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A revolutionary mindset that combines competition and cooperation; The Game Theory strategy that’s changing the game of bus...

By Barry J. Nalebuff and Adam M. Brandenburger
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Co-opetition  by Barry J. Nalebuff and Adam M. Brandenburger

Co-opetition (1996) combines game theory with business strategy, presenting a roadmap for how to create a successful venture. The authors explain how running a business is just like playing a game: it involves mastering the rules, knowing the players and the value they bring, understanding tactical approaches and being able to see the big picture. With these elements in place, you can utilize them to improve your own position in the game of business.

Key idea 1 of 8

In the business world, two players can cooperate and compete at the same time.

What does it take to make it in the business world? Some people think it’s purely a matter of getting one over on the competition. In this view, business is like a race, and you just have to keep your fingers crossed that your main competitors will trip and fall along the way.

But this metaphor doesn’t necessarily apply to all business. In reality, two business competitors might actually benefit from supporting each other, instead of trying to outrun each other.

To understand why, let’s divide business players into four groups. The first three are obvious: the customers, the suppliers and the competitors. The fourth group? These are the complementors.

In essence, complementors are products and services that supplement your product to make it more valuable. Hardware and software are perfect examples of a complementor duo: when people have better hardware, they need faster software, and vice versa.

It’s worth noting that there’s not always a clear divide between complementors and competitors. Although we’ve outlined distinct business roles – suppliers, customers and so on – players can also take on multiple roles.

Therefore, you might be cooperating with a player by adding value to your respective products and at the same time competing with them to determine how to divide the value between you. For example, in the cosmetics industry, manufacturers and retailers complement each other, as both play a vital role in supplying consumers with cosmetics. However, customers are only willing to pay a certain price for, say, lipstick, so manufacturers and retailers have to compete with each other when it comes to dividing up that sum.

And that’s exactly where the term co-opetition comes from: it’s when two players cooperate and compete with each other at the same time.

These double roles may seem confusing, but being aware of them is essential if you want to develop an effective business strategy.

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