Co-opetition
Summary
Brandenburger and Nalebuff apply game theory to business strategy and argue that business is simultaneously cooperative and competitive, and that most strategic thinking misses the cooperative half. Their central tool is the value net, which places the firm at the centre with customers, suppliers, competitors and a fourth category they name: complementors, meaning players whose product makes yours more valuable to the customer.
The complementor concept is the book's main contribution. They argue that firms systematically manage relationships with customers, suppliers and competitors while ignoring complementors, and that the complementor relationship is frequently where the most value can be created or lost. They give worked examples across hardware and software, cars and finance, and airlines and hotels.
The analytical method is what they call added value: a player's added value is the total value created by the game with them in it minus the total created without them, and no player can capture more than their added value. This gives a rigorous way to assess bargaining position and to ask how to raise your own added value or lower a rival's. They set out five levers, being players, added values, rules, tactics and scope, and argue that changing the game is usually more profitable than playing the existing game better.
The book is practical and its framework is directly usable. Its weakness is that added value is easier to define than to measure, and the examples are chosen after the fact. Game theory applied to business remains better at explaining outcomes than at predicting them.
Key takeaways 7
- Business is simultaneously cooperative and competitive, and most strategic analysis attends only to the competitive part.
- Complementors, meaning players whose product raises the value of yours, are a distinct category from suppliers and competitors and are usually unmanaged.
- A player cannot capture more value than their added value, which is the difference between the value created with them in the game and without them.
- Raising your own added value or reducing a competitor's is the fundamental strategic move, and both are achievable without any change in product quality.
- Changing the game, by altering the players, rules or scope, produces more value than playing the existing game better.
- Paying a supplier to enter a market where you have only one supplier raises your added value by creating competition you control.
- The same firm can be a competitor in one relationship and a complementor in another, and the correct treatment differs entirely between the two.
Who should read it
Founders and executives who want a structured way to identify complementors, assess bargaining position and change the terms of competition.
Where it sits in the reference 3
Who recommended it 1 · 1 direct
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