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Why your business needs co-opetition

Aggressively pursuing the competition may not be the best answer, says Cambridge Judge Business School Professor of Strategy & Innovation Shahzad Ansari.

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It’s a dog-eat-dog world. Kill or be killed. Law of the jungle. Survival of the fittest. Destroy the competition, and the glory is yours. Yes? Well actually, no.

Professor Shahzad Ansari

Professor Shahzad Ansari

“You don’t need to blow out someone else’s light to make yours shine,” says Professor of Strategy & Innovation Shahzad Ansari, quoting the financier Bernard Baruch. “Going in too aggressively harms your own reputation and can wreck your business. Why not work with your rivals to expand the whole industry?”

Ansari, a Cambridge Judge Business School alumnus who returned as faculty seven years ago, reckons many new organisations blunder with a gung-ho approach that tries to seize both the market and their rivals by the scruff of the neck – a move that often spectacularly backfires.

“Businesses have to work within an ecosystem,” he explains. “You’re reliant on other organisations to do their job which makes it possible for you to do yours. If you’re intent on shaking up an industry, you have to work within that ecosystem, not alienate it.”

This ‘disruptor’s dilemma’ is the focus of Ansari’s recent research, “The disruptor’s dilemma: TiVo and the US television ecosystem”, an article published in the Strategic Management Journal. Its focus is on the television company TiVo, whose entrance into the digital video recorder market was so aggressive and confrontational in its promised disruption of the industry that one of its ads famously showed a distressed television executive throwing himself out of a skyscraper window with the words: “It’s the end of TV as we know it”. Popular it was not.

“TiVo promised a revolution that enabled viewers to skip adverts which, along with such a forthright publicity campaign, obviously upset all the satellite and cable TV companies and the rest of the industry,” says Ansari. “Overnight, TiVo became a pariah. The problem was, it needed this ecosystem to survive”.

Fortunately for TiVo, it saw the error of its ways in time. A radical change of management – including parting company with its founders – enabled the company to reposition itself. Working in co-opetition with the existing ecosystem, TiVo pivoted into a company offering a technology that benefitted the entire TV industry.

The shift worked. “TiVo projected a vision of promise, showing the industry how its product fitted with a bigger and brighter future for the whole of the market.” One of its major concessions was tempering the ad-skipping software to ensure viewers could not miss commercials altogether, but fast-forward them. And when rival Replay TV refused to make the same compromise, TiVo was suddenly seen by the industry eco-system as the good guy. Today, it is viewed as such an asset that it provides the DVR-box of choice for Virgin Media’s UK customers. Replay was not so lucky and went into administration in 2015.

Ansari says: “I wanted to see how disruptive companies which are perceived as a threat to incumbents within an eco-system find ways to grow and establish themselves with co-opetition. When TiVo found doors were shutting on them, it went back to companies such as CNN, the other major broadcasters, advertisers and industry players and kept the narrative going – showing them that giving viewers more options in how they watched TV would actually make ratings more granular and accurate, which could bolster ad revenue, and be good for everyone.”

He points to other examples, too – of successes and failures. “Uber was similarly pugnacious, and as a result is banned in part of Europe. But it backtracked, started to use a ‘white gloves’ strategy of co-opetition with others in the taxi ecosystem, and is now a key part of that landscape. Conversely, Napster said it was going to destroy its rivals in the music industry, but that approach cost it valuable support and led to litigation eventually resulting in its demise. Later Apple launched iTunes and, working with the ecosystem partners in the music industry, created the largest and most heavily subscribed online library of songs at the time.

“You can’t think narrowly, you can’t go it alone. That’s also what good business strategy is about. And if your organisation is a disruptor, there are multiple overlaps and synergies that you need to consider, so many other players in the market whose support you need even if you compete with them. Alienate them and you fail. But embrace co-opetition, work with the ecosystem and add to the growth of the whole industry, and that way everyone can get a bigger slice of a bigger pie”.