The Rules of Co-opetition. (cover story)

SAMSUNG Electronics Co. Ltd.; APPLE Inc.; YAHOO! Inc.; GOOGLE Inc.

“Co-opetition”—cooperating with a competitor to achieve a common goal or get ahead—has been gaining traction for three decades. Yet many companies are uncomfortable with the concept and bypass the promising opportunities it presents. In this article two professors who helped introduce the approach offer a framework for deciding whether to team up with a rival, drawing on examples from Apple and Samsung, DHL and UPS, Ford and GM, and Google and Yahoo. Their advice: Start by analyzing what each party will do if it chooses not to cooperate and how that will affect industry dynamics. Sometimes working together is a clear win, but even if it isn’t, it may still be better than allowing someone else to take your place in the deal—which could leave you at a disadvantage. Next, it’s critical to figure out how to cooperate without giving away your “secret sauce”—your current advantages. Once you’ve done that, you’ll need to craft an agreement that clearly outlines the deal’s scope, who is in charge, how the arrangement could be unwound if needed, and how gains will be divided. You’ll also have to manage resistance within your own firm and alter internal mindsets. Co-opetition requires mental flexibility, but firms that develop it can gain an important edge. INSET: What About Antitrust Issues?. [ABSTRACT FROM AUTHOR]

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