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Dancing with the Devil: Cooperating with Competitors

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Have you ever had to pass on a business opportunity because you didn't have the time or capacity to undertake it alone? Did you consider approaching one of your competitors to see if they wanted to work together with you?
 
Collaborating with competitors is often a good idea. It can help you learn and grow, improve your credibility, better understand your competition, and build valuable goodwill for future cooperative ventures. Then there is the synergy of teams, where the team working together achieves more than the sum of what the individual players can achieve on their own. Maybe separately neither you nor your competitor could realize on the opportunity.

Caveat Competitor

But, it's not all rosy. Many of us have had bad experiences working with competitors, arising from loss of confidential information, our credibility being transferred to them, their bad reputation rubbing off on us, or inequitable sharing of revenues, costs, workloads, and risks. No wonder many cringe at the thought of collaborating with competitors.
So, when does is make sense to collaborate, and how should we protect ourselves? Here are some suggestions:
  1. Trust. Don't go into a business arrangement with somebody you don't trust, provided that lack of trust is based on real experience and not just suspicion. It's normal and natural to be suspicious of those we don't know well, especially competitors. Don't let suspicion alone prevent you from working positively with competitors. Allow yourself to work with them carefully, until they demonstrate they are untrustworthy.  
  2. Roles. Drive ambiguity out of the relationship, as much as you can. Insist on setting out explicit roles for each partner, especially around leadership authority for the various tasks, customer liaison, accountability for results, and quality assurance.
  3. Responsibilities. Set out explicitly who is responsible for each of the financial components, especially where there is uncertainty and risk involved. Make sure you are comfortable that risk sharing is commensurate with reward sharing, and that each partner is in the best position to deal with its own risk factors.
  4. Confidentiality. Make sure all parties agree on what confidential information will be shared and how it will be protected.
Collaboration isn't always the best decision, but you should give it a fair chance. There can be a lot to be gained, and you can take steps to minimize the downside.
 
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