When you are starting a company, you have challenges from so many different directions – competitors, customers, and even what we academics call the “macroenvironment,” which is also known as the general climate for business. There are generally three types of environments:
Benevolent - everything is awesome and it’s easy to grow
Turbulent – there are a lot of changes going on, some good and some bad
Hostile – just like it sounds in that everything is hard and it seems like nothing is good
The macroenvironment occurs at multiple levels too – for all businesses, for specific industries, and even for specific companies. In the terminology of The Titanic Effect, it can also create hidden debts, or debtbergs, for the unsuspecting startup. Right now, the overall environment is pretty hostile for most businesses. The economic conditions combined with the pandemic create both turbulence and hostility. So now is a good time to look for “coopetition” opportunities.
What’s coopetition or co-opetition? It’s a term coined to describe “cooperative competition.” It means that sometimes it makes sense to work with your competitors – cooperate to achieve a higher value than you can achieve by independently creating a competitive advantage. A local Indiana example happened in 2015 when the two largest independent craft brewers, Sun King and Three Floyds, banded together to change state liquor laws. Indiana law mandated that any volume a brewery produced over 30,000 barrels had to be sold out of state. The cost of distributing in-state will always be cheaper than out of state. And, both breweries were growing. So they wanted the limit to be raised. Working together, they got the limit raised to 90,000 barrels…a 300%. Amazing given that both brewers had been told, “You can’t change state laws.” Sometimes, coopetition works for mutual advantage.
In the spirit of helping build a vibrant startup ecosystem here in central Indiana, we’ve joined forces with the Purdue Foundry to share insights about what it takes to build strong startups. In fact, we have collaborated many times over the years to help Indiana’s venture ecosystem. On the one hand, you could argue that we are competitive universities. On the other, we both want to create value by helping build stronger companies. So mark your calendars for our Facebook live session on Friday, August 21st at 9:00am with Purdue Foundry Grounds. We’ll be sharing stories and taking questions. This will not diminish our competitive spirit in the sporting arena when play resumes!
Until then, look around and ask yourself: What challenges are industry-wide that are limiting opportunity in your market? Among your competitors, with whom might you want to collaborate, and how? This might include changing regulations (like Sun King and Three Floyds), educating potential customers to help a market “cross the chasm,” or collaborating on core technologies to advance an emerging market. There is a time for direct competition. But there is also a time for structuring win-wins through coopetition. And now is that time.