Walk the fine line with ‘Co-opetition’

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Several times recently, a health care client has directed me to start publicity campaigns promoting breakthrough new procedures, cost efficiencies or other competitive advantages – only to change course and cancel at the last minute.

The reason? Highlighting these competitive advantages could endanger relationships with referral sources or organizational partners. This same issue just came up in a health care-related RFP we’ve been working on – some of that organization’s competitive advantages couldn’t be highlighted, for fear of irking their competitors. So why are they worried about their competitors’ feelings? Because those competitors are also their partners.

This seemingly curious dynamic, often called “co-opetition,” isn’t unique to health care, nor is it particularly new. It came into the national lexicon via the computer industry in the 1990s, when Novell founder Raymond Noorda began using it. It was subsequently adopted by software entrepreneur Daniel Ervin and became the title of a 1997 book.

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The concept’s origins pre-date Silicon Valley, however. The term appeared in academic literature as far back as 1930s and ‘40s, particularly in the context of game theory and mathematician John Forbes Nash (subject of Oscar-winning film, “A Beautiful Mind”).

On a less academic level, the term became well-known to NASCAR fans in 2005, when racer Darrell Waltrip began using it to describe drafting. The concept wasn’t invented by Waltrip, though; it was popularized by racers as far back as Junior Johnson, who used the technique to propel a technically inferior car to victory in the 1960 Daytona 500.

The analogies between racing and business may be particularly apt. In racing, the practice of drafting doesn’t just help the trailing car; it actually allows both to go as much as 5 mph faster. Co-opetition in business works much the same way. We’ve seen clients start businesses as a complement to a larger parent organization, even though they ultimately grow to compete with it. We’ve experienced the same with our vendors, some of whom we’ve helped launch because we needed their highly specialized services.

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In several cases those companies’ spheres of expertise have grown to partially overlap with ours – to the point where we occasionally compete against each other. Admittedly, it can make for strange bedfellows when this week’s partner is next week’s adversary, but on the whole these relationships benefit both organizations, and we regularly serve as referral sources for each other.

So will this phenomenon continue to grow? That’s hard to say – particularly in health care, where the coverage circle is trending back toward systems. Nonetheless, my guess is “yes.” As counter-intuitive as it sounds, the key to increasing your business may come from working with your competitors.

Andy Larsen is a partner and vice president at Boelter + Lincoln in Milwaukee.

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