By Lance Eliot, the AI Trends Insider
Competitors usually fight tooth and nail for every inch of ground they can gain over the other. It’s a dog eat dog world and if you can gain an advantage over your competition, so the better you shall be. If you can even somehow drive your competition out of business, well, as long as it happened legally, there’s more of the pie for you.
Given this rather obvious and strident desire to beat your competition, it might seem like heresy to suggest that you might at times consider backing down from being at each other’s throats and instead, dare I say, possibly cooperate with your competition. You might not be aware that the US Postal Service (USPS) has cooperative arrangements with FedEx and UPS – on the surface this seems wild to think that these competitors, obviously all directly competing as shippers, would consider working together rather than solely battling each other.
Here’s another example, Wintel. For those of you in the tech arena, you know well that Microsoft and Intel have seemingly forever cooperated with each other. The Windows and Intel mash-up, Wintel, has been pretty good for each of them respectively and collectively. When Intel’s chips became more powerful, it aided Microsoft in speeding up Windows and being able to add more features and heavier ones. As people used Windows and wanted faster speed and greater capabilities, it sparked Intel to boost their chips, knowing there was a place to sell them, and make more money by doing so. You could say it is a synergistic relationship between those two firms that in combination has aided them both.
Now, I realize you might object somewhat and insist that Microsoft and Intel are not competitors per se, thus, the suggestion that this was two competitors that found a means to cooperate seems either an unfair characterization or a false one. You’d be somewhat on the mark to have noticed that they don’t seem to be direct competitors, though they could be if they wanted to do so (Microsoft could easily get into the chip business, Intel could easily get into the OS business, and they’ve both dabbled in each other’s pond from time-to-time). Certainly, though it’s not as strong straight-ahead competition example as would be the USPS, FedEx, UPS kind of cooperative arrangement.
There’s a word used to depict the mash-up of competition and cooperation, namely coopetition.
The word coopetition grew into prominence in the 1990s. Some people instantly react to the notion of being both a competitor and a cooperator as though it’s a crazy idea. What, give away my secrets to my competition, are you nuts? Indeed, trying to pull-off a coopetition can be tricky, as I’ll describe further herein. Please also be aware that occasionally you’ll see the use of the more informal phrasing of “frenemy” to depict a similar notion (another kind of mash-up, this one being between the word “friend” and the word “enemy”).
There are those that instantly recoil in horror at the idea of coopetition and their knee jerk reaction is that it must be utterly illegal. They assume that there must be laws that prevent such a thing. Generally, depending upon how the coopetition is arranged, there’s nothing illegal about it per se. The coopetition can though veer in a direction that raises legal concerns and thus the participants need to be especially careful about what they do, how they do it, and what impact it has on the marketplace.
It’s not particularly the potential for legal difficulties that tends to keep coopetition from happening. By and large, the means to structure a coopetition arrangement, via say putting together a consortium, it can be done with relatively little effort and cost. The real question and the bigger difficulty is whether the competing firms are able to find middle ground that allows them to enter into a coopetition agreement.
Think about today’s major high-tech firms.
Most of them are run by strong CEO’s or founders that relish being bold and love smashing their competition. They often drive their firm to have a kind of intense “hatred” for the competition and want their firm to crush the competition. Within a firm, there is often a cultural milieu formed that their firm is far superior, and the competition is unquestionably inferior. Your firm is a winner, the competing firm is a loser. That being said, they don’t want you to let down your guard, in the sense that though the other firm is an alleged loser, they can pop-up at any moment and be on the attack, so you need to be on your guard. To some degree, there’s a begrudging respect for the competition, paradoxically mixed with disdain for the competition.
These strong personalities will generally tend to keep the competitive juices going and not permit the possibility of a coopetition option. On the other hand, even these strong personalities can be motivated to consider the coopetition approach, if the circumstances or the deal looks attractive enough. With a desire to get bigger and stronger, if it seems like a coopetition could get you there, the most egocentric of leaders is willing to give the matter some thought. Of course, it’s got to be incredibly compelling, but at least it is worthy of consideration and not out of hand to float the idea.
What could be compelling?
Here’s a number for you, $7 trillion dollars.
Allow me to explain.
At the Cybernetic AI Self-Driving Car Institute, we are developing AI software for self-driving cars. We do so because it’s going to be a gargantuan market, and because it’s exciting to be creating something that’s on par with a moonshot.
