“Do I not destroy my enemies when I make them my friends?” ― Abraham Lincoln
Kiss and make up with an enemy? Sound gross? Well, in life and business, we’d all be wise to heed Honest Abe’s advice.
In business, we call this concept a competitive collaboration. It may sound a little strange or maybe even impossible, but it really works. And it doesn’t destroy anyone.
Building relationships with competitors is more than trying to avoid an all-out war. It’s learning how to turn a potential threat to your business into a tremendous benefit.
So whether you are just starting a business or feeling as if your momentum is stalling, I strongly recommend considering this strategy. Competitive collaboration can help you boost profits, improve brand awareness, attract your target audience, and much more.
In this article, you’ll learn something that could turn your world upside down. In a good way, of course. Ready?
Why Competitive Collaboration Makes Sense
Many companies have been taking advantage of this trick for decades. It used to be a nice addition to an overall business strategy. Today, it’s becoming an integral part of it.
The above image borrowed from https://www.eoi.es/ shows that as time passes, the competitive approach loses its edge and collaboration makes more of an impact. To understand why collaborating is better than competing, let’s look at the emotions people are experiencing in both situations, as well as their pros and cons.
When you are in competition, you are driven to achieve results, but this is often accompanied by fear, stress and resentment. You are worried about performing beyond your abilities in order not to lose what is already achieved.
|Urgency to complete a project||Extreme stress|
|Better productivity||Possibility of malicious behavior|
|Resentment of potential partners|
When you are collaborating, however, you can still be driven to achieve results, but with less fear or worry. Your desire is to achieve joint goals.
|Self-reinforcement||Different working styles|
|More creativity due to better sharing||Desire to do less work|
When people are working in a competitive environment, they are under continuous stress. The energy they could have used for achieving their goals is wasted on trying to find ways to outrun the competition.
They feel an urgency to complete every project before the competition does it faster and better. While this can help with maintaining tight deadlines, such an approach can have a negative impact on the quality of work.
When stressed and pushed to beat competitors, people make mistakes, overlook important matters, compromise their ethics, and eventually burn out. Even if they achieve certain goals in the process, they may not be ready to perform to their full potential moving forward.
In a collaborative environment, people feel more relaxed. They share the responsibility with partners, thus feeling less stressed. Meanwhile, they aren’t racing to get the job done. A calm and friendly atmosphere allows a person to take a more holistic approach to each task. It improves the overall quality of work, not to mention quality of life.
Even though different work styles and a desire to hand certain tasks over to a partner can pose challenges, overall, the results are bound to be better. Eventually, collaboration brings more profits, makes the work environment more productive, and improves customers’ satisfaction.
Examples of Successful Competitive Collaborations
Businesses become successful because they offer solutions. More often than not, a business can’t provide a perfect solution on its own. By trying to outrun the competition, it eventually runs out of funding and fails to provide the right solutions to people’s problems. Check out how these businesses avoided that fate.
Deliveroo + Uber
Deliveroo finds clients for restaurants that don’t have delivery options. Uber helps taxi drivers get clients. Both companies and their partners win. This collaboration helped both companies become more popular and meet customer needs.
Microsoft + Intel
One of the most famous competitive collaborations is Microsoft and Intel. They created Wintel Alliance, in which Intel worked on hardware and Microsoft created software. While the alliance has since fizzled out, the two giants collaborated to build software and hardware platforms and brought their tech to virtually every home in the world.
Pfizer + Merck
Another successful example of competitive collaboration is the powerful alliance between Pfizer and Merck. These pharma companies entered a strategic partnership to bring new cancer treatments to the market as soon as possible.
Relationships With Competitors: Choosing the Lucky Enemies
Assuming I’ve won you over on competitive collaboration, where do you start?
The first thing to understand is that even if you’re collaborating with competitors, that doesn’t mean you can just relax all the time. Companies working together are still technically “enemies.” They just learn how to hide their teeth and claws. That means you always have to be careful about the way you act and the information you share.
Having said that, if you don’t ask, you don’t receive. It’s that simple. Once you start working together, you can always sign a non-disclosure agreement, which can keep the frenemy from hurting your business.
Here are a few types of competitive collaborations you may want to consider:
· Support a charity – A charitable cause is the simplest way to start a collaboration. It can give both of you a push toward the negotiation table. As a bonus, of course, you get to help people.
