Discussion: Entire Product Life Cycle

Discussion: Entire Product Life Cycle

Co‐opetition Clearly, not all strategic alliances are formed with suppliers or customers as partners. Rather, co‐opetition is an increasingly popular alternative model. As defined by Brandenburg and Nalebuff in their book of the same name, co‐opetition is a strategy whereby companies cooperate and compete at the same time with companies in their value net.14 The value net includes a company and its competitors and complementors as well as its customers and suppliers and the interactions among all of them. A complementor is a company whose product or service is used in conjunction with a particular product or service to make a more useful set for the customer. For example, Goodyear is a complementor to Ford and GM because tires are a complementary product to vehicles. Likewise, Amazon is a complementor to Apple in part because the Amazon reading application, the Kindle, the reading tablet that Amazon sells, is one of the most popular apps for the iPad. Finally, a cellular service is a complementor to Google’s search engine because the service allows more consumers to use Google’s search function.

Co‐opetition, then, is the strategy for creating the best possible outcome for a business by optimally combining competition and cooperation. It can also be used as a strategy for sourcing as discussed in Chapter 10. It fre- quently creates competitive advantage by giving power in the form of information to other organizations or groups. For example, Covisint.com hosts the auto industry’s e‐marketplace, which grew out of a consortium of compet- itors, including General Motors, Ford, DaimlerChrysler, Nissan, and Renault. By addressing multiple automo- tive functional needs across the entire product life cycle, Covisint offers support for collaboration, supply chain management, procurement, and quality management. Covisint.com has extended this business‐to‐partner platform to other industries including health care, manufacturing, life sciences, food and beverage, and oil and gas. Thus, co‐opetition as demonstrated by Covisint not only streamlines the internal operations of its backers but also has the potential to transform an industry.

13 Adapted from N. Wingfield, “Virtual Products, Real Profits” The Wall Street Journal (September 9, 2011), A1, 16; L. B. Baker, “Zynga’s Sales Soar on Facebook Connection,” Reuters News (February 2, 2012), http://www.reuters.com/article/2012/02/02/us‐zynga‐shares‐idUSTRE8111PO20120202 (accessed September 14, 2015); Jackie Cohen, “So Much for the Facebook Effect: Zynga Sees $978.6 Million Loss In 2011,” Yahoo News (February 14, 2012), http://www.allfacebook.com/facebook‐zynga‐eps‐2012‐02 (accessed February 20, 2012). 14 A. Brandenburg and B. Nalebuff, Co‐opetition (New York: Doubleday, 1996).

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