Co-opetition is a business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together. The co-opetition business model is based on games theory, a scientific approach (developed during the second World War) to understanding various strategies and outcomes through specifically designed games. Traditional business philosophy translates to games theory's zero-sum game in which the winner takes all, and the loser is left empty-handed; proponents of co-opetition claim that it can lead to a plus-sum game, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the game with.
The co-opetition model starts out with a diagramming process called the value net, which is represented as a diamond shape, with four defined player designations at the corners: customers, suppliers, competitors and complementors. Complementors are defined as players whose product adds value to yours, the way, for example, that software products gain value because hardware products coexist with them, and vice-versa. In comparison, a competitor is defined as someone whose product makes your product less valued, the way, for example, a second brand of toothpaste would make one that had previously been the only one less valued.
The game of business is then broken down into its PARTS (players, added values, rules, tactics , and scope) as a means of viewing practices and strategies. Added value focuses on ways to improve products and services to find ways of making more money from an existing customer base. Rules specify ways of attracting customers with strategies such as price-matching. Tactics are the practices sometimes used to take away a competitor's likely market share, for example, announcing an upcoming (and possibly non-existent) new and improved product when a competitor's product is released. Scope is the final part, used to take a broader prospective and create links between competitor's games and interests and see how co-opetition can benefit the players.
Although several people have been credited with inventing the term co-opetition, including Sam Albert, Microsoft's John Lauer, and Ray Noorda, Novell's founder, its principles and practices were fully articulated originally in the 1996 book, Co-opetition, by Harvard and Yale business professors, Adam M. Brandenburger and Barry J. Nalebuff.