WHEN TO TURN COMPETITORS INTO ALLIES
Too often we think of our competitors as enemies we must keep at arm’s length. Primitive
instincts cause us to put distance between ourselves and competitors we see as a threat to our business. Modern business thinking has evolved beyond instinct to an understanding that in certain circumstances our competitor can often be our ally.
Consider the sudden and unexpected alliance of Microsoft and Apple. Two fierce competitors
realized that a unification of their products would expand the market for both. Microsoft Office was very important to the Mac customer base and, at the same time, added more than 8 million Mac customers to the Microsoft universe.
Product synergies are usually overlooked by competitors. Take a more careful look and, like
Microsoft and Apple, you may uncover an explosive market opportunity that has escaped notice.Under careful scrutiny you may also find that some of your fiercest competitors are not
competitors at all. Three Event Planners in Scottsdale, Arizona began meeting monthly after the crash of 2008. Their convention business had evaporated and fear had driven them together rather than apart. As they commiserated month after month, they began to realize that they were actually all on the same team. They weren’t trying to sell better banquet facilities or
different golfing amenities or more competitive room rates. They were all trying to sell
Scottsdale. They were competing with Las Vegas, Maui and Miami, not one another. A market synergy had placed them all on the same team. Immediately an advertising co-op was created with the city of Scottsdale participating as a full partner, and sales began an upward curve that continues to this day.
Begin a market segmentation study with an eye to understanding how your competitors can
participate in a mutual effort. A clear understanding of markets often reveals partnerships that
were invisible before.
When two companies compete for scarce assets competitive energies flare. The recent wireless revolution has created a qualified personnel shortage in the IT industry. Local installation and repair companies are competing for installers and repairmen. As they bid for scarce assets, prices go up, personnel migrates from one company to another and operating systems are becoming unstable. Finally, one IT C.E.O. called another. “We are killing one another and damaging our reputation in the broader market. We must find a solution.”
The two men met and hammered out an ingenious solution. They would both specialize on one segment of IT installation and repair. Each company would bid entire jobs and then sub out the appropriate segment to the other's specialty. This operations synergy allowed both companies to participate in almost all future jobs. Both prospered.
NATIONAL BUSINESS BLOG