Stop competing yourself to death: strategic collaboration among rivals

Abstract

Purpose

Vigorous competition among companies for customers, talent, and capital serves everyone well, for the most part. But competition can be harmful as well, when companies fight over things that hold little value to customers or that offer little potential for differentiation.

Design/methodology/approach

The article discusses how thinking and changing the compete/collaborate ratio offers a way out that benefits all players. By joining forces to carry out common and largely undifferentiated functions or processes, companies can avoid redundant expenditures and capitalize on economies of scale and shared expertise. Strategic collaboration can take place at any stage of an industry's value chain. It can take many other forms, consistent with antitrust laws, including the sharing of back‐office functions, factory production, R&D efforts, marketing and distribution, and repair or return facilities.

Findings

Even bitter rivals have sometimes joined forces to achieve common goals and solve common problems. Notable examples are the Airbus consortium of European aircraft manufacturers, the Sematech consortium of US semiconductor manufacturers, banks working together to launch Visa and Mastercard, and small hardware stores using the TruValue organization for cooperative marketing, purchasing, and loyalty programs.

Originality/value

Collaborating on well‐defined activities offers an immediate payoff in reduced costs. And it tends to promote, rather than hamper, constructive competition in the areas most valued by customers.

Citation

Slywotzky, A. and Hoban, C. (2007), "Stop competing yourself to death: strategic collaboration among rivals", Journal of Business Strategy, Vol. 28 No. 3, pp. 45-55. https://doi.org/10.1108/02756660710746274