Whether you think the economy is still screwed up, or you think we’re moving towards another golden era in business—one thing is clear: the current changes in the market place have made it tougher than ever for a business to survive, much less thrive.
I recently had a conversation with a colleague, discussing significant changes we’ve noticed in the business world over the past few years, including increased price sensitivity, a decrease in client loyalty, and, of course, increased competition. The latter sparked a deeper debate. Following the 2007-2012 recession, one would have guessed there’d be less competition overall, but it seems there’s been a steep rise in competition. How is this possible?
The fact is, companies that survived the economic downturn emerged leaner and meaner. They were forced to get creative with their products, cut operating expenses, find innovative ways of holding onto existing markets, and aggressively expand into new markets. All this fine-tuning resulted in my colleague’s unshakable argument for Darwinian economics: Only the strong survive. I only partly agreed on that point because I saw a gaping hole in his assertion that any company still-standing-but-struggling in the year 2015 is destined to go the way of the dodo.
From my perspective, I explained, there are viable ways for companies to thrive in today’s market, and one tried-and-true strategy is to collaborate with your biggest competitors. My friend fervently dismissed my postulate, thus generating the title for this week’s article.
Of course, there are countless ways to shore up businesses facing intense competition, such as launching a strong promotional campaign, hiring great talent, or slashing excessive spending (to name a few big ones). But one of the older and more effective methods can be gleaned from the ancient teachings of Sun Tzu: The enemy of my enemy is my friend. (The modern version of this phrase actually sums up the idea I want to illustrate: If you can’t beat ‘em, join ‘em!”)
I saw an example of this growth strategy a few years ago in the ski resort industry. In the early 2000’s, smaller-scale ski resort visits were on the decline due to unusually warm winters coupled with economic disruptions caused by the dotcom bust and by 9/11. These smaller, privately-owned resorts were struggling to compete with facilities owned by much larger corporate conglomerates, and many were considering closing their doors.
Needless to say, a paradigm shift was required. Facing the challenge of economic survival, these tiny resorts began collaborating with each other, offering joint ski passes, giving vacationers access to multiple ski resorts as alliance members.
By harnessing the power of their combined resources, these small businesses attracted customers who would have otherwise gone elsewhere, and each resort saw an increase in ancillary sales—(food and beverage, gift shops, and lodging). Of course, some of these resorts were eventually bought out by larger companies, but many survived long enough to position themselves for a premium re-sale instead of having to file for bankruptcy. Note: A handful of these resorts went on to become small powerhouses—thriving on their own.
This collaboration approach can be observed in the amusement park industry amongst the two biggest rivals in Virginia: Kings Dominion and Busch Gardens. They recently teamed up with each other, offering all-access passes to both parks—one of many ideas coming from the Virginia’s Gateway to Family Thrills program.
Now I’ll admit—collaborating with your competitors might not make sense for a number of reasons: Their values might be different; your business models might be completely incompatible; industry compliance regulations might prohibit you from sharing information with one another; or the cost benefit is simply not there. However, in many cases, there is a way to form a successful alliance; you’ll just need to collaborate with people who embrace the concept of abundance, and are willing to join forces for the purpose of generating mutually-beneficial results.
This approach also works with organizations that compete indirectly for similar clientele. We’re seeing this trend in the health care industry with allied health professionals teaming up to create a seamless, holistic healthcare experience for their patients. These boutique businesses are often comprised of MDs, chiropractors, dieticians, physical therapists, massage therapists, personal trainers, and yoga instructors. Even some athletic clubs are embracing this approach. The model is simple: Become a one-stop shop for the customer who wants a consistent healthcare experience with a select group of practitioners.
Collaborating with a competitor might not make a lot of sense at first glance; however, more and more companies are finding ways to do so. There is great potential there, not only for offering a more satisfying consumer experience, but also for finding creative ways to capture more revenue and market share.
Who are the chief competitors (direct or indirect) in your line of work? Chances are they are feeling the same economic pressures you’re feeling. Put together a short list of people you think might be open to an exploratory conversation. Who knows where it may lead? This could be the beginning of a beautiful and fruitful partnership!
