Two heads are better than one: the case for green co-opetition

Several years ago, when I used to pay my rent by writing about the global IT industry, there was a somewhat bizarre flurry of announcements from the world's largest technology companies detailing how they had decided to bury the hatchet and work together.

The stories varied considerably, covering partnerships ranging from formal joint ventures or co-funded research teams working on product development, to joint marketing and lobbying activities designed to advance the cause of the industry as a whole. But what they all had in common was a desire for fierce rivals to bury the hatchet, albeit temporarily, and co-operate in the pursuit of improved customer service, better returns for both parties, and the general advancement of the wider sector.

This being the IT industry they needed a horrible piece of jargon to describe the phenomenon and as a result I was forced to write countless stories containing the word 'co-opetition'.

It was a horrible word, but the actual practice made a huge amount of sense. By the early 2000s many businesses' hardware and software environments had become so complicated, and contained technology from so many different manufacturers or software developers, that IT suppliers had only two options: convince your customers to ditch everything they had and only buy your technology; or learn how to co-operate with your rivals so your products could work together. Unsurprisingly, they were forced to choose the latter option.

Companies, such as business software giants Oracle and SAP or hardware behemoths IBM and HP, fought like rats in a sack when battling for new business or market dominance, but at the same time they quickly learned how to co-operate closely when circumstances dictated.

In essence there were three main types of co-opetition: partnerships designed to ensure that specific technologies could be integrated; broader research and development partnerships that could see a number of companies collaborate to spread the risk of investing in an emerging technology and which often result in IT firms working with companies from other sectors such as the automotive or building industry; and policy-inspired alliances designed to move the entire industry forward, such as developing industry standards or orchestrated lobbying for better IT skills development.

The co-opetition phenomenon was not confined to the IT industry, but the sector did prove particularly well suited to the delicate balancing act required when co-operating with an arch rival.

IT industry CEOs remained as fiercely committed capitalists and some harboured a visceral loathing of their main competitors, but they also had a tendency to realise that their entire industry, and hence their own firm, would benefit if they occasionally worked together on projects that could accelerate product development or deliver the kind of standards customers were crying out for.

This arch pragmatism, married with many senior Silicon Valley executives' idealistic belief that technology could be used to help create a better society, led far more companies than you would expect to openly co-operate and even share patents and development secrets in order to prosper.

Intriguingly, this co-opetition trend is now gaining considerable traction in the clean tech sector, and again, the industry's senior figures seem temperamentally well suited to making it work.

The model was thrown into the spotlight this week with the news that Toyota and Ford are to team up to accelerate the development of more efficient hybrid engines for trucks and SUVs, an announcement that was quickly followed by comments from Opel chief executive Karl-Friedrich Stracke to the Frankfurter Allgemeine Zeitung newspaper in which he said the General Motors owned brand is similarly considering partnering to accelerate hybrid technology development.

These kind of alliances are becoming increasingly common across the green economy. Clean tech companies of all stripes have become adept at clubbing together to lobby for effective policy environments, while investors and conglomerates have realised that joint ventures offer the perfect means of spreading the risk associated with new technologies, even if it means working with a potential competitor.

Two of the most interesting deals of the past few years have seen Shell launch a joint venture with a Brazilian company as it seeks to become a major player in the biofuel market, and Toyota, Daimler and Panasonic all partnering with electric vehicle trail blazer Tesla.

Meanwhile, on the technology front, initiatives such as the Green Grid, the Eco-Patent Commons, various smart grid alliances, and jet biofuel research groups have all demonstrated that large numbers of competitors can come together to try to accelerate the development of greener technologies and, as importantly, establish the standards required to ensure that these technologies can be rolled out.

As with the IT industry this co-opetition (I know, I know, I'd love to find a better word. Comperation?) makes sense.

The scale of the environmental challenges we face are so daunting and the pace at which we need to roll out potential solutions so rapid that, while we need the urgency and innovation competition brings, we also need to take every opportunity to pool resources, limit duplicated work, and establish the standards required to ensure the efficient rollout of technologies such as smart grids and electric cars. We do not have the time to spend a century or so working out that we need to work together.

Moreover, the manner in which the low carbon economy requires the complex interaction or convergence of different technologies means that companies will have to get a lot better at working in alliance with their competitors and firms from other sectors. We will never deliver the green economy promised by sustainability experts unless the energy, grid, automotive, IT and building sectors all learn to work together to promote green products and services that can interact.

The obvious example of an electric car that can be charged using any charge point, while also being used to store energy produced by solar panels on a building's roof for use during the evening, can only be made possible through a remarkable degree of corporate co-opetition.

No one is suggesting that wind turbine manufacturers should publish their latest aerodynamic blade designs, or that Toyota should tell all its rivals how the next version of the Prius will work. But if we are to deliver a genuine low carbon economy, leading green businesses will have to get better at working together. Thankfully, if Ford and Toyota can agree to get along, anything is possible.