Why You Should Collaborate With Competitors… Not Wage War

Published by Nadeem Muaddi on April 5th, 2011

Check out Rick Spence’s latest article in Financial Post, “Don’t Let Competition Get in the Way.” It’s not explicitly about the auto trim industry, but offers a compelling argument on why you should collaborate (rather than do battle) with competitors.

Spence writes:

I believe business is about leveraging every advantage you have. And your competitors, with their market knowledge, customer contacts, and ability to make you look good by supplying some product, information or resources that you may lack, may offer more opportunities for leverage than anyone else you know. […]

Big companies do it all the time. Arch-competitors work together in industry associations, and they often share the same lawyers for lobbying lawmakers and regulators. Hotels regularly send overflow guests to “friendly” inns with whom they fight tooth and nail in shoulder season. I’ve known rival companies that happily share production equipment with competitors or refer work to them when their own order books are full.

We’ve all heard of competitors that formed cartels to fix prices or control other production conditions. I’m not recommending collusion, but collaboration. When two or more companies share marketing costs or production resources, they cut their costs and expand customers’ abilities to access their products, making markets more efficient for all parties. [read more]

Spence also illustrates how competing businesses that go to war wind up limiting opportunities for themselves. He asserts that business is not a “zero-sum game,” and that sometimes collaboration can be financially rewarding for all parties involved. He isn’t arguing that businesses shouldn’t compete – but that they should just do so wisely.

Sound Off? Have you collaborated with a competing business before? And if so, how did it work out for you and the other business involved? Are there certain aspects of business where you wouldn’t mind collaborating and others where you’d say ‘no way’?

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