The new world of business collaboration
Imagine being granted access the archives of a competing business which has been trading for a decade longer than you? Or, being allowed to trawl through the client list of a business you've always admired?
Welcome to the wonderful world of "co-opetition", where businesses of all shapes and sizes are forming co-working arrangements, enabling them to become stronger competitors in the process.
This new perspective on business collaboration requires both parties to create a working arrangement that enables them to capitalise on the arrangement.
Unlike traditional collaborations in which businesses may come together to offer a joint promotion, co-opetition is a powerful way to develop a business strategy and identify new market opportunities.
Co-opetition is thriving among Australian start-ups, according to Sydney technology entrepreneur Mick Liubinskas. He's seen lots of examples of co-opetition among education and technology companies, where many players regularly share ideas and tools.
"The co-working spaces, accelerators and investors that predominantly work together to support co-founders are the ones that build successful businesses," Liubinskas says.
"Most people are a part of three, or four, groups and everyone shares information and connects."
Adventure Capital founder and managing partner Stuart Richardson says that co-opetition is a critical business skill.
"As big as your dreams are and as smart as you might think you are, you can't do it alone," he says.
"Start-ups need to find mechanisms to scale efficiently, or face a painful death of 1000 cuts. Partnering, and forming an effective ecosystem that extends your influence and enhances your access to market is a sustainable means to achieve this."
He recounted a recent example of co-opetition, in which Adventure Capital portfolio company, 121cast, worked closely with radio station Southern Cross Austereo for almost 12 months to gain its trust, and now receives access to its library of audio content.
In return, it provided a personalised radio service via radio app Omny, which enabled the radio network to connect with new listeners.
"There's no denying that agile start-ups can and will out-innovate larger corporations."
The founder of custom jewellery website StyleRocks has also benefited from a co-opetition arrangement.
Pascale Helyar-Moray forged a relationship with chocolate retailer Lollypotz, which gave away StyleRocks gift certificates.
The arrangement works well for StyleRocks as a cost-effective customer acquisition mechanism and also a source of revenue, Helyar-Moray says.
"What we find is that gift certificates help customers make their first online purchase with StyleRocks jewellery. It also gives Lollypotz something innovative to offer their customers - the idea that customers have their chocolate now, and jewellery later."
Harvard Business Review blogger Marquis Cabrera wrote recently that sharing information is a good way to build trust with your competitors in the lead-up to a co-opetition arrangement.
These partnerships have also worked well for businesses that create new technologies given the high costs associated with research and development, she says.
Cabrera suggests choosing partnerships where each person brings something different to the table.
"In many circumstances, forming co-opetitions is better than traditional collaborations because they create transparency about motivations, agendas and goals."
However, it's important to understand how to protect your own interest whilst co-operating with competitors to maximise value.
Richardson says the business relationship should be formed around a clearly articulated set of principles, which are used to ground the progress, success or need to discontinue any arrangement.
"Like any relationship, it takes time and energy to develop and grow the best partnerships. And despite best intentions, sometimes they can end in tears," Richardson says.
Sydney Morning Herald