Joining Forces

As a supplier of printing, packaging and in-store displays, James A. Klein competes against every printer, box-maker and display-builder in and around Chicago. But he also buys products and services from 50 or so of these same firms. And if he learns that a promising prospect is already doing business with one of his printers or suppliers, he backs off in a hurry.

"We will not compete against the vendors we use because that would not be fair," says the president of eight-person Diversified Merchandising Inc. in Skokie, Illinois. It also wouldn't be good business practice, say advocates of a half-and-half approach that blends competition and cooperation in a strategy called "co-opetition."

Co-opetition, according to Adam Brandenburger, a Harvard Business School professor and co-author of Co-opetition: A Revolutionary Mindset That Combines Competition and Cooperation (Currency/Doubleday), is a way to avoid destructive competition and to build a market for all participants, including competitors, suppliers and customers. The idea is to work together to discover new markets and expand existing ones rather than endlessly fighting over customers.

Although co-opetition may go against entrepreneurs' instincts, Brandenburger urges them to bury the hatchet and take up the olive branch of peace. "The old world of competitive strategy really misses the picture," says Brandenburger. "[Businesses] fight over the division of the pie, but just as important are strategies for growing the pie."

This article was originally published in the December 1996 print edition of Entrepreneur with the headline: Joining Forces.