Competition or collaboration?

Working together with your competitors can bring advantages if done correctly, Neville Stein advises.

Image: Shutterstock
Image: Shutterstock

Fans of Top Gear may recall an episode when the team attempted to destroy a Toyota pickup. It would have made for poor television had the vehicle failed to start. But of course, being a Toyota, it did start. No surprise then, as Toyotas are reputed to be extremely reliable.

The famous Toyota build quality is in part due to the innovative manufacturing methods developed by the company, such as "just in time" and "lean", which have become commonplace in UK manufacturing. In our own industry, for example, lean has become a popular tool that enables businesses to eliminate waste and to focus only on activities that add value.

Every so often a new management concept comes along. The current mantra for success in our post-credit crunch world is "co-opetition", a term describing the ideal of business rivals competing in some areas and co-operating in others.

This is not an entirely new concept. If you have been knocking around this industry as long as I have, you might recall the co-option project involving Blakedown and Far Plants (or Fargro as it was then known) to bring Salvia Butterfly Blue to the market, or indeed the much larger project involving five major nurseries in the late 1980s to bring Ballerina trees to the market.

These two are classic example of co-opetition where companies in the same market work together to explore knowledge and research of new products but remain very competitive as they seek to gain market share. A more recent example of co-opetition outside our industry is where three companies - Toyota, Peugeot and Citroen - combined to produce a new city car, but each is marketing their new model under different badges with minor changes in detail. There is, of course, nothing new under the sun, but the same thing can appear in different styles and forms.

The difference with the form of co-opetition I believe businesses are involved with today is its depth and breadth, which brings even greater opportunities and challenges. It is up to each individual business to decide how much of their knowledge, information and expertise is shared and to be clear what they are asking for or expecting in return. Generally it is wise to share data involving your strengths rather than weak areas and to always remember at the end of the day that you are competitors, not co-workers, for that pound in the customer's pocket.

The advantages of entering into a co-opetition-type arrangement are fairly clear:

- Costs can be saved across the whole of the business - manufacturing, despatch and marketing.

- Research can be shared. Why reinvent the wheel when someone else may have the answer? Sharing technology and outcomes from research is a classic aspect of co-opetition.

- Market share can be gained. This may help to protect a domestic market against foreign imports.

- Co-opetition allows organisations to concentrate on their core competencies - what they are good at.

The disadvantages are also clear:

- If you are benefiting, so are your co-opetition buddies. In other words, your competitors are gaining as much as you.

- By sharing information you may give ideas or competitive advantage to a competitor. You will be relying a lot on trust. Being open can mean vulnerability.

The key thing is that each business involved should be clear about what they are prepared to give, what they want to achieve and where the line between co-operation and competition is clearly drawn.

So how does this work in our industry? As it is very fragmented - typified by small independents - many small business have realised that they lack buying power. Consequently, we have seen a proliferation in co-opetitive buying groups - garden centres working with other centres to aggregate their purchases, reducing the cost price. The success of the Tillington Group, Choice Marketing and Future Marketing are just some examples.

Not only is co-opetition alive and kicking among buying groups but many garden centres are collaborating by sharing key financial data - not just sales data but key financial ratios that can be used to measure the success of a business. The HTA's retail business improvement scheme is an early model for such co-opetition. Since its inception many garden centres have benefited from sharing such data with their competitors.

There are also great opportunities in our industry to promote collaboration as a way to build barriers to entry or to avoid product substitution at a time when we are faced with an increased threat of imports or products being substituted. Businesses in the horticulture sector are also collaborating with each other and consumer organisations to invest in research, product development and marketing. Typically this is organised by official bodies that are often comprised of members from an industry. Outcomes from research and marketing activity are then disseminated to the wider industry for the greater good.

In our industry we have numerous examples of this type of collaboration, ranging from research groups such as the Brassica Growers Association to membership bodies such as the Association of Professional Landscapers. Of course, all of these organisations are stronger when they have industry support.

There is no doubt that co-opetition works. Costs are reduced, market share is gained and knowledge is shared. It may sound corny, but together we are stronger and you definitely do not want to be the one on the outside when all the other businesses have got together. United we can achieve more, but to make this happen we need to perhaps break down our traditional British reserve and open up to the possibility that working with a competitor might grow our own business.

Since the credit crunch, there have never been so many business opportunities - difficult trading patterns breed creativity. Yet the problem is that the single operators have neither the time nor the resources to exploit opportunities. Together in a co-opetitive arrangement they might be able to do so. Remember, the best athletes train together but once the race starts they are out there to win.

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