By Ed Rappuhn, Chairman – SCORE Nashville
“My service is great and customers are happy. How can we increase business without adding manpower and skills?”
Have you heard of co-opetition? Is that a typo? No, it’s actually a combination of the words cooperative competition. Consider cooperating with a competitor to enhance both of your service offerings.
Too often small businesses try to be everything to everyone. Sometimes that means selling something you can’t deliver properly because of capacity or product limitations. You can damage your reputation. Co-opetition is a possible strategy.
Say you are running a handyman business and you are overwhelmed by new opportunities. Have you considered developing a partnership to off-load some of your projects? You are proud of your ability to do “everything” that needs to be done including tile work, drywall, minor plumbing and electrical fixes, painting, installing cabinets, and on and on. Your reputation of performing quality work is unsurpassed. But the problem is that you have more opportunities and business than you can handle.
You could hire someone, but what if your volume varies? What if the new employee isn’t reliable or doesn’t provide the quality work your customers desire? On the other hand, do you know a quality tile person or a drywall expert? These guys may compete for things you can do yourself – if only you weren’t so busy. Consider making a deal. You will bring them in for jobs that exceed your capacity. In return, they will recommend you when they have projects that include tasks outside their areas of expertise. Everyone wins – you, your “competition,” and most importantly the customer, because they get quality work in a timely manner.
That’s a simple example. But look around and notice that movie theaters and restaurants promote each other even while they are competing for entertainment dollars. Software developers cooperate with competitive developers to provide more complete solutions, airlines share frequent flyer programs with others, and competing car companies share components. These efforts reduce costs and/or provide better products or service to the customer.
Recently I went to a department store looking for a specific clothing item. Instead of trying to sell me an alternative article they carried, they sent me to a specialty store in the same mall. Will I go back to the department store for other items? Of course I will. Rather than being afraid of their competition, they understood my needs and helped me find exactly what I wanted.
In the sporting world, Darrell Waltrip talks about how race car drivers draft behind competitors and allow others to do the same until ready to make their moves in an attempt to cross the finish line first. He calls this co-opetition. Small businesses need to leverage opportunities to provide better service at lower costs using fewer resources. Co-opetition is often a good solution.
For those that want to examine co-opetition in more detail, read the book “Co-Opetition: A Revolutionary Mindset That Combines Competition and Cooperation” by professors Adam Brandenburger (formerly of Harvard University) and Barry Nalebuff of Yale University.