Co-opetition is a bit of a buzzword in business. The portmanteau brings together ideas of cooperation and competition. Essentially, businesses decide to interact because they have shared interests of reaching a higher value creation. There are plenty of successful examples of this, especially in tech between hardware and software companies.

Right now though, it’s particularly important because of how COVID-19 has changed our shared business landscape. Digital is a key trend that has been accelerated by lockdown and social distancing. Because tech progresses so quickly and it’s so costly to develop your own product or software, it makes sense that business should team up. Two hands make light work, after all.

Partnering is a great way to save on the high costs of research and development – and with most businesses focusing on saving cash right now, finding someone to help share these costs is really useful.

However, there are a few things to consider if you want to make sure co-opetition works for you. If you choose the wrong partner for example, you could end up losing what’s unique about your business to someone else. Possibly without even gaining market share. We go through our top tips for businesses considering co-opetition, including:

  1. Time it right
  2. Be honest with yourself
  3. Pick your partner wisely
  4. Share the cost

Time it right

Since the arrival of COVID-19 and lockdowns across the globe, we’ve seen a vast amount of collaboration. Different medical and scientific institutions have been working together to produce a vaccine against the disease and have pooled efforts and resources. In the face of the crisis, people and businesses have come together to help us get through collectively.

COVID-19 and social distancing have changed the business landscape for us all. It will define how our businesses function for the foreseeable future as customer needs and habits are redefined. Many companies have pivoted to survive, and you may have been one of them. Use this time to assess what you require technically to progress and remain relevant.

There’s an intense pressure right now to perform digitally. If you want to capitalise on this shift then you’ll need to develop these outputs. Start by working out what expertise and skills you want to have on board to meet this changed demand and how you can remain competitive. Speed is critical here, as well as cash.

Be honest with yourself

Be realistic about your capabilities and honest about what you do or don’t include in your offering. Understanding what you lack and who can help will help you work out what you need to improve. 

Know your market scrupulously. Your offering may be unique, but that doesn’t make it perfect. The support of a rival who has more resources or specific skill sets could provide you with access to a framework that helps your business survive. Finding help is smart and can help you progress faster. Even Apple has their screens supplied by Samsung and Microsoft developed their Office products for Mac because they saw market demand there.

The rising cost of research and development, along with a more globalised marketplace with more competition, mean it makes sense to collaborate with competitors on innovation in your sector. Being able to get something done faster and with less cost to you is more important than ever.

Many startups compete in similar markets but have unique advantages. Partnering up to fight a larger competitor is useful, especially if it helps to increase user growth for both businesses. Reaching out doesn’t need to be a challenge just because we’re working remotely. In many senses, collaborating is now easier given the way we now approach virtual teams. 

Pick your partner wisely

The first rule of co-opetition is not to collaborate with a rival in the areas in which your business is unique. In other words, don’t lose your USP because  this will eat into market share. If there’s an area where you’re both looking to get the same job done, it makes sense to share the cost. This could be something like developing a better digital platform to enable smoother running of an aspect of business you both need.

Focus on being the best where you’re unique. Don’t waste lots of money on doing things that you’re not going to be a leader in. In other words, invest in your progress with competition, but not the fundamentals of your offering.

Ultimately, you want a partnership of equals. Make sure your objectives are aligned and that it will be a success for your customers, your partner and you. Think about the services, capabilities, speed and location of both your own business and your competitor’s. You want to make sure you don’t overlap too much. You save money on shared costs but ultimately remain competitive in other areas.

A study by the Multidisciplinary Digital Publishing Institute found that if collaborating competition lasted between three and five years, businesses had a more than 50% chance of mutually reducing company costs. Sustained partnerships in development can reap rewards for both, and crucially could slim the timeframe required.

It’s worth considering potential downsides too. It may be harder to exert control on the process, especially if you’re not equal in size, and there’s always a risk to equity even if it’s shared. For partnerships to work, you need trust. This comes back to having a shared objective that isn’t tied to either business’s USPs.

Share the cost

If you need to achieve something that requires a lot of investment of time and resources, always think about which of your competitors would stand to benefit too. Exploring their knowledge and skills will allow you to facilitate research of new products. Ultimately you’ll be competing for market share but, by collaborating, you’re both able to make the end result much stronger.

There may be collaborative relationships to explore that allow you to co-create something truly innovative that would’ve been impossible for either to achieve independently – at least in the same timeframe. And at a time where the Treasury is keen to invest in business innovation with government-backed loans, it may be worthwhile considering what other funds you can both bring to the table too.


For more advice and help to get through current business challenges, head to our COVID-19 Impact Support Hub.