· Enter a new market – You make amazing forks, the competition makes awesome spoons. Join together to create cutlery kits. Sounds too simple? That’s exactly what Ford and Toyota did in 2011. Of course, this approach requires a formidable investment from both parties. But it’s better than doing it alone.
· Purchase in bulk – As a fork manufacturer, you must be buying a lot of metal. Work with your spoon manufacturer competitor to purchase metal in bulk. You can cut costs in the blink of an eye.
· Cross endorsement – You are selling amazing forks. You joined the spoon manufacturer to make awesome cutlery kits. But wouldn’t it be great if your kits were selling alongside dinnerware for such big clients as restaurants or hotels? Cross selling is offering to sell your product as a nice add-on to a larger item. Both companies win. You sell your forks, your partner (the dinnerware seller) offers its clients a full range of products for their dining purposes.
· Join a complementary business – Can’t work directly with the snobby spoon seller? Don’t. You can help market the competitors’ company. When people come to buy forks, they probably need spoons too. Refer them to your partner-to-be. You can refer them to the dish-maker as well. Remember, such referrals work both ways. Just be careful that you are referring your clients to a company which cares about quality. Low-quality products sold by the referred party can damage your reputation.
How Do You Choose Companies to Collaborate With?
Start with your needs and desires. What do you want to achieve with this collaboration? What’s in it for your company? And, more importantly, what’s in it for theirs?
If you are the one initiating the partnership, you need to sell the idea. So be honest with yourself about what both of your companies can gain from the partnership.
Find out as much as you can about the potential partner and its needs and goals.
- Has the company been in a similar partnership before?
- Does it have weaknesses that you can strengthen?
- What can you offer to make your partnership appealing at first glance?
- What results can you achieve together on a monthly basis (weekly, yearly)?
If your business needs serious help from an “older brother” (in other words, you are basically screaming for help), be willing to become a junior partner in the relationship. You may not get as much from the collaboration, but if your company is in trouble, a partnership like this could save you. But, since you are not bringing as much to the table, you will need to really sell the idea.
Be honest with yourself about what both of your companies can gain from the partnership. Try to come up with as many benefits for your potential partner as possible before asking for collaboration.
Where Do You Find Competitors to Collaborate With?
When looking for a partner, you may not have to go far, especially if you run a local business. Start with those you are on speaking terms with. If you have already established some type of professional relationship, the collaboration won’t seem that strange to them.
Don’t always focus on your direct competitors either. For example, a flower shop’s competitors aren’t just flower stores down the street. They are also event organizers who use floral services.
One of the quickest ways to find partners is to join business clubs, networks, associations, and organizations, such as your Chamber of Commerce. Here are a few more you may want to consider:
- National Business Association
- National Small Business Association
- Startup Nation
- Business Network International
- International Franchise Association
You can also visit a trade show to find companies looking for clients and partners. It’s an excellent place to find collaboration opportunities, since all the information about the company and its needs is readily available.
Companies can even benefit from looking for partners on social media. Once you identify your potential frenemies, you can find their social media accounts and connect with them offline or via online video conferencing, in an informal setting.
A Slow Approach
When you approach a company, take it slow. View your potential partner in business as you would a romantic partner. Do the whole wooing thing. And be prepared to get dumped.
However, the smarter and slower you go, the more chances you have at success. This is especially true for companies, which win less from the partnership than you do. If you are a company looking to become a junior partner, you shouldn’t be surprised with rejections. You just need to stand up and try again.
Collaboration Among Competitors: Keeping Up Your Defenses
Be careful. Competitors have their own goals, which may interfere with yours. By blurring the lines between competition and collaboration, you may be dropping your defenses. Here are the questions to ask:
1. Can You Achieve Your Goals Without the Competitor’s Help?
It may take time, money, effort, and so on and so forth. But if you can do your thing without involving another party, why involve it? If a partnership with a competitor isn’t integral to achieving your goals, ask yourself if it’s worth the risks.
2. What Is the Purpose of the Partnership?
Be clear with yourself about the purpose of this collaboration. According to B2B experts from Miromind, a good strategy has to juggle many moving parts to be effective. Can you achieve the goal without sharing information and profits with another company? What are the time and geography limits of the collaboration?
Asking these questions can help you single out the boundaries of a fruitful relationship. The extent of the collaboration shouldn’t go beyond what’s needed to be done to achieve the benefits you are striving for.
