regional realities: old & new - collaborate to compete

REGIONAL REALITIES--OLD & NEW

OLD REALITY: regions are competitive because the firms within them compete with one another to produce the best products at the lowest price.

OLD REALITY: regions make things, and the more they make the more competitive they are: the advantage of agglomeration

Competition is THE rule of the game, firms within the same region compete with one another

Regions became known by their principal agglomeration; by the things they make

Pittsburgh is Steel Town

OLD REALITY: The region is structured around its central city:what’s good for the city is good for the region

Burnham’s 1909 Plan for Chicago

BUT….building a region’s future on old realities can leave it high and dry

West Toronto

NEW REALITY: Regions are less and less about making things, though their identity may still be tied to them

Pittsburgh Steelers

Bostonian Shoes

NEW REALITY: Regions are increasingly about knowledge creation

NEW REALITY: Instead of chasing smokestacks we need to attract creative people

NEW REALITY: It’s no longer cities but regions that are the units of economic competition

Energy sector companies Charlotte, NC

Telecommunications and Information Cluster

NEW REALITY: Instead of agglomerations we market regions by their clusters

Clean Energy Cluster San Diego, California

Life Sciences Cluster: Baltimore, Maryland

The vision for Cascadia links Seattle, Portland, and Vancouver, British Columbia with high-speed rail, while protecting the area's unique and pristine environment. Other strategies highlight these cities' shared high-tech competencies, commitment to environmental sustainability, and creative clusters in film, music, and green building

Linear clusters to be created by high speed transportation

Our new realities require a different way of thinking about working together and marketing the region

The new realities of regions requires a different understanding of what drives businesses and communities

The concept of Co-opetition helps provide that new understanding

In the mid-2000s, "coopetition" began to be used by Darell Waltrip to describe the phenomenon of drivers cooperating at various phases of a race at "high speed" tracks such as Daytona and Talladaga where cooperative aerodynamic drafting is critical to a driver's ability to advance through the field. The ultimate goal for each driver, however, is to use the strategy to win.

Ray Noorda, founder of Novell, explained…• Cooperation is creating value• Competition is dividing it up• Business is not cycles of war and peace and war• Business is simultaneously war and peace

“You have to compete and cooperate at the same time.”

Co-opetition in Business

• New value comes from the development of new products

• New product development can be exceptionally costly to business

• Competitors sharing in development reduces costs

• Once new products are developed, partners resume competing with each other for greater share capture

Case 1: In the mid-2000s, PSA Peugeot Citroen and Toyota shared in costs and technological expertise in developing components for a new city car - while remaining fiercely competitive in other areas.

Toyota Aygo

Peugeot 107

Citroen C1

The Case 2: Samsung and Sony*

• Samsung and Sony have been fierce competitors in the domestic electronics market.

• Nevertheless, in 2004 they engaged in a joint venture to develop the next generation of liquid display, flat screen TVs.

• Each invested $1 billion (US).• Samsung contributed its technological strength, while Sony

contributed technology and marketing strengths.

* “Co-opetition between giants,” Gnyawali & Park in Research Policy 40(2011)

• The firms established a joint venture governance mode to provide safeguards and balance for the new venture.

• They achieved economies of scale and standards setting through their partnership

• While collaborating they continued to compete fiercely through their existing product lines.

• Dynamics between the two firms in this case follow the fundamental principles of co-opetition—creating a bigger value together while competing to gain a larger portion of that value.

Co-opetition in Regions

• Importance of recognizing “multi-nucleated” regions as units of global economic competition

• Thinking in terms of regional assets and how they contribute to quality of life

• Making this a multi-sector effort• Focusing on economic clusters• Creating the rules for a new game

Case 1: Denver International Airport

Elements of Co-opetition

• Denver wanted a new airport to enhance its global competitive advantage

• Adjacent Aurora wanted to increase its tax base

• Aurora agreed to support Denver in an annexation election for the airport site

• Denver agreed to allow Aurora to benefit from the spinoff commercial development

Case 2: SDFC

A collaboration of the major scientific and cultural facilities of the Denver region worked together to win approval for establishing a taxing district supporting their institutions

Case 3: The San Diego Dialog works to develop projects strengthening the identity of the trans-border region between San Diego and Baja California, Mexico

Crossborder Innovation & Competitiveness Initiative

The Innovation & Competitiveness Initiative explored the concept that the San Diego-Baja California region will be more globally competitive in key science and technology sectors by leveraging economic development opportunities linking both sides of the border. This concept includes not just crossborder research partnerships, but also catalyzing connections between the San Diego and Baja California economies in high-value added sectors that link the R&D capabilities to manufacturing and service industries in the region.

Case 4: Established in 1993, Joint Venture Silicon Valley provides analysis and action on issues affecting the region's economy and quality of life.

The organization brings together established and emerging leaders—from business, government, academia, labor and the broader community—to spotlight issues and work toward innovative solutions.

Value Added by Joint Venture

• Creating awareness of regional dynamics• Identifying areas of strategic opportunity• Mobilizing multi-sector responses to regional

challenges

ConclusionsCo-opetition offers a useful model for how communities in a region can work together. In order to do this:

• Develop a shared vision of the region and a shared mission for the coordinating organization

• Develop trust and “thicken” networks• Create joint governance agreements to assure an equitable

distribution of risks and rewards• Clarify the boundaries between cooperation and competition,

and enforce those boundaries• Develop organizational capacity to do the work• Find the right leader• Achieve some early wins to cement relations

Some caveats in Translating U.S. Experiences to Canada

• U.S. regions generally have more discretion in planning and acting than provincial/local relations allow for in Canada.

• U.S. regions have a wider array of financing tools (e.g., voter initiatives)

• U.S. regions have a longer tradition of public/private cooperation

• Many U.S. regions have strong technical support from nonprofits (e.g., foundations)