You may be familiar with the common strategy, “The enemy of my enemy is my friend.” But why not cut out the middleman? Companies competing with each other in certain areas don’t have to be foes in every situation. Under the right circumstances, teaming up with a business that sometimes competes for the same customers can make sense for both sides.
Take the legal industry, for example. Lawyers compete for the same clients, but they can also join forces on cases to complement their strengths. Anidjar & Levine, a personal injury firm in Florida, reflects on the firm’s first co-counseled case partnering with a law firm specializing in mass torts.
“I always viewed other attorneys as my adversaries,” says Marc Anidjar. “Mass torts taught us that you can work together in a symbiotic relationship that’s a win-win. Attorney, co-council, and client—all working to correct a wrong.”
These collaboration opportunities appear at every level of business. Apple, Facebook, Google, and Microsoft have plenty of competing products, but all four companies work together in different areas. Doing so doesn’t guarantee one company will get an advantage over the other, but they don’t expect it to.
Companies collaborating rarely aspire to take a bigger piece of the pie: instead, they seek to make the whole pie bigger.
Making It Work With a Business Frenemy
Partnering with a competitor makes sense when both companies understand the boundaries of the partnership. Master the art of sleeping with the enemy by following these key tips:
Don’t muddle your core business.
If you sell apples and your competitor sells oranges, it may make sense to enter into a pineapple partnership when pineapples are in season. It does not make sense to enter into an apple-selling partnership, though. Your business should remain your business.
Understand the core value your company offers and protect that differentiation in any arrangement. Partnerships with competitors only work in situations when the two sides are not competing for attention in the same area. Go into every negotiation with the intention to protect what you have already built before taking on new risks.
Set clear boundaries, expectations, and timelines.
Make sure both sides understand what to expect before entering into any deal. You may expect to work together on a project for six months, but if your competitor expects an ongoing relationship, you could be in for trouble.
Hash out the timeline for the partnership and the specific duties each side will perform ahead of time. Make it clear what each company is responsible for doing and what happens when one side fails to hold up its end of the deal. You don’t need to hide these outs — both sides should expect the other to exercise caution.
In this way, partnering with the competition is actually easier than partnering with a neutral party. Both sides already know the other won’t hesitate to seize an advantage, even a potentially harmful one. The cards are always on the table.
Research the opportunity for yourself.
Never trust the research of a competitor before verifying it yourself. A competitor approaching your business with a proposition for partnership could have ulterior motives. While it’s not common for most businesses to be so underhanded as to feign partnership to do harm, it’s not unheard of, either.
Enter into negotiations with your own research and facts. Let your own team analyze the situation and bring an independent report. You may confirm the findings of your potential partner or discover something amiss. Either way, you’re in a better position when you can make decisions based on data you sourced yourself.
Stay professional before, during, and after.
Companies that play tricks rarely find repeat partners. Conduct your business with integrity from beginning to end. Executive Chairman of Starbucks, Howard Schultz defines the importance of partnership integrity in the company’s Standard of Business Conduct. “Conducting business ethically, with integrity and transparency, is essential to preserving our culture and protecting our brand,” Schultz says.
Don’t try to change the deal at the last second or perform your end of the duties in a way that would damage your reputation. You may be working with a competitor, but you both run in the same circles. Do harm to one, and others will treat you with suspicion.
Once you have done your research and spoken plainly with your potential partner, you can act in good faith for the duration of the arrangement. Trust, but verify. If all goes well, you may discover a wealth of ongoing opportunities in places you never would have expected.
Remember that not all competition has the potential for collaboration. Tesla and GM won’t be friends any time soon. Coca-Cola and Pepsi are highly unlikely to release a new line of sodas together. Evaluate your potential partners carefully, consider your angle of approach, and remember that your goal is to grow your company, not tear down someone else’s.