Coopetition (Value Net Model) - Explained
What is Coopetition and the Value Net Model?
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What is Coopetition?
Coopetition is a strategy in business in which competition and cooperation are combined in a way that harnesses the benefits of each. Specifically, coopetition is when two companies that are known to be competitors collaborate with each other with the expectation of mutual benefits.
Back to: STRATEGY & PLANNING
Companies collaborate for different reasons, the major ones are:
- Coopetition enhance synergy between companies in which each of them gain benefits and achieve their business goals.
- Coopetition aid expansion of the businesses involved and the entire industry.
- Coopetion is formed by companies who share common gains and have similar objectives in order to achieve their goals faster.
How Does the Coopetition Model Work?
In business, coopetition is a model that draws insight from a gaming theory in which competitors in a game form an alliance to achieve the same purpose. Coopetition models involve the use of certain statistics that map out the shares and losses of parties involved in the alliance.
When two companies engage in coopetition, there must be an agreement that states what is expected of each party to achieve mutual benefits. The idea of coopetition was introduced by Adam M. Brandenburger and Barry J. Nalebuf, who are professors from Havard and Yale respectively.
Co-opetition is the mix of competition and cooperation. It means looking for win-win as well as win-lose opportunities. Keeping both possibilities in mind is important. Win-lose strategies often have negative effects. The game of business is to create and to capture value.
The coopetition model had the shape of a diamond where customers, suppliers, competitors and complementors were pitched in different corners of the diamond. In this business model, all these forces begin to cooperate, rather than compete and each party will achieve their goals.
The Value Net is a schematic map designed to represent all the players in the game and the interdependencies among them. Interactions take place along two dimensions. Along the vertical dimension are the company's customers and suppliers. Along the horizontal dimension are the players with whom the company interacts but does not transact. They are its substitutors and complementors.
Substitutors are alternative players from whom customers may purchase products. Or to whom suppliers may sell their resources.
Complimentors are players from whom customers buy complementary products. Or to whom suppliers sell complementary resources.
What is the The PARTS Model?
The following are the steps in using the Value Net.
- The Value Net describes the various roles of the players. It is possible for the same player to occupy more than one role simultaneously. Designing the Value Net for your business is the first step toward changing the game.
- The second step is identifying all the elements of the game. There are five:
- Have you written out the Value Net for your organization, taking care to make the list of players as complete as possible?
- What are the opportunities for cooperation and competition in your relationships with customers and suppliers, competitors and complementors?
- Would you like to change the group of players? In particular, what new players would you like to bring into the game?
- Who stands to gain if you become a player in a game? Who stands to lose?
Added Values Questions
- What is your added value?
- How can you increase your added value? In particular, can you create loyal customers and suppliers?
- What are the added values of the other players in the game?
- Can you benefit from limiting their added values?
- Which rules are helping you? Which are hurting you?
- What new rules would you like to have? In particular, what contracts do you want to write with your customers and suppliers?
- Do you have the power to make these rules? Does someone else have the power to overturn them?
- How do other players perceive the game? How do these perceptions affect the play of the game?
- Which perceptions would you like to preserve? Which perceptions would you like to change?
- Do you want the game to be transparent or opaque?
- What is the current scope of the game? Do you want to change it?
- Do you want to link the game to other games?
- Do you want to change the link from the game with other games?
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