Collaborate with Your Competitors and Win

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Collaborate with your Competitors and Win
Gary Hamel, Yves L. Doz, and C.K. Prahalad

Summary

This article discusses that collaboration between competitors can be a beneficial experience for all member companies. Three conditions are specified for creating a positive collaborative environment, first that the partner's goals converge while their competitive goals diverge. If the two firms are working on similar technologies to support different core businesses, then there is a higher chance for successful collaboration and a lower chance for competitive disturbance. If, both companies are chasing a larger player in the industry, then both companies are motivated to work with each other to stand against the larger player. If both collaborators believe that they can learn key skills from the other collaborator without giving up too much proprietary information, then the chance of success for the joint venture is higher. The article describes how an organization can prepare defences to protect against negative technology transfer to the other firm. The authors discuss how Western culture is prone to sharing while Eastern cultures are more closed. The ability for technology transfer to occur differs based on the complexity and portability of an idea. If a firm has a better technology where its blueprint can be downloaded onto a disk and emailed to a competitor, then there is a high degree of risk for that firm. If one firm's advantage is in its holistic process, then this is something that can be identified and studied but not easily replicated. The major findings are that the key to successful collaboration is in an organization's ability to learn. It must have the willingness to closely examine the functions of its partner and be able to circulate its learning’s throughout its organization to maximize gain. In this analysis we will be discussing various types of collaborations, the reasons why competitors should collaborate and not collaborate. How to create defences for excessive passage of knowledge amongst competitors and principles of successful collaborations?

Table of Contents
1. The Meaning and types of Competitive Collaboration
2. Why Collaborate
3. General Argument
4. How to Build Secure Defenses
5. Winning through collaboration
6. Questions
7. References

Collaboration with competitors

Collaboration is a strategic coalition among two firms with the purpose of providing joint profit for each firm. Competitor collaboration is when two companies that are selling similar products and are each other’s competition come together to achieve a similar goal. Collaborating with your competitors with the right approach of give-and-take and without compromising each of the firm’s competitive position in the industry is highly successful. Sharing between companies is a clever strategy as long as there is clear understanding that the relationship is of give and take and both companies benefit equally without compromising their competitive position in the industry.

A few examples of companies collaborating

NUMMI (General Motors + Toyota)
Sony Ericsson (Sony + Ericsson)
Verizon Wireless (Verizon communications + Vodafone)
XFL (NBC + World wrestling entertainment)
Nokia Siemens Network (Nokia + Siemens AG)

A few more…

JVC and Kenwood develop car audio and home audio products
Siemens and Philips develop semi conductors
Canon supplies photocopiers to Kodak

There are four types of competitive collaborations

1. Joint Ventures A joint venture is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise. 2. Outsourcing Contracts Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of...
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