Why Competitive Collaboration is the Strategic Path Forward

I know this may sound like an oxymoron, but hear me out. Collaborating with competitors is the way of the future because it can often be a boon for all parties involved. Think about it: if two companies are working towards the same goal, wouldn’t it logically make sense for them to pool their resources and get there faster? Yes, and let’s find out why.

Uniting against a common enemy isn’t just for the military — companies do it too. Microsoft and Intel got their computing technologies into our homes by changing their competitive tactics to expand the pie and extract mutual value. By respectively tackling software and hardware, each company could focus on their strength, and expand their market share by being the primary hardware and software components in virtually every PC made by computer manufacturers.

They were in the same boat, therefore focusing their joint efforts on the goal benefited both companies tremendously. Their decision to collaborate and maximize efficiency secured them first mover advantage in the home computing market for a very long time. Microsoft has since proceeded to collaborate with Apple over 10 times throughout their ongoing and long standing sibling rivalry. This tactic is commonly used in manufacturing, as we saw GM and Ford partner to produce new transmissions in 2013 to comply with industry regulations.

Chasing new opportunities can be an expensive and risky undertaking. That’s why collaborating with competitors can be useful if they happen to possess attractive distribution networks, unique manufacturing skills or valuable tech knowledge. Companies interested in penetrating new markets would be wise to survey the landscape for any competitors who might make powerful cooperative allies.

The collaboration between Uber and Spotify allowed both companies to quickly reach new audiences. This partnership let Spotify users play their own music and control the volume during their Uber journeys. The common ground between their consumers means this partnership offered both companies an influx of new people experiencing each service and subsequently enhancing the experience of existing users. This strategic intent will be especially valuable in the post-pandemic business world as companies looking to pursue new revenue streams, minimize costs and adapt to the ever-changing market can share R&D costs and distribute risk.

Competitive cooperation also presents a tremendous opportunity for firms to pool intellectual property and learn from each other. A mutual knowledge transfer can enhance skills across internal teams and allow each company to proceed from the partnership more agile than when they began. Samsung and Sony pulled this exact move in 2004 with a joint venture to develop flatscreen LED TVs. These “fierce rivals” revolutionized their industry by co-developing LCD panels and both still reap rewards from this strategic alliance.

The pandemic proves another example of the impact of sharing knowledge. Almost 90% of the mRNA covid vaccine technology rolled out today “could be traced back to prototypes tested in HIV vaccine trials.” According to the MIT economist Jeffrey E. Harris, who wrote the research paper quoted above, the collective failure of the drug companies rushing to compete over an HIV vaccine provided powerful collective wisdom which helped propel overall medical technology forward. A recent illustration of that is that Pfizer’s mRNA research was intended to be for the flu virus, but instead, they ended up in the history books for their work fighting the covid virus. That’s a damn good consolation prize.

Competitors sharing the same boat isn’t always a bad thing — they can pick up an oar and help row your team to shore. Pivoting between fierce rivalry and collaboration can actually produce better and more cost effective goods, lower risk and kick the door down to new industries. Competitors can often be perceived as a last resort for collaboration partners, but they might be worthy of a higher place on the list because of the equitable opportunities they can present, if an appropriate deal can be struck. Remaining open to creative possibilities will be especially useful as we navigate the post-pandemic business and finance worlds.

Business Management & Financial Services Consultant Focused on Development Stage Companies & Microcap Markets

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