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Coopetition: Why it is vital for the success of the Independent Schools Sector

12/10/2016

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by David Winfield

David Winfield, BSc. (Hons) Economics and Politics, PGCE, QTS, Founder & CEO Independent Schools Portal.

and Karen Burns

Karen Burns, BSc. (Hons) Economics and Accountancy, Commercial Director, Independent Schools Portal
In the face of increasing competition from the state sector, rising costs and the increasingly limited scope for fee increases, Independent Schools can draw  inspiration from private enterprise ​
where the ​phenomenon of ‘coopetition’ is being increasingly used not only to defend market share and profitability, but to grow it.
'Coopetition' is all about understanding how other organisations can complement and improve the services that you provide, to make your organisation stronger. These ‘complementers’ don’t necessarily have to be working in a different or related sector. They can be your direct competitors. For example, distribution firms UPS and DHL collaborated in Asia because many businesses enjoyed UPS’ service levels, but they lacked DHL’s logistics network. Therefore to keep customers, these two ferocious competitors were forced to cooperate in the interests of clients.
That independent schools benefit from coopetition is well understood, if not formally articulated; they have long sought to amplify the influence they wield with policy makers through their respective member associations and there are well developed co-curricular activities to extend pupils through competitive sport and arts events.

​
What is perhaps less appreciated in the education sector is that private enterprise is developing new models of competition, often in incredibly cut-throat markets, that contain strong collaborative strands: This allows all organisations who are part of a collaborative project to become stronger both individually and collectively.

One of the most famous historical examples of 'coopetition in action' was when Citibank in the United States launched the very first cashpoint machines. When Citibank’s rivals followed suit in subsequent years, they also established a ‘network cluster group’ whereby debit cards from any participating bank would work in any cashpoint. The principle behind this form of coopetition was that everyone’s cards would become more valuable as a result. Citibank were invited to join the network from the outset, but at first refused to do so. This devalued their cards and they lost market share as a result… and so were eventually forced to join.

Increasing amounts of research are being undertaken into this area of business economics, led by Paul Hughes at Durham University and Dr. Jinqui Cai at Loughborough University, and they are developing approaches that allow organisations to consider whether and how their competitors can also be complementors. They have identified 4 key questions that must be understood before embarking on a coopetition project:
​
  • Who are my competitors?
  • What are their strengths and weaknesses?
  • Can any of my competitors become my complementors and vice-versa?
  • ​Can I establish beneficial relationships with these organisations?
Most headteachers and governing bodies instinctively know who their competitors are within the independent sector, along with their strengths and weaknesses. They will already also likely have good links with them; the opportunity for independent schools lies in deepening those relationships and in understanding the imperative to do so.
​

The market drivers for coopetition in education are clear: A stagnating market for independent education, driven by the well resourced and improving quality of state provision (especially in London and the south), as well as increasing academic selectivity in the maintained sector and limited scope for fee increases. New educational marketplace entrants in the form of Academy chains, Grammar and Free schools represent an existential threat for some, and have the potential to cause significant pain for many.
So how can independent schools deepen collaborative relationships to quickly generate practical, tangible benefits?
​
  • Sharing best teaching practice and resources boosts professional development through improved knowledge, shared experiences, widened networks and by making colleagues more efficient. Collaboration in this area has a direct impact on teaching, learning and pupil outcomes. It makes all participating schools stronger by improving the quality of their end product.
  • Collective purchasing power could be used more widely to drive down the cost of resources from suppliers. For example, instead of renting 6 photocopiers for your school, how much would be saved on those 6 if you were renting 60 or 600 as part of a collaborative purchasing group? Schools generally buy similar things, at similar times and could stretch budgets much further through collaborative purchasing processes - improving resource availability for all.
  • Co-operation in professional services is now common-place in industry. For example, Wineries from the same region often share marketing costs and expertise and hold trade shows to promote the excellence of their area. Many firms now also outsource more mundane financial administration tasks such as payroll and income collection.  These are just two areas where the independent sector could take advantage of coopetition, and there are many more.
  • Limited resources are often a huge problem for small and medium size businesses - which is what most independent schools are, of course. Competing manufacturers will often share production capacity through sub-contracts and will also base future individual investment decisions in-part based upon the collective manufacturing requirements of the group. This allows them to gain market share by competing with bigger companies, or grow the overall market as a whole by improving quality. Clusters of schools could potentially derive enormous benefit by applying this approach to facilities and this could over time significantly deleverage many schools by avoiding wasteful duplication of assets.
In order to make coopetition work, the Durham and Loughborough research teams identified some key areas for organisations to consider:
  • What is the scope and boundaries of the coopetition?
  • Which employees will be involved?
  • Do any confidentiality agreements need to be signed?
  • Employees involved in coordinating coopetition should not also be involved in direct competition as this leads to role ambiguity.

This final point is one of the unique benefits of the Independent Schools Portal. Portal technology provides a means of direct communication and collaboration between individual schools, but more importantly, the Portal commercial team provides impartial coordination and project oversight for the benefit of all.

Independent Schools have secured returns from elements of coopetition over a long period of time and understand it's value. What the recent research and case studies have highlighted is that schools could derive significant additional benefits by revisiting their coopetition strategy as a development area, with a view to deepening and extending relationships with competitor schools for the benefit of all.


​If you would like to discuss how coopetition might deliver benefits to your school, and how it might work in practice, please contact Karen Burns, Portal Commercial Director, in the first instance to arrange an informal discussion.
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