Try to limit the activities as part of any competitive collaboration as much as possible. For example, you may need a competitor to assist with research and development. Then you can stop working together when you need to sell the product.
Think about the purpose before making a deal. This way you can talk about the limitations in advance.
3. What Are the No-No Areas?
No matter how warm your relationship with the competitor has become, avoiding the no-no areas is vital. Identify the areas that neither of you will ever go into. For example, the pricing strategy, customer information, sales approaches.
Some of these points may need to be discussed as part of the collaboration. However, they must be limited to the specific collaboration matter and never go beyond it.
This also goes for your employees. Discuss with them what these “no-no” subjects are so they never discuss them with competitive partners. Talk to your employees about the subjects they can and can’t discuss with the people working for the frenemy company.
4. What Are the Limits on Sharing?
Before getting into a relationship with your competitor, you need to identify which information can be shared. It should be limited to the essential data, without which the project can’t go further.
The need-to-know basis is the key to fruitful and powerful collaboration among competitors. The information shared should be protected by the non-disclosure agreement.
Ideally, when you are collaborating with another company on a certain project, you can form a special team, whose only responsibilities will be to work on that project. For the duration of the collaboration, that team shouldn’t be making decisions on other matters within your company.
In other words, you can isolate your employees from working outside the collaboration project so they don’t reveal any unnecessary information to the partner.
5. Are You Still Protected?
If you’ve already been working with a company for a while, reassess the relationship. Some collaborations may be moving into areas they shouldn’t. This can happen naturally and inconspicuously.
In order to avoid such a problem, make sure you reassess the relationship on a regular basis. Check if the shared information is still within the limits of what you originally defined.
Competitive Collaboration: Regular Maintenance
Just like your old Ford, relationships with competitors need regular maintenance. If we use our romantic comparison, you need to keep rekindling the fire if you want to avoid a divorce.
When you are working with your competition, you have to build trust continuously. Some partners tend to impose their opinion onto others, damaging the entire ecosystem around the competition. Others share their opinions and support the environment.
It’s important to nourish mutual respect and understanding on a daily basis. When you are building the relationship, show your willingness to nurture the ecosystem rather than impose your own.
If the company you are collaborating with has prior experience with competitive partnerships, check if it may have ended badly. Perhaps, you should avoid such frenemies.
The following tips can help you maintain your competitive collaboration while it’s still offering benefits:
1. Remain a Separate Entity
While you are playing nice, don’t lose yourself entirely. Becoming too dependent on your partner can lead to a disaster. You have to maintain your ability to work separately.
2. Be Ready for the Collaboration to End Tomorrow
You can never predict what your competitor-turned-partner will do next. Collaborative competition is not a true partnership. It’s, well, collaboration. It can end at any time, so make sure you suffer minimal damage if this happens.
3. Keep Learning From the Experience
Always view your collaboration as one of the best things that could happen to your company. By embracing competitive collaboration, you are learning and getting inspired. It’s an opportunity for growth.
Whenever the partnership ends, if it does, both of you should come out as winners. If you don’t learn the tips and tricks offered by the competition, you’ll be on the losing side.
4. Show the Partner How Much You Care
Nurturing your relationship with frenemies is vital. You don’t just have to keep building trust, you need to keep showing how important the relationship is to the company. Even if it requires a few unwanted actions from your side. Thankfully, this works both ways. If the partner isn’t doing the same for you, it should raise a big red flag.
5. Think About the Future
Consider the future of your partnership. The strategic collaboration can turn into a financial relationship. The company may have the finances you need to invest in a certain business area. Such collaboration can eventually turn into a merger or acquisition.
Keep expanding the market for both of you. The relationship between competitors shouldn’t just become better, it should create more opportunities with time. Combine strengths to work on new projects.
All you have to do is play it smart. And you can come out as a winner.
The Future of Competitive Collaboration Is Now
The bottom line is that no matter how small your company or how little you feel you can bring into a relationship, you’ve got to try a competitive collaboration. This type of partnership has become a standard, rather than an option.
A careful approach to choosing the right partner coupled with well-thought-out limits and regular maintenance can help your business thrive.
Ready to take advantage of this profit booster? Go make some frenemies.
Do you have any questions left about competitive collaboration? Or perhaps you have your own pointers to share? Hope we’ve raised a lot of questions and ideas—please share them in the comments below!