Coopetition in Tech: How Blockchain Could Help
The common perception of the tech industry is that it’s a hotbed of tribal warfare, with rivals jostling constantly for market share. This may previously have been true, and it still is to an extent. However, organisations today are increasingly finding that collaboration is actually more effective. And blockchain technology is helping to enable this.
Coopetition: Together Apart
Tech companies have a great deal to gain by adopting a more open attitude towards working with their competitors. It translates into creative thinking around new projects and partnerships that can enable better protections for meeting everyday challenges. It helps advance the entire tech community because, as they say, a rising tide lifts all boats.
One of the main forms of collaboration that can be found in rival companies operating within the same industry is known as coopetition (a contraction of cooperative competition).
Coopetition was a principal chronicled in game theory, and as a business principle, it was introduced by management professors Adam M. Brandbenburger and Barry J. Nalebuff. Brandbenburger and Nalebuff theorised that businesses that form coopetitions become more competitive by cooperating, and should therefore consider both cooperative and competitive strategies. This can manifest itself in any number of ways, from information sharing through to integrating and streamlining processes
The mechanisms of juxtaposed competition and cooperation occur in industries where there is a congruity of interests but different end goals, though it can also work when the end goals are the same. It is generally motivated by the following three reasons: (a) to use fewer resources, or to use their current resources more efficiently, in serving their existing share of the market (b) to Increase the size of the current market or creating totally new ones © to protect the share of the market they have been able to capture and to conquer a larger share of what remains.
Cooperative agreements among competitors can vary widely according to the level of commitment lavished by firms on technology developments and market creation. It works best in knowledge-intensive industries such as tech, where coopetition can be seen even at the highest echelons.
Even famously direct competitors are seemingly pitched in an endless battle for market dominance actually work together. Apple and Samsung are perhaps the most recognisable examples of this relationship. By 2012, there were over 50 active lawsuits between the two companies, worth hundreds of millions of dollars. Apple and Samsung both alleged that their patents had been infringed upon, resulting in victories on both sides in courts around the globe.
Often underreported was the fact that Samsung has been one of the main manufacturers for major iPhone components ever since the iconic handset’s launch in 2007. A-series processors, as well as NAND and DRAM memory chips have been manufactured by Samsung for Apple, and the two warring companies did not cut these partnership ties even during the most bitter stages of the lawsuits.
The collective contribution of competing companies in emerging technologies creates a phenomenon of encouragement that fosters research and knowledge sharing. This, in turn, accelerates development and the rate of consumer adoption. Coopetition between two tech companies can also increase the chance of user growth within each company through cross-channel promotion.
Zero Knowledge Proofs Enables New Collaboration Potential
New technologies, such as the cloud, have provided opportunities for collaboration on an unprecedented scale, allowing various parties to view and work on the same information wherever they are in the world. There is, however, still a major issue when it comes to trust, with most theories of coopetition relying on variations of game theory to keep parties honest.
Blockchain, specifically zero-knowledge proofs, eliminates the need for trust, enabling potential partners with competing interests to work together and share information without relying on this most fluid, abstract and fragile of concepts.
Zero-knowledge proofs enable you to share insights and evidence of the logic for how you arrived at them, without sharing the proprietary data itself. Imagine two parties, Alice and Bob are looking at the same Where’s Waldo book. Alice has found Waldo and needs to prove that she has found it to Bob without showing him the whole page and giving away exactly where it is, thereby ruining his fun. She would put the page in an envelope 4 times the size of the page cut a Waldo size hole in the middle, then manoeuvre the page so that Waldo was revealed. This is a very basic example of a Zero Knowledge Protocol.
This system essentially removes the need to trust other participants, allowing participants in a collaboration network to be able to prove a large class of properties about their private documents with just a one-time proof setup. You can share information with them that could be helpful to both parties in a way that both know that it is correct, without revealing other extraneous information you might normally need to verify the information. This ability to trust partners removes an element of risk, which enables you to work in new and previously unthinkable ways.
Do you think collaboration is the best policy for tech? Let us know in the comments.
