Competing

Competing and
and
Cooperating
Cooperating
MGMT 182
PROF. HAN
 Business
Business is
is
War
War and
and Peace
Peace
Cooperation in creating value

Competition in dividing it up

Not cycles of War, Peace, War ...

Simultaneously War and Peace

“You have to compete and cooperate at the same time”

Ray Noorda, Novell
Manual
Manual for
for Coopetition
Coopetition
• Leadership secrets of
Attila the Hun?
St. Francis of Assisi?

• How to
cooperate without being a saint
compete w/o killing the opposition
 Business
Business as
as a
a Game
Game
Chess, poker, sports?
– Looking ahead; predicting competitor responses
– Not win-lose

– No rule book

– People change the game

– Success comes from playing the right game

The
The Game
Game of
of Business
Business
• Who are the players?
– Customers, Suppliers, Competitors

Plus
Providers of complementary products
and services
 The
The Value
Value Net
Net
CUSTOMERS

COMPETITORS COMPANY COMPLEMENTORS

SUPPLIERS
Competitors
Competitors &
& Complementors
Complementors

A player is your complementor if customers value

your product more when they have the other
player’s product than when they have your product
alone.

A player is your competitor if customers value your

product less when they have the other player’s
product than when they have your product alone.
Complementors
Complementors &
& Competitors:
Competitors:
The
The Supply
Supply Side
Side

A player is your complementor if it’s more attractive

for a supplier to provide resources to you when it’s also
supplying the other player than when it’s supplying you
alone

A player is your competitor if it’s less attractive for a

supplier to provide resources to you when it’s also
supplying the other player than when it’s supplying you
alone
 The
The Supply
Supply Side:
Side:
Examples
Examples
Compaq & Dell
compete with each other for the latest Intel chip
complement each other in defraying Intel’s R&D costs
American & Delta
compete with each other for landing slots and gates
complement each other in defraying Boeing’s R&D costs
The
The Competitive
Competitive Mindset
Mindset
• The bias:
– Customers and suppliers have to choose between opportunities
with us and with others

– We’re taught to think in terms of constraints, trade-offs,

substitution

• To correct the bias:

Think complementor as well as
competitor
 Added
Added Value
Value
What you get is based on your added value

Added Value =
total value with you
minus
total value without you

It’s what you bring to others

 Cooperating
Cooperating
• Cooperation makes markets--increases
size of the pie
• Multiple roles: Your substitutors can also
be your complementors
• Citibank and ATM’s
• Antique stores
• Movie studios and videos
 The PARTS
The PARTS of
of Strategy
Strategy

• Players
• Added values
• Rules
• Tactics
• Scope
 Changing
Changing the
the Players
Players
• Bring in suppliers and complementors
by :
– paying them to play (Nutrasweet)
– forming buying coalitions (e.g. health care, car
insurance)
• Sometimes it pays to bring in
competitors!
– Second sourcing (Intel)
Changing
Changing the
the Added
Added Values
Values
• Lowering others’ added
values
– The Nintendo story
• Raising your added value
– Cost reduction, better differentiation, etc
– GM Card
– Frequent flier programs
 Changing
Changing the
the Rules
Rules
• Lobbying for regulation
– CPA requirements
• Meet-the-competition
clauses
– Carbon dioxide
 Using
Using Tactics
Tactics
• Sending signals to
competitors
– Murdoch’s mini-war
• Sending signals to buyers
– MBA education
• Creating a fog
– Pricing of new cars and phone calls
Changing
Changing the
the Scope
Scope of
of
the
the Game
Game
• Broadening the scope
– Timex’s entry strategy
• Recognize links between
games
– Epson’s blunder
 Mental
Mental Traps
Traps
• Seeing only part of the game
• Failing to think methodically about changing
the game
• Believing that success must come at others’
expense
• Accepting the game as it is