Business rivalry: Why Dangote, BUA should embrace co-opetition

Introduction
The intense rivalry between two Nigerian conglomerates, Dangote Industries Limited and BUA Group, has recently taken a contentious turn, with allegations, accusations, and counter-accusations flying back and forth. This ‘do or die’ business rivalry has not only stirred up tensions in the corporate world but also holds valuable lessons on the detrimental impact of such fierce competition on business growth and the nation’s economy. In this article, I delved into the Dangote-BUA rivalry, drawing insights from renowned economists and business strategists, to shed light on why such cutthroat competition can be counterproductive.

Escalation of Dangote-BUA rivalry
The Dangote-BUA rivalry is a prime example of how competition can sometimes spiral out of control, leading to a host of adverse consequences. The conflict, which recently resurfaced over allegations of illegal foreign exchange deals, has roots that run deeper. The bitter exchanges and mudslinging between the two conglomerates reflect a long-standing feud that has not only soured business relationships but also negatively impacted the broader business environment in Nigeria.

Economists and business strategists weigh in
Economists and business strategists have long emphasized the importance of healthy competition and cooperation in driving economic growth. The Dangote-BUA rivalry, however, presents a stark contrast.

Renowned economist and leading authority on competitive strategy, Dr. Michael Porter argues that intense rivalry can lead to a “zero-sum” game in which companies end up undermining each other, rather than focusing on improving their industry’s overall competitiveness. The allegations and counter-allegations exchanged by Dangote and BUA demonstrate this zero-sum mentality, where the focus shifts from innovation and market expansion to undermining the opponent.

Warren Buffett, Legendary Investor: Warren Buffett, one of the most successful investors of all time, emphasises the importance of maintaining goodwill and good relationships in business. He once said, “It takes 20 years to build a reputation and five minutes to ruin it”. The public spectacle of Dangote and BUA’s feud and their public accusations not only tarnishes their respective reputations but also erodes trust and goodwill within the business community.

Game theory expert, John Nash, who is also a mathematician and Nobel laureate, developed the Nash Equilibrium, which is essential for understanding competitive dynamics. In this scenario, both Dangote and BUA seem to be stuck in a non-cooperative equilibrium, where their actions are detrimental to their collective interests. By perpetuating this ‘do or die’ rivalry, both parties miss out on opportunities for mutually beneficial cooperation.

The impact on business growth and the nation’s economy
The Dangote-BUA rivalry demonstrates how excessive competition, characterised by aggressive tactics, can hinder business growth and affect the nation’s economic landscape.

Resource diversion: Rather than focusing on innovation, expansion, and market development, both companies have diverted significant resources towards countering each other’s moves. This diversion limits their capacity to invest in new ventures and technologies, which could otherwise drive economic growth.

Market uncertainty: The ongoing feud creates an atmosphere of uncertainty in the business community, which can deter potential investors and partners. Such instability is detrimental to the overall business environment and the nation’s attractiveness for foreign investment.

Reputation damage: The public nature of the rivalry has cast both Dangote and BUA in a negative light, damaging their reputations. This could ultimately affect their ability to secure partnerships, customers, and government support.

Instead of resorting to unsavory tactics in a cutthroat win-lose ‘zero-sum’ business rivalry, both Dangote and BUA have a remarkable opportunity to embrace a more constructive approach known as ‘Coopetition.’ This strategy could unlock their true potential, fostering an environment where they bring out the best in each other while reaping the benefits of their cooperation. In doing so, not only will both companies thrive, but their customers will also be the ultimate beneficiaries of this enlightened business approach.

The concept of ‘coopetition or co-opetition’
Coopetition, a portmanteau of “cooperation” and “competition,” is a business strategy in which competing companies also collaborate on certain aspects of their operations to achieve mutual benefits. This concept recognises that businesses can simultaneously be rivals and partners, working together in specific areas while competing in others.

The concept of co-opetition, which combines cooperation and competition, is not a recent invention. Its origins can be traced back to as early as 1913 when it was employed to describe the intricate relationships among independent dealers in the Sealshipt Oyster System. In this system, these dealers were encouraged to collaborate for the greater good of the system, all the while engaging in fierce competition to win over customers within the same city. This early manifestation of co-opetition was documented in Advertising as a Business Force: A Compilation of Experience Records by Paul Terry Cherington in 1913.

Nonetheless, it was in 1996 that the term and the associated concepts of co-opetition garnered significant attention within the business community. This newfound prominence came with the publication of the book ‘Cc-opetition’ by Brandenberger and Nalebuff. Since then, co-opetition has continued to shape the landscape of business strategy and collaboration, offering a nuanced perspective on how companies can simultaneously compete and cooperate for mutual success.

Characteristics of ‘coopetition’

1. Respectful competition: Coopetition is characterised by mutual respect between competitors. While they vigorously compete in the market, they do so with fairness and without resorting to personal attacks or unethical tactics.
2. Innovation and growth: Competing businesses strive to outdo each other through innovation and improvements in products, services, or operations. This competition drives economic growth and fosters creativity.
3. Customer focus: Companies in a coopetition prioritize the needs and satisfaction of their customers. They constantly seek ways to enhance the customer experience.
4. Market expansion: Coopetition often leads to the expansion of markets. Competing companies explore new markets and demographics, which can benefit the overall economy.
5. Transparency and ethics: In Coopetition, businesses maintain high ethical standards in their rivalry. They operate transparently and adhere to legal and regulatory guidelines.