See my article about how making AI self-driving cars is like a moonshot:https://aitrends.com/selfdrivingcars/self-driving-car-mother-ai-projects-moonshot/
See my article that provides a framework about AI self-driving cars:https://aitrends.com/ai-insider/framework-ai-self-driving-driverless-cars-big-picture/
Total AI Self-Driving Car Market Estimated at $7 Trillion
Suppose you were the head of a car maker, or the head of a high-tech firm that wanted or is making tech for cars, and I told you that the potential market for AI self-driving cars is estimated at $7 trillion dollars by the year 2050 (as predicted in Fortune magazine, see: http://fortune.com/2017/06/03/autonomous-vehicles-market/).
That’s right, I said $7 trillion dollars. It’s a lot of money. It’s a boatload, and more, of money. The odds are that you would want to do whatever you could to get a piece of that action. Even a small slice, let’s say just a few percentages, would make your firm huge.
Furthermore, consider things from the other side of that coin. Suppose you don’t get a piece of that pie. Whatever else you are doing is likely to become crumbs. If you are making conventional cars, the odds are that few will want to buy them anymore. There are some AI self-driving car pundits that are even suggesting that conventional cars would be outlawed by 2050. The logic is that if you have conventional cars being driven by humans on our roadways in the 2050’s, it will muck up the potential nirvana of having all AI self-driving cars that presumably will be able to work in unison and thus get us to the vaunted zero fatalities goal.
For my article that debunks the zero fatalities goal, see:https://aitrends.com/selfdrivingcars/self-driving-cars-zero-fatalities-zero-chance/
If you are a high-tech firm and you’ve not gotten into the AI self-driving car realm, your fear is that you’ll also miss out on the $7 trillion dollar prize. Suppose that your high-tech competitor got into AI self-driving cars early on and they became the standard, kind of like how there was a fight between VHS and Betamax. Maybe it’s wisest to get into things early and become the standard.
Or, alternatively, maybe the early arrivers will waste a lot of money trying to figure out what to do, so instead of falling into that trap, you wait on the periphery, avoiding the drain of resources, and then jump in once the others have flailed around. Many in Silicon Valley seem to believe that you have to be the first into a new realm. This is actually a false awareness since many of the most prominent firms in many areas weren’t there first, they instead came along somewhat after others had poked and tried and based on the heels of those true first attempts did the other firm step in and become a household name.
Let’s return to the notion of coopetition. I assume we can agree that generally the auto makers aren’t very likely to want to be cooperative with each other and usually consider themselves head-on competitors. I realize there have been exceptions, such as the deal that PSA Peugeot Citroen and Toyota made to produce the Peugeot 107 and the Toyota Aygo, but those such arrangements are somewhat sparse. Likewise, the high-tech firms tend to strive towards being competitive with each other, rather than cooperative. Again, there are exceptions such as a willingness to serve on groups that are putting together standards and protocols for various architectural and interface aspects (think of the World Wide Web Consortium, W3C, as an example).
We’ve certainly already seen that auto makers and high-tech firms are willing to team-up for the AI self-driving cars realm.
In that sense, it’s kind of akin to the Wintel type of arrangement. I don’t think we’d infer they are true coopetition arrangements since they weren’t especially competing to begin with. Google’s Waymo has teamed up with Chrysler to outfit the Pacifica minivans with AI self-driving car aspects. Those two firms weren’t especially competitors. I realize you could assert that Google could get into the car business and be an auto maker if it wanted to, which is quite the case and they could buy their way in or even start something from scratch. You could also assert that Chrysler is doing its own work on high-tech aspects for AI self-driving cars and in that manner might be competing with Waymo. It just doesn’t though quite add-up to them being true competitors per se, at least not right now.
So, let’s put to the side the myriad of auto maker and high-tech firm cooperatives underway and say that we aren’t going to label those as coopetitions. Again, I realize you can argue the point and might say that even if they aren’t competitors today, they could become competitors a decade from now. Yes, I get that. Just go along with me on this for now and we can keep in mind the future possibilities too.
Consider these thought provoking questions:
- Could we get the auto makers to come together into a coopetition arrangement to establish the basis for AI self-driving cars?
- Could we get the high-tech firms to come together into a coopetition arrangement to establish the basis for AI self-driving cars?
- Could we get the auto makers and tech firms that are already in bed with each other to altogether come together to enter into a coopetition arrangement?
I get asked these questions during a number of my industry talks. There are some that believe the goal of achieving AI self-driving cars is so crucial for society, so important for the benefit of mankind, that it would be best if all of these firms could come together, shake hands, and forge the basis for AI self-driving cars.
