Our team, 2491 No Mythic, is set for the North Star Robotics tournament next week. It’s an event that teaches all the aspects of engineering and entrepreneurship – design, build, teamwork, and budgeting. This year’s competition also brings back an important concept in any business – Coopertition. The teams competing in a match can bump up all their scores at once if they work together.
It goes against the sporting aspects of the match in many ways, but it is critical. In business, companies have always worked together for mutual benefit even as they have competed. Cooperation can be a powerful force for change or a descent into stagnation. No matter what, business has never been purely a “survival of the fittest” in ways that define the boundaries of ethics and will almost certainly be more critical in a close-knit global economy increasingly defined by technology.
The best examples of cooperation in business come from classic “trade associations” – the groups that put out publications and assemble conventions where everyone in the biz can get together to swap stories. They may even set up standards that insure quality and have an independent laboratory to verify safety – such as Underwriter’s Laboratory, created by insurance companies all eager to prevent fires caused by the growing use of electrical devices over 120 years ago.
Sometimes, they go a bit further than that, such as the Western Enegy Alliance that filed suit on behalf of oil drillers to block new regulation. That is a great example of Coopertition because it appears that they are against the disclosure based regulation in part to protect their own trade secrets – working together to preserve their individual advantages.
That’s what Coopertition is usually all about – an agreement on the rules of the game where competition will take place.
Lately, however, computer companies have been forced together to define more than just the standards of their field. Apple relies heavily on Samsung for key components in its iPhones, even after their epic multi-billion dollar patent infringement suit. Car companies often share components, and the Peugeot 107 and Toyota Aygo were designed together by the competitors (though neither is sold in the US).
This gets awfully close to the downside of cooperation, which would be called collusion. Price fixing is illegal in most nations, so a direct agreement on price is more than unethical. But it may come about when no one happens to lower a price in response to lower costs or a lead is followed when one raises prices, which happens often in the airline industry.
What level of cooperation is legal and ethical, and what is not? The lines are being tested all the time by innovation. The best example of crossing the lines comes from the mortgage industry, circa 2006.
Headlines were made for the fines imposed on Standard & Poors, the agency that rated far too many bad mortgages as top-notch investments. But beneath the headlines there were many more loans made in a gray area – properly labeled as risky but still gobbled up by investors eager for a piece of the growing mortgage backed securities bonanza. The industry simply changed all at once, operating under the belief that the risk of default was outweighed by the interest rates charged and fees collected.
There is always a market for junk bonds – but it waxes and wanes as investors’ appetites for risk change. The financial industry always responds to these new standards, competing to provide new products even as the cooperate to define them.
The relative mix of cooperation and competition is a big part of business cycles, I would argue. A perfectly cooperative economy is a tranquil one that never changes and hangs on as long as everyone is happy with their share of the pie. A completely cut-throat competitive environment ultimately puts pressure on labor and the environment, at least until they hit the breaking point and long for a more peaceful and safe existence.
New areas of Coopertition are naturally going to rise, much like the strange relationship between Apple and Sumsung, as natural monopolies come about by new technologies (read: skills) created by companies. With the appetite for risk at a low point at the end of this Depression, cooperation is almost certainly going to rise. But what will stop that from going into collusion, price fixing, and fraud?
This naturally takes us back to those who will define the next economy, which are the business and engineering leaders of tomorrow. Many of them will be at the robotics league competition this week, and I have the great pleasure of working closely with them to help them define just what Coopertition means to them – at least within the confines of the game we’ll be playing.
Ultimately, it’s about ethics. There will be new frontiers in ethics defined by the natural cooperation necessary to advance technology and the equally natural competition to define a personal edge. Teaching the basics of Coopertition to this generation is easy enough as they can experience what it means for themselves. But the ethical and legal standards are going to be a lot harder. What, indeed, are we teaching the kids so that they will be ready to create a world that is fair and reflects the importance of hard work with innovation?
Along with strategic thinking, this kind of ethics can and should define the world of tomorrow. Making it happen, which is to say reducing it to practice as a technology, will take something else that will have to come at a later date.
For now, I would love to have your thoughts on Coopertition.