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Competing and Cooperating

Competing and Cooperating. MGMT 182 PROF. HAN. Business is War and Peace. Cooperation in creating value Competition in dividing it up Not cycles of War, Peace, War ... Simultaneously War and Peace “You have to compete and cooperate at the same time” Ray Noorda, Novell.

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Competing and Cooperating

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  1. Competing and Cooperating MGMT 182 PROF. HAN

  2. Business is War and Peace Cooperation in creating value Competition in dividing it up Not cycles of War, Peace, War ... Simultaneously War and Peace “You have to compete and cooperate at the same time” Ray Noorda, Novell

  3. Manual for Coopetition • Leadership secrets of Attila the Hun? St. Francis of Assisi? • How to cooperate without being a saint compete w/o killing the opposition

  4. Business as a Game Chess, poker, sports? • Looking ahead; predicting competitor responses • Not win-lose • No rule book • People change the game • Success comes from playing the right game

  5. The Game of Business • Who are the players? • Customers, Suppliers, Competitors Plus Providers of complementary products and services

  6. The Value Net CUSTOMERS COMPANY COMPLEMENTORS COMPETITORS SUPPLIERS

  7. Competitors & Complementors A player is your complementor if customers value your product more when they have the other player’s product than when they have your product alone. A player is your competitor if customers value your product less when they have the other player’s product than when they have your product alone.

  8. Complementors & Competitors:The Supply Side A player is your complementor if it’s moreattractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone A player is yourcompetitor if it’s less attractive for a supplier to provide resources to you when it’s also supplying the other player than when it’s supplying you alone

  9. The Supply Side:Examples Compaq & Dell compete with each other for the latest Intel chip complement each other in defraying Intel’s R&D costs American & Delta compete with each other for landing slots and gates complement each other in defraying Boeing’s R&D costs

  10. The Competitive Mindset • The bias: • Customers and suppliers have to choose between opportunities with us and with others • We’re taught to think in terms of constraints, trade-offs, substitution • To correct the bias: Think complementor as well as competitor

  11. Added Value What you get is based on your added value Added Value = total value with you minus total value without you It’s what you bring to others

  12. Cooperating • Cooperation makes markets--increases size of the pie • Multiple roles: Your substitutors can also be your complementors • Citibank and ATM’s • Antique stores • Movie studios and videos

  13. The PARTS of Strategy • Players • Added values • Rules • Tactics • Scope

  14. Changing the Players • Bring in suppliers and complementors by: • paying them to play (Nutrasweet) • forming buying coalitions (e.g. health care, car insurance) • Sometimes it pays to bring in competitors! • Second sourcing (Intel)

  15. Changing the Added Values • Lowering others’ added values • The Nintendo story • Raising your added value • Cost reduction, better differentiation, etc • GM Card • Frequent flier programs

  16. Changing the Rules • Lobbying for regulation • CPA requirements • Meet-the-competition clauses • Carbon dioxide

  17. Using Tactics • Sending signals to competitors • Murdoch’s mini-war • Sending signals to buyers • MBA education • Creating a fog • Pricing of new cars and phone calls

  18. Changing the Scope of the Game • Broadening the scope • Timex’s entry strategy • Recognize links between games • Epson’s blunder

  19. Mental Traps • Seeing only part of the game • Failing to think methodically about changing the game • Believing that success must come at others’ expense • Accepting the game as it is

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