Rethinking the way forward for SMEs

In the 1990s, Barry Nalebuff and Adam Brandenburger wrote a book called Coopetition and launching an idea that many businesses have used to grow their business. Coopetition fuses two words; cooperating with competitors and seeking out potential collaborators becomes the name of the game. Customers valuing your product more for it being aligned with another - wine and cheese, bookshops and excellent coffee.

The world is now on lockdown 3.0 and coopetition has never been more necessary – a strategy used to cope with the unique impact of COVID-19. For pharmaceutical companies it has been the spur to accelerate research on vaccines and now with logistics firms on distribution; they have cooperated with non-profit organisations and tech firms, such as Google and Amazon. There has been an unprecedented pooling of resources such as information, data, expertise and other capabilities. So much for global corporations; how can coopetition benefit SMEs across the North of England?

Harold Laski was Chairman of the Labour Party in 1945 and once made it clear that when the rules of the game prove unsuitable for victory, the gentlemen of England change the rules. Coopetition does not ask us to bend the rules of business but shape them to our advantage in fresh context. For example, whole swathes of British business have been conditioned to offshore where labour costs are lower. As cash flow tightens, lengthy transit times from Asia cut flexibility, automation levels the playing field and carbon taxes to be charged at borders are spoken of, bringing manufacturing back to the UK makes sense. What about your own business?

First up on Coopetition, you need to map your business context. This means identifying your customers and suppliers – these are symmetrical roles. Whatever we agree with our customers has to play out with the terms and conditions we agree with our suppliers. They are equal partners in creating value. Do we understand fully what our customers need and, how has this changed with Covid? When it comes to our suppliers, do we just extract the cheapest price from them or, do we involve them in improving our competitive edge in a mutually beneficial drive for continuous improvement? These days’ supply chain networks compete – not companies on their own. 

Then, we need to understand our competitors and, explore potential collaborators who can help us to build more value into our offer. These two are mirror images of each other. The biggest insight from Coopetition is to abandon the zero-sum games – I win you lose – and look to collaborate. Who can I collaborate with? I make burgers, I collaborate with the ketchup makers and to combine for a taste that customers love. Under Covid, many companies have had to rethink who they can link up with to reach their customers. For example, local taxi firms combining with restaurants and packaging firms to offer takeaways with a difference. Can you identify potential collaborators across your industry? 

These days supply chains compete not companies. Why not look beyond your immediate Region and link up with companies in Regions abroad. An average pair of jeans is made in 17 different locations; denim from Thailand, zips from Japan, copper studs from Turkey and so on. Why not look to collaborate with a Design company in one location; Procurement in another and, source specific skills such as legal contracts elsewhere. Become a global cluster to reshore the revenues. Most National Export Financing units are happy with 40 per cent home produced to qualify for support. That said, collaborate with the best fit you can find - where ever they are. At the very least start the conversation - digitally.

If ever there was a time to re-think Business Development for reshoring (bringing back manufacturing to local markets) and exports tis now! After the music stops from Covid dislocation - how many chairs will be still standing? How many will have pivoted? Does your offer and portfolio match emerging needs. How many need to look elsewhere as the shape of Brexit downstream firms up? Who do you engage with when you can't travel or, visit an exhibition like Canton. Default positions - all change. What about a tailor made online marketplace to band together and buy at discount; or an online marketplace to re-visit for a supplier and customer base re-set?

Coopetition also invites us to reconsider the rules of the game in our industry. When Pep Guardiola arrived at Manchester City, he had no place for Joe Hart, the then England Goalkeeper. He wanted his goalkeeper to have the ball playing skills to play out from the back and not just hoof it up field. Consider the medals haul of Team GB on the Olympic cycle track and at rowing. Both sports redefined their performance by using science and data analytics to the full and the whole complexion of cycling and rowing was transformed. Consider Arsene Wenger at Arsenal. He broke up a drinking culture, had alcoholics face themselves, transform their diet and extend their careers. And, he added fresh dimensions to the football played. Boring 1-0 wins became an ironic chant when they ripped teams apart with flowing football.

Specifically, we need to examine the players across your sector and how they add value. This is where you need to map out the market. Then, we need to understand the emerging rules. At a time of Brexit, this is crucial. Which rules and regulations are hurting the business and which ones are helping? Covid is having an impact as well. The old days of just-in-time delivery with no buffer stocks are gone. Supply chains are slowing down, and inventories cost money. Zero carbon is another huge consideration. What does this mean for your industry?

Now, the tactics. Covid has been a game of musical chairs; who is still standing in your industry when the music stops? Who has “pivoted’ their capacity into your sector – the gin still making hand sanitizer or, the packaging company making pouches for home delivery as online sales soar? Also, many supply chains are looking to make their movements totally transparent; others remain as a string of black boxes. Which approach favours your business and what can we do to build momentum? 

Finally, the scope of many industries has been transformed with Brexit, Covid and digitalization. Narrow competition models are being exposed as limiting business potential. The speeded-up route to market for vaccines is a case in point. Coopetition is stimulating a fresh look at a business when all else is telling us to go back to basics; a better yesterday is no way forward. A wider focus keeps the business forward looking. This approach can also shift us from trying to protect our slice of the cake to baking a bigger one. 

Overall, coopetition can open up conversations about and around your business that make opportunity out of what many see as a shrinking market. We are where we are, and we need more of the “can do” spirit that everyone shares when they started their business in the first place. Coopetition is the way forward; a “do tank” and not a pause for thought.