For my article about idealists in AI self-driving cars, see:https://aitrends.com/selfdrivingcars/idealism-and-ai-self-driving-cars/
Why would these firms be willing to do this? Shouldn’t they instead be wanting to “win” and become the standard for AI self-driving cars? The tempting $7 trillion dollars is a pretty alluring pot of gold. Seems premature to already throw in the towel and allow other firms to grab a piece of the pie. Maybe your efforts will knock them out of the picture. You’ll have the whole kit and caboodle yourself.
Those proposing a coopetition notion for AI self-driving cars are worried that the rather “isolated” attempts by each of the auto makers and the tech firms is going either lead to failure in terms of true AI self-driving cars, or it will stretch out for a much longer time than needed. Suppose you could have true AI self-driving cars by the year 2030, if you did a coopetition deal, versus that suppose it wasn’t until 2050 or 2060 that true AI self-driving cars would emerge. This means that for perhaps 20 or 30 years there could have been true AI self-driving cars, doing so to the benefit of us all, and yet we let it slip off due to being “selfish” and allowing the AI self-driving car makers to duke it out.
For selfishness and AI self-driving cars, see my article:https://aitrends.com/selfdrivingcars/selfishness-self-driving-cars-ai-greed-good/
You’ve likely see science fictions movies about a giant meteor that is going to strike earth and destroy all that we have, or an alien force from Mars that is heading to earth and likely to enslave us all. In those cases, there has been a larger foe to contend with. As such, it got all of the countries of the world to set aside their differences and band together to try and defeat the larger foe. I’m not saying that would happen in real life, and perhaps instead everyone would tear each other apart, but anyway, let’s go with the happy face scenario and say that when faced with tough times, we could get together those that otherwise despise each other or see each other as their enemies, and they would become cooperative.
That’s what some want to have happen in the AI self-driving cars realm. The bigger foe is the number of annual fatalities due to car accidents. The bigger foe also includes the issue of a lack of democratization of mobility, which is what it is hoped that AI self-driving cars will bring forth, a greater democratization. The bigger foe is the need to increase mobility for those that aren’t able to be mobile. In other words, the basket of benefits for AI self-driving cars, and the basket of woes that it will overturn, the belief is that for those reasons the auto makers and tech firms should band together into a coopetition.
Zero-Sum Versus Coopetition in Game Theory
Game theory comes to play in coopetition.
If you believe in a zero-sum game, whereby the pie is just one size and those that get a bigger piece of the pie are doing so at the loss of others that will get a smaller piece of the pie, the win-lose perspective makes it hard to consider participating in a coopetition. On the other hand, if it could be a win-win possibility, whereby the pie can be made bigger, and thus the participants each get sizable pieces of pie, it makes being in the coopetition seemingly more sensible.
How would things fare in the AI self-driving cars realm? Suppose that an auto maker X that has teamed up with high-tech firm Y, they are the XY team, and they are frantically trying to be the first with a true AI self-driving car. Meanwhile, we’ve got auto maker Q and its high-tech partner firm Z, and so the QZ team is also frantically trying to put together a true AI self-driving car.
Would XY be willing to get into a coopetition with QZ, and would QZ want to get into a coopetition with XY?
If XY believes they need no help and will be able to achieve an AI self-driving car and do so on a timely basis and possibly beat the competition, it seems unlikely they would perceive value in doing the coopetition. You can say the same about QZ, namely, if they think they are going to be the winner, there’s little incentive to get into the coopetition.
Some would argue that they could potentially shave on costs of trying to achieve an AI self-driving car by joining together. Pool resources. Do R&D together. They could possibly do some kind of technology transfer amongst each other, with one having gotten more advanced in some area than the other, and thus they trade with each on the things they each have gotten farthest along on. There’s a steep learning curve on the latest in AI and so the XY and QZ could perhaps boost each other up that learning curve. Seems like the benefits of being in a coopetition are convincing.
And, it is already the case that these auto makers and tech firms are eyeing each other. They each are intently desirous of knowing how far along the other is. They are hiring away key people from each other. Some would even say there is industrial espionage underway. Plus, in some cases, there are AI self-driving car developers that appear to have stepped over the line and stolen secrets about AI self-driving cars.
See my article about the stealing of secrets of AI self-driving cars:https://aitrends.com/selfdrivingcars/stealing-secrets-about-ai-self-driving-cars/
This coopetition is not so easy to arrange, let alone to even consider. You are the CEO of the auto maker X, which has already forged a relationship with the high-tech firm Y. The marketplace perceives that you are doing the right thing and moving forward with AI self-driving cars. This is a crucial perception for any auto maker, since we’ve already seen that the auto makers will get drummed by the marketplace, such as their shares dropping, if they don’t seem to be committed to achieving an AI self-driving car. It’s become a key determiner for the auto maker and its leadership.
