with No Comments

Post No.: 0541coopetition


Furrywisepuppy says:


Even in business contexts, being allocentric, which means being concerned with the interests of others (at least as much as one’s own), can bring advantages. For example, you’re very interested in using an image, that is copyrighted, on a leaflet that’ll be distributed to millions of people. You might consider that the only option is to pay the copyright holder a fee to use their image. But if you took the perspective of the copyright holder then you might consider that they should be happy to pay you to have their image used because it would advertise the photographer to millions of people!


By looking at things through someone else’s eyes, you might work out their strengths and opportunities, as well as their weaknesses and threats. So if a head teacher/principal is thinking about publishing your naughty misdeeds in the school paper for all to read, you might ask if it’ll reflect well upon him/her and the reputation of the school?!


When the ‘zone of possible agreement’ (ZOPA) is vast in a negotiation, and if each side only thinks about how much they’re willing to pay from their own personal point of view, then they’re going to end up paying a lot. But if one takes the point of view of the other party too then one can do better.


Coopetition – a portmanteau of cooperation and competition – can often bring both parties the greatest payoffs, both individually as well as mutually. A hypothetical example is if you and a well-matched competitor are against each other in an arm wrestling competition and each and every time one of you wins a game, the winner will receive $1 from a third party, and the total match time is 1 minute. Here, you could each individually go for winning as hard as you both can and maybe complete one or two games within that time. But if you both agree to as rapidly as possible alternate the winning then you could both win dozens of games each i.e. you’ll have cooperatively gamed the system to the advantage of you both – and this game was really about making as much money as possible rather than winning at arm wrestling!


So if business competitors collaborate, they can sometimes produce mutually beneficial outcomes. This is fine as long as they don’t break any anti-trust laws. So be aware of anti-competitive market practices like collusion or cartels.


This also highlights that there’s a difference between winning and succeeding in life. Winning over others and getting or doing the best you can for yourself are not always the same things. Succeeding doesn’t necessarily mean others must fail. Real-life contexts include alliances or trade deals that benefit all members involved versus armed conflicts or trade wars that harm all sides involved. (There may be a long-term strategy at play with a trade war, but the escalations of import tariffs sometimes don’t have much rationale except for reactionary revenge and counter-revenge.) You can be greedier by being less selfish – by taking advantage of coopetition and by sharing the spoils. Woof!


When such coopetition strategies cannot be explicitly discussed with the other party, there is often a suspicion that ‘if you want me to do something, even if this seems to be to my benefit, such as letting me win the first arm wrestling game without resistance, then it must be because it’ll somehow ultimately be to your benefit and at my expense, even though I don’t know exactly how you’re going to do that’ – but when cooperating, or when expanding the pie, it might be to a mutual benefit as a non-zero rather than a zero-sum outcome.


Now a non-zero-sum outcome can mean a lose-lose outcome as well as a win-win outcome, but if so then neither party should sensibly even attempt a deal, which means non-zero-sum outcomes tend to mean win-win or positive-sum deals. (Having said that, people often behave irrationally because they over-value their immediate or short-term gains and over-discount their delayed gains, or they simply cannot (be bothered to) do the maths.)


The pie isn’t always fixed, and expanding it would be to the benefit of all cooperative parties. To gain trust under such suspicion though, you might need to give them a bit more to convince them of the plan – such as letting them win a few more arm wrestling games at first. If they then loosen up and follow your rapid-play strategy then they’ll hopefully see the mutual benefits and gladly follow you, or if they still don’t, and continue to resist your wins, then you should subsequently resist their wins too.


Cooperation or coopetition is possible in many contexts where on the surface it appears like it’s only about competition. In many contexts, a single-minded, self-focused and adversarial attitude can cost you. Sometimes the best way of getting a larger absolute piece of the pie – be that making the most money you can for yourself, saving the most lives as possible, or whatever your overarching goal is – is to work together with the other party through coopetition to make that pie as large as possible first. Fight over a large pie rather than a tiny pie. 50% of a large pie is bigger than 50% of a small pie – well 10% of a large pie could potentially be much bigger than 90% of a small pie. Don’t ever forget that the aim of negotiation is not one-upmanship but simply getting as much as you can out of it for yourself, whether they lose or also win. Life and business are different to zero-sum outcome sports or games like tennis or chess in many ways – your success doesn’t necessarily require others to fail.


Also don’t forget that what matters highly for you may be different to what matters highly for them, thus the pie can be expanded by you conceding to them more of what they really want in return for them conceding to you more of what you really want.


Unless there are hard and justifiable reasons why other options cannot be explored, other options can be explored to try to enlarge the pie. Create new options. Just because someone says there are only so many ideas – feel free to suggest your own. People often spend too much time debating between different poor options – they’d do better to focus on figuring out some new and better furry options.


Considering radical solutions can be fruitful for both parties. Post No.: 0501 looked at how even negotiation deadlines can be mutually renegotiated. But one side or both at the negotiating table may not have the authority to consider anything other than what options are originally proposed. In that case, negotiate an agreement based on the radical solution but also work out an acceptable agreement based on the original criteria as a contingency, so that when they go back to their boss they can present both possibilities to him/her and you can do the same with your own boss.


Hence even if you’re not sure you have the authority to try these new options, propose two deals – one that you know is safe and one that both parties would prefer if it were permitted, then check with your boss whether the latter option is feasible. Some people would rather ‘ask for forgiveness than permission’ (which sounds totally creepy in other contexts(!)) but asking is a better strategy. Ask the other party to agree to give you this novel deal contingent on your boss’s approval, and if that approval doesn’t materialise then you’ll both take the fallback deal. You might ask to talk to their boss directly, although they usually won’t allow this until at least all existing options have been exhausted with the designated negotiator, who might not like you trying to immediately bypass them and therefore belittle their role and worth anyway.


…However, in scenarios where there are only two competitors or there are large network effects (where the most popular service tends to get even more popular), you might be tempted to care more about your relative payoff compared to the other party, rather than your own absolute payoff regardless of what the other party will receive. This is because not being overtaken by your rival in a race to achieve scale first is what you should most care about in these sorts of cases.


In many real-world contexts too, we don’t get to experience a counterfactual world to enable us to compare outcomes between competition and coopetition strategies hence it’s hard or impossible to say which would be the best strategy for a given scenario that has no precedents.


Still, in most cases – focusing on your internal return on investment (absolute outcomes) is more important than your market share (relative-to-your-competition outcomes).


Woof! So try seeing things from the other side’s point of view because this might ultimately help you as well. Both competition and cooperation or coopetition move the world forwards in their own ways, but cooperation or coopetition is frequently the smarter long-term strategy, even in business or market contexts.


Comment on this post by replying to this tweet:


Share this post