Companies & Industries

The New Language of Competition


Friend or foe? Companies have to learn to be friends with and foes of other companies with whom they do business

Posted on Game Changer: Sept. 16, 2007, at 3:23 p.m..

I'm just back from London, where I participated in an idea summit organized by WPP, one of the world's leading marketing-communications groups. The highlight of the day for me was a talk by Sir Martin Sorrell, WPP's founder and CEO, and a true game changer in the realms of marketing, media, and strategy.

Back in my days running Fast Company, I had the chance to conduct an in-depth interview with Sir Martin, and he offered truly original insights into strategy, competition, and the global economy. Last week in London he did it again.

Sir Martin painted a mesmerizing picture of the still-underestimated power of China. The country is producing 465,000 engineers per year, he noted, while the US produces 56,000 per year. China Telecom alone has 340 million subscribers—40 million more customers than there are people in the United States.

He also identified a defining challenge for big companies everywhere. On the one hand, there is vast oversupply of products. From cars to computers, dishwashers to disk drives, there are too many makes, models, and brands chasing too few customers. At the same time, there is a worsening shortage of talent—making it tougher for giant companies to find the brainpower they need to win.

But for me, the most striking insight came from Sir Martin's discussion of the competitive dynamic between his firm—a global marketing powerhouse—and digital powerhouses such as Google. One participant wondered: Are the new Internet giants allies of or rivals to marketing giants such as WPP?

Certainly, Google is a business partner of WPP, Sir Martin replied. (In fact, WPP is Google's biggest customer.) At the same time, he explained, Google aspires to play a bigger and bigger role in how advertising works, from print to radio to the Web. In other words, the Internet giants are both friends and foes—or "froes," to use Sir Martin's phrase. They are both friends and enemies—or "frenemies," to use his other phrase.

Froes. Frenemies. Those clever little terms capture a huge transformation in competition. Think of the relationship between Apple and the music labels, or between semiconductor companies and PC makers, or between Chinese manufacturers and the Western companies they supply. The neat dividing lines of business are being erased and redrawn. Companies have to learn to be friends with and foes of other companies with whom they do business.

Who are your most valuable froes? Who are your most worrisome frenemies? Have you figured out how to cooperate with and compete against the most important players in your field?

HARVARD BUSINESS ONLINE RECOMMENDS:

Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Hardcover)

Staying Ahead of Your Competition (HBR Article Collection)

Hardball Strategies, 2nd Edition (HBR Article Collection)

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