Coopetition: A New Strategy To Ignite Innovation

Coopetition: A New Strategy To Ignite CPG Innovation

The tried-and-true model CPG companies and retailers have been operating with needs to be modernized. That is, the competition model of fighting for the same space with fairly similar products, guarding statistical analysis data, protecting secrets—some of them legitimate trade secrets, some not so much. Small and large innovators including Amazon is hurtling toward that business model like a meteor toward the dinosaurs and it’s time for a new approach: Coopetition.

Coopetition is a model in which competitors share their pre-competitive data, insights, and experiences all for the greater good. This information helps everyone understand the market and make strategic decisions faster.

The Problem with CPG Innovation Today

Today, companies try to innovate in secret. Rollouts of new products are costly and time-consuming, which puts giant companies at a disadvantage. What takes them months or years to develop, smaller companies can often do in weeks or months. While some companies are rock stars in research and development, others struggle.

The Benefit of Coopetition

Coopetition would give everyone the insights that would help them think in new ways. It would work like open source software, a way of producing software where anyone can have access to the code and make their own modifications and improvements. This is the way humans innovate. It’s known as cultural ratcheting. Each entity contributes something and products, services and profits get better for everybody.

Finding a Solution not a Band-Aid

The old way is to fight for the status quo. Recently CNBC reported the big box stores that anchor shopping areas are finally able to use their weight against Amazon, which is trying to open a number of Whole Foods stores. Because of their leases, they can prevent Amazon from selling or delivering certain products through Whole Foods. This is probably an effective strategy for now, but it’s essentially old-school thinking. Amazon’s competitive advantage is data. It has data on every retailer and customer out there while other companies have maintained theirs in silos.

Coopetition Isn’t A New Concept

Back in 2015 Hershey announced a partnership with data analysis firm Palantir, and called it the CPG Consortium. The idea was to create a group of consumer packed goods companies that would swap data and allow their teams to get in front of emerging trends that impact the industry as a whole. Unfortunately, after that article ran there has been no update on the partnership since.

“Your competitive advantage is being able to work with the information, not hold on to it.” – J.P. Bilbrey

Giving Away the Farm

Of course, the traditional perspective is that no one wants to give away their secret product, information about their customers or anything else related to business strategy. But that’s how we wind up with an overload of pumpkin spice everything this fall. Pooling data sets gives everyone a better idea of how consumer tastes and habits are changing. From that, everyone can find their own strategic stronghold from which to create new products or delivery options, giving consumers a range of choices to fit their own preferences.

It’s All About The Shopper

Today, every company is a data company. The more data CPG companies and grocers have, the more they can hone their particular niche in the market. It’s time for coopetition.

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Seth Nagle, Senior Marketing Manager at RW3 Technologies understands the power of innovation but also its limitations. Attending Salve Regina in New England, starting his career in Silicon Valley, and now living in Austin, Texas; Seth provides a unique tech perspective to a complex CPG and Retail Grocery Industry that is in constant disruption.