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SMPIG--Frenemies aka Collaborative competition—how the best make it work
Frenemies aka Collaborative competition—how the best make it work
Typically, firms who effectively manage their value chain squeeze marginal cost to increase marginal profit. In Henry Ford’s day, he brought all the means of production under one roof and managed his production volume relative to demand. The relative efficiency gains and impact on profitability of balancing quality and production costs appears to be cyclical. It also demands greater diversification and cross-leveraging of resources. Firms that continue to operate lean succeed by coordinating and cooperating with competitors to create additional value from underutilized assets.
Elon Musk made headlines with his bold collaborative move that gives his competitors rights to some of Tesla’s patents. He understands how his growth depends on the success and growth of his competitors. This is not the traditional management view of limited priorities and cross-wired incentives that meet quarterly earnings but create inefficiencies long term, and impede innovation.
Enough illustration—From Pharma to Tech to manufacturing, coopetition is neither simple or regulatory permissible for everyone. In July we question for whom and when does a coopetition strategy make sense?