for consumers to look at a variety of products and prices with just a mouse click. How can a company pretend they offer an exclusive product when dozens of other companies offer the same product just one click away?"

In a time when Internet companies are struggling to compete, taking the cooperative view may be the best long-term approach. "Successful e-business companies will reinvent themselves," he says. "There are two results from this cooperation. First, these companies will improve in efficiency and service as they combine resources, share data, share customer information and demand, and work to improve the interactivity of their community. But more importantly, as the coopetitive community increases and its efficiency and service improve, more customers and consumers will be drawn to the community. The cycle will continue, as the new customers and companies provide even more opportunities for efficiency, customization and improved service."

A new century, a new President at the helm, but a return to one of the oldest principles in the book: Cooperation -- even when you compete.