Leaders Library: How Co-Opetition Can Increase Your Value

Can you do business with a win/win philosophy? Business is competitive, so how can it really be win/win? People constantly borrow from the military and “war strategy” when they talk about business, using words like fight, survive and capture. Sounds like one side is the winning side.

But during a recent meeting, someone asked me about collaboration and partnership and it reminded me of an older book, Co-Opetition, by Adam Brandenburger and Barry Nalebuff. I was fortunate to have a negotiation class taught by Brandenburger when I was in business school.170016-PB-Blog_03_02_17

The conversation took me back to that class and I resurrected the book. Ultimately, Co-Opetition is a strategy book, with the underpinnings centered around game theory. But the book doesn’t talk about strategy as purely competition. It talks about strategy as a game – one that is not zero sum; one where competition can co-exist with collaboration. The authors focus not on dividing the pie, but growing the pie.

3 strategic lessons

Conceptually, the book can really help us think differently about strategic context and how we approach negotiation through several key lessons:

  1. Understand your added value equation.

You have to start by understanding your “added value.” This is defined through a simple equation: What is the game worth with you in it, minus what it’s worth without you in it. The difference is your added value.

  1. Look for complementors that can enable your success and growth.

We have to continue to think about competitors; they are real and they have the ability to lower your added value by providing alternatives to what you provide. But we also have to spend time thinking about complementors. Complementors are firms or people who you can partner or collaborate with that would increase customers’ willingness to pay for your product or service. These partners would increase your added value.

For example, advertisers pay Google more for certain demographic groups. Google’s added value to its customers (the advertisers) is greater if it can provide access to specific demographics.

  1. Grow the pie through the Value Net Model – know the moving PARTS.

The authors introduce a game theory framework called the Value Net Model to help you think through your particular game of business and how you can change the game to increase your added value and grow the pie. They use an acronym called “PARTS” to discuss the game:

  • Players
  • Added Value
  • Rules
  • Tactics
  • Scope

 

The point is that the game is dynamic – if you are not getting what you want from the game, think about how to change the PARTS to increase your added value and grow the pie. Don’t simply try to capture greater share of the market through competition and price because, in the end, that shrinks the value of the overall market.

Remember games can be nested within other games. You may be able to impact your game by changing or impacting another game. Think about the NFL’s added value and how it was impacted by the game of wearable data and fantasy football.

Teaching an old dog new (or maybe old) tricks
While Co-Opetition was written in 1996, I found the concepts just as valuable today as I did in business school. The theory proves that win/win is truly possible – if we are willing to think about business differently. I approach a lot of my negotiations as win/win, but I did not use the concepts as directly in terms of strategy – something I plan to change going forward.