What is Co-Opetition?

The term, co-opetition (coopetition) is a combination of the words cooperation and competition. It is the concept that competing businesses sometimes benefit by cooperating so that each gains greater capacity to compete in the market. Often, this idea is used in technological fields, where shared information can improve products and provide some economic and competitive benefit to all sharers. This stands in opposition to business practices where all information and technology is closely guarded and exclusive and where competition in the market becomes a zero sum game. Instead, co-opetition, which might also be called strategic partnering, offers the opportunity for competing companies to create win-win scenarios that increase survival, profitability, and competitive edge.

Co-opetition has been used as a business and economic term since the early 20th century, but the name gained most popular usage with the 1990s book, Co-opetition, written by Adam Brandenburger of the Harvard Business School and Barry Nalebuff of the Yale School of Management. The book relies on game theory and a number of examples to make the argument that businesses in direct competition may benefit from shared information or partnering on some issues. This doesn’t mean businesses give up competing with each other, but they help each other become stronger so that each gains equal competitiveness and produces better products or services.

An example of this has been ongoing engagements between Apple® and Microsoft®. Though these companies have a legendary rivalry with each other, they both create some software for each other. An Apple® user can choose to use Microsoft Word® on his computer. A Microsoft operating system has access to iTunes®. Similarly, Apple® now uses Intel® microprocessors in many of its computers, making it a faster computer that competes with numerous PCs better.

The goal of co-opetition is never to decrease competition. Rather, it magnifies it because companies use shared information or access to make their products and services more attractive. When businesses choose these opportunities to help each other, they support each other’s existence. Instead of creating winners and losers, the goal is to create higher profits and lifetime competitors. Cooperation and competition combined are posited to be much more positive for all involved.

On a micro scale, this concept is sometimes used in school settings. Students may be asked to work together, but each student gets an individual grade, which is, essentially, competition. To best benefit, two students would want to work closely together, each contributing his or her best work to a project. When successful, both students can walk away with a good grade. If there is only competition, both students can end up losers. In co-opetition, the desire to compete fuels the spirit of cooperation.