By Tyler Kem
Strike Tax Advisory
The gaming term "cooperative competition," typically shortened to "coopetition" or "co-opetition," describes when competitors work together and strategically utilize their strengths to accomplish a common goal. In the business world, it may feel counterintuitive to reach out to potential competitors and collaborate on projects together. But coopetition, done right, brings in high-value returns.
We spoke recently with a payment processing professional who uses coopetition to white-label his services. Rather than seeing competitors as adversaries, he recognizes his strengths can help him tap into networks he couldn't reach on his own. The mental flexibility that coopetition requires helped him pivot his business numerous times over the last two decades so he could stay on the cutting edge of fintech services.
Melody Brue, the author of the Forbes article "Collaboration Is the New Competition In FinTech," bit.ly/3NIDNDR, pointed out that since the pandemic began, popular startup payment methods have chosen to stack their services on existing banking infrastructure. She wrote, "This collaborative approach lends the established banks relevance and innovation while giving FinTech startups decades of trust, customer loyalty, and ultimately, security for its users."
Instead of going it alone, fintech startups are showing up with their ideas, and banks are giving them the platform, and the capital, to leapfrog over their competition.
Let's take this one step further. Collaboration can happen between industries too. With the rising popularity of food delivery apps like DoorDash and Uber Eats, for example, restaurants that may have already offered delivery services found they could expand their customer base when they signed up for delivery platforms.
These platforms would advertise restaurants to their extensive networks and send more customers to their partners. The restaurants could then focus on their core competency, which was food all along, not delivery.
Choosing an innovative or established partner can enhance your business in the same way. So build coopetition into our business model, and you'll have referral partnerships that enable you to tap into broad networks across a variety of industries. At Strike Tax, for instance, we work with other accounting firms, bookkeepers, loan officers, and anyone with a network that could benefit from our services.
Tapping into complementary networks to find clients creates win-win-win situations for everyone involved. Your referral partners will be able to earn a fee, their clients will have a chance to save money and your partners will be able to offer additional services without working more.
Structuring partnerships where everyone wins makes coopetition a straightforward process. If you're ready to make coopetition work, lay down a few ground rules.
First, start by assuming positive intent. If you're someone who has a winner-takes-all attitude, you may struggle to adapt to the flexibility that coopetition requires. Dale Laszig pointed out in "The adjacent POS-sible," published Feb. 27, 2017 in issue 17:02:02."[Payment processing] is a collaborative business, a long tail of large and small players whose combined efforts move the industry forward in billions of tiny increments."
There's a long history of successful collaboration in the payments industry, and it's for a good reason. It's faster to grow a business when you tap into pre-existing networks.
Second, choose a partner that complements your core competency. You might choose to offer a certain technology, or serve a certain industry. Connecting with peers in forums or at networking events will help you identify those connections that can work with you.
Finally, decide how to unwind the partnership should either of you want to end it. For our partners, it's a no-risk situation; they can end the partnership at any time. But for partnerships with considerable assets involved, starting with the end in mind will solve potential issues.
Harvard Business Review contributors Adam Brandenburger and Barry Nalebuff suggested in "The Rules of Co-opetition," published in January 2021, that settling on the scope and control of the partnership from the beginning will harden up boundaries and set up the partnership for success. "It's important to structure any agreement in such a way that one side doesn't become dependent on the other," the authors wrote. "Otherwise, the dependent party may be backed into a corner when it comes time to renegotiate the deal—or distressed when the deal ends."
Whether you're ready to grow your network this year, or just your net worth, lean into coopetition. If you're ready to stand on the edge of innovation, coopetition is like putting rocket fuel on your company's positive ROI.
Adam Brandenburger and Barry Nalebuff, who are quoted in this article, wrote a seminal book on cooperative competition titled Co-opetition. First published in 1997, the updated book is now in its ninth printing, available in a variety of formats, and described by its publisher, Currency Doubleday, as having "revolutionized the game of business." 
Tyler Kem is co-founder and president of Strike Tax Advisory, which helps businesses discover and claim government-provided tax credits and incentives available to them. Strike Tax helps SMBs compete more efficiently while keeping jobs in the United States. For more information, visit www.striketax.com.
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