Principles of coopetition

1. Mutual benefit: Coopetition is driven by the idea that all parties involved can gain something valuable from the collaboration. It’s a win-win approach where competitors recognize that they can achieve more together than they can separately.
2. Selective collaboration: Companies choose to cooperate in specific areas, such as research and development, distribution, or marketing, while still competing in other aspects of their business.
3. Common goals: Coopetition works best when the collaborating companies share common objectives, even if they have different methods for achieving them. These common goals are the basis for their cooperation.
4. Resource sharing: Businesses involved in coopetition often share resources, knowledge, or technology to reduce costs and risks. This sharing can lead to innovation and efficiency.
5. Competitive separation: While collaborating in certain areas, companies maintain their competitive independence in other aspects. This allows them to compete vigorously while still achieving their shared goals.

Now, let us consider how Dangote and BUA, two fierce competitors in various industries, can explore the concept of coopetition for their mutual business success:

1. Research and development: Both companies can benefit from joint research and development efforts. They can share the costs of developing new technologies, product innovations, or sustainability initiatives that are beneficial to their industries.
2. Industry lobbying: Dangote and BUA can join forces when dealing with regulatory and policy issues affecting their industries. By presenting a unified front to government bodies, they may have a greater impact on shaping industry regulations.
3. Market expansion: While they fiercely compete in the Nigerian market, Dangote and BUA can explore opportunities for joint ventures in international markets. This cooperative approach could help them enter new markets more effectively.
4. Supply chain efficiency: Both companies can work together to streamline their supply chains, reducing waste, improving delivery times, and enhancing customer satisfaction. This would be a win-win for their operations.

I can list five other benefits of Coopetition to both Dangote and BUA but I am trying to keep this article as short as possible (which I am not sure I am doing a good job). To drive home my point I will like to share two case studies where bitter rivals embraced coopetition for mutual gains.

Case study 1: Airbus and boeing

Airbus and Boeing, two of the world’s leading aircraft manufacturers, have a fierce rivalry in the global aviation industry. However, they also engage in collaborations through organizations like the International Air Transport Association (IATA) and the Air Transport Action Group (ATAG). These collaborations focus on enhancing aviation safety, improving fuel efficiency, and reducing carbon emissions.

One notable project is the development of sustainable aviation fuels (SAFs). Both Airbus and Boeing are investing in research and initiatives to create SAFs, which have the potential to reduce the aviation industry’s environmental impact significantly. Their collaboration in this area benefits the entire aviation sector and contributes to global environmental goals.

Case study 2: Apple vs. Microsoft

These tech giants have engaged in decades-long competition, pushing each other to innovate. However, they have also collaborated when it made business sense.

One of the notable collaborations between Apple and Microsoft is the availability of Microsoft Office applications on Apple’s platforms, including iOS and macOS. Microsoft recognized the popularity of Apple’s devices and the demand for productivity tools. As a result, they developed and made available the Microsoft Office suite, which includes Word, Excel, PowerPoint, and Outlook, for Apple’s mobile devices and computers.

This collaboration allowed Apple users to access and use the widely-used Microsoft Office applications seamlessly on their iPhones, iPads, and MacBooks. It also benefited Microsoft by expanding the reach of their software to a broader user base. This partnership is an excellent example of how two tech giants, who are often considered competitors, can work together to meet the needs of their customers and enhance the user experience on Apple devices.

Conclusion
In the realm of business, the Dangote-BUA saga stands as a powerful testament to the consequences of unrelenting ‘do or die’ competition and the neglected potential of coopetition. The unwavering focus on undermining one another has not only drained valuable resources but has also sown seeds of uncertainty in the market, leaving scars on the reputation of both conglomerates. However, this rivalry carries far-reaching implications, extending beyond the boardrooms of these giants to the very heart of the nation’s economic landscape.

As revered economists and seasoned business strategists affirm, there exists a road less traveled, one that leads to a landscape where cooperation flourishes alongside competition. It is not merely a path to business prosperity; it is the cornerstone of economic growth and development for the entire nation. The time has come for these industrial titans to pivot away from the zero-sum game, where one’s gain is seen as another’s loss, and embrace a more enlightened approach where their synergy not only elevates their empires but also nurtures the flourishing fields of Nigeria’s economic landscape.

An ancient Yoruba adage profoundly reminds us that, “Where two elephants fight, it is the grass that suffers”. Business competition should inspire progress, not ignite feuds. In the clash of giants, it’s not just the competitors who are casualties, but the entire landscape they tread.

Let this business odyssey stand as a testament to a new narrative, one where giants, instead of clashing, collaborate to nurture the fertile grounds of prosperity. In this landscape, it is not just the competitors who thrive, but the very earth beneath them that yields the harvest of shared success.

Ayodele is a strategic communication expert who specialises in ‘message engineering’. He helps organisations, brands and leaders communicate in a way that yields the desired outcome. He can be reached via ishopr2015@gmail.com or +2348077932282