Value Net & Coopetition

Most strategy discussions begin with a familiar question:

Who are we competing against?

But what if that is only half the question?

Sometimes, the company competing for your customers is also helping make your product more valuable.

Sometimes, a supplier can become a strategic partner.

And sometimes, two competitors can work together to make the market itself larger.

This is the logic behind coopetition.

In Co-opetition, Adam Brandenburger and Barry Nalebuff introduced the Value Net as a way of understanding the different players who influence the value a company creates and captures.

Instead of viewing business as a simple battle between competitors, the Value Net places the company within four groups:

Those who buy your offering.

Those who provide the resources, capabilities or inputs you need.

Those whose offerings can reduce the value customers place on yours.

Players whose products or services make your offering more valuable when used together.

The concept of complementors is particularly important.

A complementor isn’t simply a “partner.”

It is a player whose offering increases the value of yours — and potentially vice versa.

This creates a different strategic lens:

Some relationships enlarge the pie. Others determine how the pie is divided.

Traditional competitive thinking often assumes:

If they win, we lose.

The Value Net introduces a different possibility:

Sometimes, helping another player succeed can increase the value available to everyone.

Think about a smartphone.

The value of the phone isn’t determined only by the hardware manufacturer.

It also depends on:

• app developers

• payment providers

• network operators

• content providers

• accessory makers

More and better complementary offerings can make the core product more attractive.

This means a company may have an incentive to strengthen another player, even when that player captures part of the economic value.

That’s the strategic logic behind coopetition: cooperation and competition can coexist within the same relationship or ecosystem.

(Read the article on Resource Based View, we explored how competitive advantage can come from what a company does uniquely well)

Consider Sony and Microsoft.

At first glance, they are straightforward competitors.

PlayStation competes with Xbox for gamers, developers and market attention. Microsoft’s own reporting identifies Sony as one of the major competitors to its gaming platform.

But in 2019, something strategically unusual happened.

Sony and Microsoft announced a partnership to explore Azure-based cloud solutions for gaming and content streaming, as well as collaboration in AI and semiconductors.

Sony explicitly acknowledged the apparent contradiction: Microsoft was both a business partner and a competitor.

Competitor

Sony and Microsoft compete for:

gamers → subscriptions → developers → gaming ecosystems

Winning users for PlayStation can mean losing users for Xbox, and vice versa.

But there was another relationship.

Complementary capabilities

Microsoft had:

Azure → cloud infrastructure → AI capabilities

Sony had:

PlayStation → gaming/content ecosystem → entertainment expertise

Combining some of these capabilities could potentially create better cloud-based gaming experiences for customers.

So the strategic relationship wasn’t simply:

Sony vs. Microsoft

It became:

Sony competes with Microsoft in one part of the game while cooperating with Microsoft in another.

The companies later continued discussions around cloud streaming and expanded the partnership beyond gaming into areas such as semiconductors.

The strategic insight is important:

Sony didn’t have to choose between “compete” and “cooperate.”

It could do both.

This changes how we think about competitive strategy.

A competitor isn’t necessarily someone you should always try to weaken.

The better question is:

What role does this player play in the value system?

A company can simultaneously be:

Competitor in one market

and

Complementor in another.

It can even change roles over time.

That means strategy isn’t only about positioning your company against other companies.

It is also about positioning your company within a network of relationships.

Strategy isn’t always about beating the other player.

Sometimes the smarter question is:

Can we create more value together and then compete over how that value is captured?

That’s the logic of coopetition.