The Rules of Co-opetition

Rivals are working together more than ever before. Here’s how to think through the risks and rewards.

by

Adam Brandenburger

and

Barry Nalebuff

by

Adam Brandenburger

and

Barry Nalebuff

From the Magazine (January–February 2021) · Long read

Tierney Gearon

Summary.

“Co-opetition”—cooperating with a competitor to achieve a common goal or get ahead—has been gaining traction for three decades. Yet many companies are uncomfortable with the concept and bypass the promising opportunities it presents.

In this article two professors who helped introduce the approach offer a framework for deciding whether to team up with a rival, drawing on examples from Apple and Samsung, DHL and UPS, Ford and GM, and Google and Yahoo. Their advice: Start by analyzing what each party will do if it chooses not to cooperate and how that will affect industry dynamics. Sometimes working together is a clear win, but even if it isn’t, it may still be better than allowing someone else to take your place in the deal—which could leave you at a disadvantage. Next, it’s critical to figure out how to cooperate without giving away your “secret sauce”—your current advantages. Once you’ve done that, you’ll need to craft an agreement that clearly outlines the deal’s scope, who is in charge, how the arrangement could be unwound if needed, and how gains will be divided. You’ll also have to manage resistance within your own firm and alter internal mindsets. Co-opetition requires mental flexibility, but firms that develop it can gain an important edge.

Idea in Brief

The Context

The idea that competitors should sometimes cooperate with one another has continued to gain traction since it was initially explored in the 1990s.

The Issue

Even so, executives who aren’t comfortable with “co-opetition” bypass promising opportunities.

A Framework for Action

Start by analyzing what each party will do if it doesn’t cooperate and how that decision will affect industry dynamics. Sometimes cooperation is a clear win. Even if it isn’t, it may still be preferable to not cooperating. But it’s critical to try to figure out how to cooperate without losing your current advantages.

The moon landing just over 50 years ago is remembered as the culmination of a fierce competition between the United States and the USSR. But in fact, space exploration almost started with cooperation. President Kennedy proposed a joint mission to the moon when he met with Khrushchev in 1961 and again when he addressed the United Nations in 1963. It never came to pass, but in 1975 the Cold War rivals began working together on Apollo-Soyuz, and by 1998 the jointly managed International Space Station had ushered in an era of collaboration. Today a number of countries are trying to achieve a presence on the moon, and again there are calls for them to team up. Even the hypercompetitive Jeff Bezos and Elon Musk once met to discuss combining their Blue Origin and SpaceX ventures.

A version of this article appeared in the January–February 2021 issue of Harvard Business Review.

Adam Brandenburger is the J.P. Valles Professor at the Stern School of Business at New York University, distinguished professor at NYU Tandon School of Engineering, and faculty director of the Program on Creativity and Innovation at NYU Shanghai.
Barry Nalebuff is the Milton Steinbach Professor at Yale School of Management and a cofounder of Honest Tea.

The Rules of Co-opetition

Idea in Brief

The Context

The Issue

A Framework for Action

Partner Center

Explore HBR

HBR Store

About HBR

Manage My Account

Follow HBR