Co-opetition
Adam Brandenburger, Barry Nalebuff, 1996
Why did Coca-Cola and Pepsi save hundreds of millions of dollars by never switching to a new supplier? Professors from Harvard and Yale show that business is not a war in which one side wins only at the other's expense. You will learn to see every player in your game, count your own value honestly, and change the rules in your favour.
Who it is for
For people who run their own business, negotiate with customers and suppliers, or are simply tired of seeing an enemy in every neighbour on the market. And for anyone who wants to understand where the strength in a negotiation comes from.
What matters is not whether others win (in life they sometimes do), but whether you win.
A pie you cannot bake alone
Imagine you run a small business and from the start you hear one rule: business is war. A competitor is an enemy, a customer is prey, a supplier is someone to squeeze. In that picture, every win has a loser. But look closely at any ordinary deal and the picture starts to crack. The seller needs money, the buyer needs the product, and neither of them gets anything without the other.
Adam Brandenburger of Harvard Business School and Barry Nalebuff of the Yale School of Management wrote this book in 1996 to replace the image of war with a more accurate one. Game theory, the science of making decisions when your result depends not only on you but on others, gave them the tools. Their main point is simple: value is almost always created together with others, and your share of it has to be fought for. For this double nature they took the word co-opetition, a blend of cooperation and competition.
The authors say at once that they do not ask you to take their word for it, and they build the book on the stories of companies. There are Intel and Microsoft, video game consoles, the credit card of a car giant, and a maker of sweetener that created hundreds of millions of dollars for others and kept almost nothing for itself.
Next you will see who really takes part in your game, how much you bring into it, and why the biggest gains come not from playing better but from changing the game itself. For this the authors offer five levers: players, added value, rules, tactics and scope. Taken from the first letters of the English words, they call this set PARTS. Let us start with the map that shows all the players.
A stranger's product can make yours worth more
Take two companies that never sold the same thing. Intel makes processors, Microsoft makes software. They are not competitors, yet they are tied together more tightly than many partners under contract. When Intel brings out a faster processor, Microsoft's programs run better on it, and people want to buy them. When Microsoft releases a new, more demanding program, people need a more powerful computer. The success of one company pulls demand for the other's product along with it.
For this kind of player there was no word, so the authors invented one: complementor, from the English complement, meaning addition. By their definition, another player is your complementor if your product is worth more to the buyer when that player's product is there too. A competitor works the opposite way: next to its product, yours is worth less.
To see the whole game, the authors draw a diagram they call the value network. You are in the centre. Above you are customers, below are suppliers, and on the sides are competitors and complementors. In this diagram customers and suppliers are equal partners in creating value. Complementors can also sit on the supplier side: another player becomes one when a supplier finds it more profitable to serve you while it also serves that player.
Why are complementors so rarely noticed? The authors blame a military way of thinking: in every player we see Mr. Hyde, the villain, and miss Dr. Jekyll, the good man. Here is an example from the book. Antique shops often open on the same street. They have to share the customers, but together they create a place people travel to specifically for antiques. The same neighbour turns out to be both a competitor and a complementor.
That gives the first step. Draw your own network and write real names in each of the four directions. Then for each player ask yourself: where do we make the pie bigger together, and where do we fight over the slice? Almost every link will turn out to have both sides.
About the author
Adam Brandenburger taught at Harvard Business School and later became a professor at New York University. Barry Nalebuff, a professor at the Yale School of Management, co-authored several books on game theory and co-founded Honest Tea.
All books by this author: Adam Brandenburger, Barry Nalebuff
Terms from the book
- patent
- Taylor
- Game theory
- Intel
- Microsoft
- Hyde
- Jekyll
- Nintendo
- Monopoly
- Cicero
- General Motors
- Ford
- Sega
- PARTS: The authors' own scheme, not a common term: the five elements of any business game, taken from the first letters of the English words: players, added value, rules, tactics and scope.
- Complementor: A term the authors of the book proposed: a player whose product makes your product worth more to buyers. From the English complement, meaning addition.
- Value network: The authors' diagram: you are in the centre, buyers and suppliers above and below, competitors and complementors on the sides. It helps you see every player in the game.
- Added value: A concept from the book: how much bigger the pie is when you are in the game than when you are not. It shows what share you can count on.
- Cartridge: A removable cassette with a game that was inserted into a game console.
- Shortage: A lack of goods, when more people want to buy than there is on the shelves.
- Aspartame: An artificial sweetener many times sweeter than sugar. It is used in diet drinks.
- NutraSweet: The company and the trademark under which aspartame was sold for a long time.
- Coca-Cola: American company that makes the soft drink of the same name, including diet versions.
- Pepsi: The soft drink of the American company PepsiCo, Coca-Cola's main rival.
- Holland Sweetener: Dutch company that began making aspartame when the NutraSweet patent was expiring.
- BellSouth: American telecommunications company that worked in the south-east of the United States.
- LIN Broadcasting: American company that owned television stations and mobile phone networks.
- McCaw: McCaw Cellular, an American mobile phone company that in 1989 fought to buy LIN Broadcasting.
- Household: American bank with which General Motors issued the GM Card credit card.
- Citibank: Large American bank with which Ford issued its own credit card.
- Judo: A Japanese martial art in which the fighter uses the strength and weight of the opponent against him. The book uses the name for a newcomer's strategy against the leader.
- Softsoap: Brand of liquid soap in a bottle with a pump dispenser, one of the first on the American market.
- Minnetonka: American company that released the liquid soap Softsoap.
All terms
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