When rival companies join forces in the name of innovation (what we call “coopetition”), they cannot simply share skills or jointly invest: they also need “ambidextrous” managers capable of making the most of these shared resources. These are the findings that emerge from a recent study that drew on the experiences of 300 industrial companies that pursue coopetition. The paper was co-written by Antony Paulraj, a professor at NEOMA, and was published in September 2022 in the International Journal of Operations & Production Management. 

Sony, Samsung, Toyota, Microsoft… a quartet of world-famous companies that have adopted a “coopetition” approach so they can innovate by pooling costs… and with varying degrees of success: Sony and Samsung have developed new generation LCD TV panels together and invested six billion dollars in manufacturing them. Conversely, Microsoft’s search engines and online maps have failed to make an impact in spite of numerous strategic alliances.

300 companies surveyed in Europe and North America

It follows that coopetition involves risk and uncertainty. We should also add that it is not reserved for industrial heavyweights: smaller companies and even SMEs are trying it on for size. The research published by Paulraj and two fellow researchers is of interest to a wide audience, especially since it draws on a substantial volume of field data: over 300 industrial companies from five countries (UK, Ireland, Netherlands, USA and Canada.) shared their experiences.

The survey focused on three questions:

• Does joint investment play a role in the success of the innovation process?
• Does skills sharing (in, for example, product development, design and management) contribute to the success of the innovation process?
• How do managers help to convert these shared resources into innovations?

Combining incremental innovation and disruptive innovation

The researchers addressed these three themes from the perspective of “ambidexterity”, a term that originally referred to the ability to use both the right and left hand equally well. Coopetition specialists, for their part, talk about “ambidextrous” relationships between companies: they cooperate at the same time as being competitors. Likewise, the term “ambidextrous innovation” refers to the parallel search for incremental innovation (improving existing products and processes) and disruptive innovations (inventing new products or processes).

The term “ambidextrous management” refers to the capacity of a manager to handle two activities simultaneously: to make the best use of the resources at his or her disposal – products, processes, skills and knowledge – and explore new horizons through training, creating products or processes, and so forth.

Joint investment: an excellent way to start innovating

Ambidextrous management is invaluable in the context of coopetition when managers have access to a wider range of resources and opportunities. The replies from the 300 companies consulted go even further: they demonstrate that ambidextrous management is essential for ambidextrous innovation.

We should remember that the study additionally focused on the role of joint investment and skills sharing: the scientific literature considers that both promote ambidextrous innovation. And yet, the feedback from the field told a different story.

It is true that it confirmed that joint investment is beneficial: building factories together, training partner teams and reconfiguring processes creates fertile ground for innovation. At the same time, however, if managers were genuinely capable of ambidexterity – if, that is, they knew how to continually optimise and innovate in parallel – this ground would be even more fertile.

Skills sharing: ineffective… and even counter-productive

On the other hand, the companies that took part in the survey were not won over by skills sharing, arguing that it could even be counter-productive! Why? Because more often than not, these skills are too generic, and not sufficiently cutting-edge to break new ground. At most, they have the virtue of strengthening ties between coopetitors.

Here again, ambidextrous managers can partly counteract this negative effect by intensifying dialogue with the partner so they can find complementary skills. The authors also suggest another avenue of exploration: sharing more specialised skills or even technology protected by patents. This is a choice that Sony and Samsung have made, and which could explain their mutual success: in a sense, you get what you give.

A lever for success: fully-fledged “ambidextrous” managers

Firms that pursue coopetition in the name of innovation will draw three conclusions from the study.

• First, they have to be unswerving in their commitment to shared investment. This builds trust between coopetitors, helps them develop a joint vision and fosters innovation.
• Secondly, companies should not have inflated expectations when it comes to skills sharing: it does not contribute to innovation and may even hinder it unless highly-specialised skills are pooled.
• Thirdly, firms should prioritise ambidextrous management so they can exploit the potential of coopetition to the full. When two competitors join forces, the boundaries of what is possible are pushed back. At the same time, managers need to appropriate them so they can optimise what already exists and invent what does not yet exist; make the best use of the available resources; seize the opportunities and so forth. In addition, all these activities must be carried out in parallel, without neglecting or abandoning any of them: this is the key to success.

 Read more

Chandrasekararao Seepana, Antony Paulraj and Palie Smart, Relational resources for innovation ambidexterity within coopetitive relationships: the contingent role of managerial ambidexterity, International Journal of Operations & Production Management – Vol. 42, No. 12, pp. 1969-1994, 2022. DOI 10.1108/IJOPM-10-2021-0666