The Digital Matrix by Venkat Venkatraman

Author:Venkat Venkatraman
Language: eng
Format: epub
Publisher: Greystone Books
Published: 2017-03-13T04:00:00+00:00

CHAPTER 7

COLLABORATE TO CO-CREATE NEW CAPABILITIES

MOST PEOPLE THINK about business as a competitive environment. We compete for market share, we compete for employees, we compete to earn more revenue than our rivals. But as we know, there are also times when we have to cooperate. We cooperate with our suppliers and distributors, we cooperate with our customers, we cooperate with lawmakers and regulators. And we love to categorize things as being in one camp or another. Digital business, with its emphasis on networks and working in ecosystems, blurs that distinction. Or as Ray Noorda, former CEO of Novell, stated when he coined the term “coopetition,” “You have to compete and cooperate at the same time.”1 When it comes to working within ecosystems, this is your winning move. Work not only with your allies, but seek out your competitors so that you can learn from them and collaborate to co-create new offerings and develop new capabilities.

WHEN AND WHY COOPETITION IS KEY

In 2016, most observers probably see Google and Apple as competitors, especially when it comes to mobile phones. But that wasn’t always the case (and it isn’t entirely true). When Apple CEO Steve Jobs launched the iPhone in 2007, he had invited his counterpart at Google, Eric Schmidt, onstage to show that Google and Apple were partners in this innovation. Schmidt was a member of Apple’s board of directors. Apple iPhone had preinstalled Google Maps, and Google was the default search engine. In the Jobsian vision, Apple—working alongside Google as a preferred partner—would disrupt and dominate telecom, just as Microsoft had done working with Intel on personal computers just two decades before.

Apple saw its relationship with Google as a preferential one, with complementary (non-overlapping) capabilities that would endure for some time. In contrast, its relationship with AT&T, the preferred launch telecom partner with exclusive rights to distribute iPhone in the United States for two years, had an expiry date. Apple would naturally work with other telecom carriers to distribute future versions of the iPhone to achieve global scale, but no other map apps would be preinstalled on the iPhone. Apple had not created its own map app to compete against Google by then and had no intention of doing so. The two companies were collaborating to co-create value with smartphones; there was no competitive friction or combative tension between them.

By 2009, two years after the launch of the first version of the iPhone, Google launched the Android operating system (OS) to compete with Apple’s iOS. Unlike Apple, which made both hardware and software OSs for phones in a tightly integrated fashion, Google chose to make Android OS available to a network of hardware manufacturers to design and manufacture Android-compatible devices. Apple and Google had gone from being partners and co-creators of the iPhone smartphone to being competitors. Although Google’s Android OS did not directly earn revenue, the Android ecosystem competes head on against Apple.

Steve Jobs exploded and declared that he was willing to go to thermonuclear war to get rid of Android.

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