Competition is considered the driving force behind business. But as they develop, become more complex, and develop more elite forms of technology, competition simply isn’t enough. That’s where is coexistence and coopetition come into play.
We all have choices to make. And typically, we make decisions based on one of two things. One – we choose based on what we already know (anchoring). Or two - by prioritising our thoughts by what’s most and least important to us (redlining). As a coping mechanism, we often try to oversimplify complex decisions, particularly when we try to solve business problems or when we try to solve the larger political problems of the world like Brexit.
Make or buy, outsource or insource, offshore or onshore – the truth is it’s no longer that simple. Demand and supply constraints restrict what we can optimally achieve. Consequently, solving complex business problems with business applications cannot always be achieved with a “one platform fits” all approach.
For the technology buyer, the challenge is very complex and so compromises are necessary and are often enforced – but does this always have to be the way?
3 Types of Service Providers
In this research paper from Gartner, the author quite rightly points out that technology and service providers should be viewed in three different ways:
1. Complementor – only work alongside services of financial service firms
2. Competitor – Vie for the same business of financial services firms
3. Catalyst – Help financial services firms compete in Fintech markets
There are lessons here in Fintech that can be applied to many different areas in that there really is no one solution that can solve all Procurement and Financial business problems. I would, however take this a step further and suggest that Co-opetition should be an additional category in this list.
The Competitive Edge of Co-opetition
Co-opetition has been a subject that has been written about by the likes of Barry Nalebuff at Yale School of Management and his book offers great thought leadership on this subject. Cooperation is creating value and competition is dividing it up.
The Manufacturing vertical has long been a leader in this thought process. Components from rival suppliers are assembled by one competitor before being delivered to the customer. This sourcing optimisation has been around for many years, measuring internal constraints against the market capabilities to produce the optimum outcome for the customer. Feedback on the process allows players to be more competitiveness in the future.
So, the challenge for the technology buyer is understanding how potential competitors can come together to solve their particular business problem. With that being said, we need to consider the fact that capabilities and functionality around points of integration have expanded the opportunity to mix and match solutions. As technology providers, we need to spend more time understanding the business problem at hand and propose the optimal solution for the client. Honest and candid conversations need to be had as earlier as possible in every engagement. Be open to suggesting that “yes we compliment SAP/Ariba and this is how.”
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The Three Types of Fintech and How they can impact Technology and Service providers