From the May 2014 issue of Entrepreneur

Here's a scenario: You run a coffee place. At the coffee place, you roast coffee beans and you sell coffee. One day your roaster breaks down. You call up the guy down the street at Most Roast--or Bean There Done That, Funky Brewsters, RÖST, take your pick--and ask if you can lease some time with his roaster. He says yes--a very generous move, on the face of it.

You meet and hit it off. Pretty soon you're golfing together, talking innocuously about drum roasters and Agtron readings (as coffee guys do), and everything is going well. You're competitors, but you like each other well enough. You're not close friends, but you are close peers. Might be a friendship, might not be; it's hard to say, since competition-related politics areinherently involved.

So one day you're hanging out and he says, "I've been thinking that we're at the dawn of a medium-roast era. Considering changing everything up. You?"

Is this a friendly question to pass the time? Is he bouncing an idea off you to see how you'll react? Is he planting a seed to make you think that it might be the dawn of a medium-roast era but he's actually trying to sabotage your business by getting you to spend money on a bad idea? Is he out to get you? Is he just a sneaky bastard, and is this whole thing just a charade?

(For the record, medium roast is underrated, and his is not an invalid notion.)

You have three choices when it comes to socializing with competitors. You can avoid them socially (weak). You can socialize with them as if they aren't your competitors (perilous). Or you can do The Dance of the Two Competitors. Sometimes it's awkward. Sometimes it's not. Occasionally, it's really awkward; it involves giving up some information about yourself and your work but protecting proprietary information at the same time.

The key to The Dance, like the key to actual dancing (although you should not take tips from us on actual dancing), is to relax and be generous and not look like you're trying to take control.

You should, from time to time, give up some information--things that expose you just slightly. You're saying that you can afford to be open. You're secure enough that you don't need to keep everything close to the vest. This is power.

And it's potentially lucrative. "If you're hanging out with another entrepreneur, there's a chance they're highly motivated [and] passionate," notes Jim Taylor, a San Francisco-based psychologist who specializes in business and corporate performance. "They can be a source [for] bouncing ideas off one another. There can be mutual benefit."

The mutual benefit is information. It's a barter.

But what if you're sensing some barely concealed competitiveness from the other side? A wee bit of espionage? What if the other person seems like a bit of a snake? In this case, you should not dance. You should engage in another metaphor entirely. What you need is the forceful elegance of the martial art of wing chun. (Wing chun is not to be confused with Wang Chung, the '80s new-wave band. In Wang Chung, all that's required is for everybody to have fun tonight and also to Wang Chung tonight. Which is not a bad approach to life and business generally but not entirely relevant in this case.)

Back to wing chun. Think of Bruce Lee when he's fighting in a kung fu movie. Think of how close he is to his counterpart, and how little his body moves. Every strike is efficient. A hit and a block look like the same thing. It's almost as though he's facilitating his counterpart's moves while deflecting them. It's an oddly mesmerizing technique; it conserves energy and time, and prevents the exhaustion that comes from flailing about and trying to knock down everything in your path.

This is the kind of thing you're doing when you're socializing with a competitor who you have reason not to trust. You're exposing a little, but you are protecting yourself, too. And occasionally you are getting in your own hit (highly concealed, of course). But in this, even when you feel somewhat under attack, it is still better to give too much than to protect too much.

Because if you're not giving anything, you're saying more about your business than you think you are. You're saying that you don't think you are in a strong enough position to be candid, and you're saying that you don't trust your competitor. This is weakness.

"When I have a client who's an entrepreneur, and he's got some very strong feelings about a competitor, that says more about my client than about the competitor," Taylor says. "The client will often see that person as a threat, often at a very personal level. So I will explore: Why are you so threatened by this person? Is it that their product might be better?"

The competitor is a threat who shouldn't be treated like a threat.

We spoke with Ted Gonder, co-founder and CEO of Moneythink, a Chicago-based nonprofit that places college volunteers in high schools to provide financial mentoring. Moneythink was one of five companies to win a $100,000 prize at the 2013 MassChallenge accelerator and competition--which is an immersion course in socializing with the competition. Gonder learned that the key was balance--to make sure that neither the socializing nor the competing took the lead.

"You have to be in the game but not of the game," he explains. "You have to recognize that the competition is just a quick game, a couple months long, designed to help everyone. All those relationships you form during the competition, whether you win or lose, are going to continue, and it's in your interest to not piss people off or ruin relationships while you're in the competition, because you never know."

What he means is: You never know when you might need the person more than you do now. A competitor isn't an enemy to keep close to you. A competitor is a peer to learn from--even if he or she views you as the enemy. By being slightly less discreet than what feels natural, by seeing a threat as an opportunity, by deftly deflecting an attack, you turn an awkward, potentially fraught situation into a social and professional advantage.

 

Key Technical Matters

Always accept an invitation to socialize with a competitor.

When speaking about your business with a competitor, you should give up 2 percent more information than you are naturally inclined to give up.

But platitudes are fine in a pinch.

Don't approach a social occasion as an intelligence-gathering mission.

But do assume that the other party is approaching it that way.

Don't hang out too long.

Don't drink too much.

Don't act offended if they cause offense.

Don't act too friendly if they seem to come in peace.

When dealing with a friendly competitor, you should engage in a kind of dance, a mutually beneficial partnership that symbolizes a strong relationship, even if both parties are wary of one another.

When dealing with a not-so-friendly competitor, you should engage in a social version of wing chun, a Chinese martial art that involves keeping your competitor close and expending as little energy as possible, even as you block and parry.

In both cases, you should always have fun.

In neither case should you Wang Chung.

 

A Garden of Vagueries (Or, possible answers to indiscreet questions about your business)

"You never know."

"Hard to say."

"I was asking myself the same question the other day. You have an answer?"

"It depends on so many factors."

"Always an option."

"You gotta do what you gotta do."

"What led to you wondering about that?"

"But don't you think that's only part of the story?"

"Have I shown you my cooling bin agitator?"

"We do what we can."