The marketplace figures that your firm, you the auto maker, will be able to achieve AI self-driving cars and that consumers will flock to your cars. Consumers will be delighted that you have AI self-driving cars. The other auto makers will fall far behind in terms of sales as everyone switches over to you. In light of that expectation, it would be somewhat risky to come out and say that you’ve decided to do a coopetition with your major competitors.
I’d bet that there would be a stock drop as the marketplace reacted to this approach. If all the auto makers were in the coopetition, I suppose you could say that the money couldn’t flow anywhere else anyway.
On the other hand, if only some of the auto makers were in the coopetition, it would force the marketplace into making a bet. You might put your money into the auto makers that are in the coopetition, under the belief they will succeed first, or you might put your money into the other auto makers that are outside the coopetition, under the belief they will win and win bigger because they aren’t having to share the pie.
Speaking of which, what would be the arrangement for the coopetition? Would all of the members participating have equal use of the AI self-driving car technologies developed? Would they be in the coopetition forever or only until a true AI self-driving car was achieved, or until some other time or ending state? Could they take whatever they got from the coopetition and use it in whatever they wanted, or would there be restrictions? And so on.
I’d bet that the coopetition would have a lot of tension. There is always bound to be professional differences of opinion. A member of the coopetition might believe that LIDAR is essential to achieving a true AI self-driving car, while some other member says they don’t believe in LIDAR and see it as a false hope and a waste of time. How would the coopetition deal with this?
For other aspects about differences in opinions about AI self-driving car designs, see my article: https://aitrends.com/selfdrivingcars/crossing-the-rubicon-and-ai-self-driving-cars/
Also, see my article about egocentric designs:https://aitrends.com/selfdrivingcars/egocentric-design-and-ai-self-driving-cars/
Normally, a coopetition is likely to be formulated when the competitors are willing to find a common means to contend with something that is relatively non-strategic to their core business. If you believe that AI self-driving cars are the future of the automobile, it’s hard to see that it wouldn’t be considered strategic to the core business. Indeed, even though today we don’t necessarily think of AI self-driving cars as a strategic core per se, because it’s still so early in the life cycle, anyone with a bit of vision can see that soon enough it will be.
If the auto makers did get together in a coopetition, and they all ended-up with the same AI self-driving car technology, how else would they differentiate themselves in the marketplace? I realize you can say that even today the auto makers are pretty much the same in the sense that they offer a car that has an engine and has a transmission, etc. The “technology” you might say is about the same, and yet they do seem to differentiate each other. Often, the differentiation is more on style of the car, the looks of the car, rather than the tech side of things.
For how auto makers might be marketing AI self-driving cars in the future, see my article: https://aitrends.com/selfdrivingcars/marketing-self-driving-cars-new-paradigms/
For those that believe that the AI part of the self-driving car will end-up being the same for cars of the future, and it won’t be a differentiator to the marketplace, this admittedly makes the case for banding into a coopetition on the high-tech stuff. If the auto makers believe that the AI will be a commodity item, why not get into a coopetition, figure this arcane high-tech AI stuff out, and be done with it. No sense in fighting over something that anyway is going to be generic across the board.
At this time, it appears that the auto makers believe they can reach a higher value by creating their own AI self-driving car, doing so in conjunction with a particular high-tech firm that they’ve chosen, rather than doing so via a coopetition. Some have wondered if we’ll see a high-tech firm that opts to build its own car, maybe from scratch, but so far that doesn’t seem to be the case (in spite of the rumors about Apple, for example). There are some firms that are developing both the car and the high-tech themselves, such as Tesla, and see no need to band with another firm, as yet.
Right now, the forces appear to be swayed toward the don’t side of doing a coopetition. Things could change. Suppose that no one is able to achieve a true AI self-driving car? It could be that the pressures become large enough (the bigger foe) that they auto makers and tech firms consider the coopetition notion. Or, maybe the government decides to step in and forces some kind of coopetition, doing so under the belief that it is a societal matter and regulatory guidance is needed to get us to true AI self-driving cars. Or, maybe indeed aliens from Mars start to head here and we realize that if we just had AI self-driving cars we’d be able to fend them off.
For my piece about conspiracy theories and AI self-driving cars, see:https://aitrends.com/selfdrivingcars/conspiracy-theories-about-ai-self-driving-cars/
There’s the old line about if you can’t beat them, join them. For the moment, it’s assumed that the ability to beat them is greater than the join them alternative. The year 2050 is still off in the future and anything might happen on the path to that $7 trillion dollars.
Copyright 2018 Dr. Lance Eliot
This content is originally posted on AI Trends.