Doing business with the frenemy

Nik Willets/TM Forum
31 Oct 2014

This article originally appeared in the TM Forum blog

My teenage son recently brought the word ‘frenemy’ back into my slang vocabulary. For the uninitiated, Urban Dictionary defines a ‘frenemy’ as:

Someone who is both friend and enemy, a relationship that is both mutually beneficial or dependent while being competitive, fraught with risk and mistrust.’

In the complex value fabric of the digital economy, almost every B2B relationship has a few ‘frenemy’ characteristics. Inspired by the success of multi-sided digital business models pioneered by companies such as Amazon, businesses across every industry vertical are exploring how they can monetize the capabilities that underpin their success, supplementing their existing revenue channels and opening up new opportunities.

Monetizing what you’re good at isn’t new, but it’s becoming easier and more commonplace in the digital economy. If you have a capability others want, and can expose it digitally, a global marketplace opens up. But it can create some fascinating tensions and relationships between B2B partners.

Contradictory relationships

Often the relationships seem contradictory. For example, Netflix is the largest customer for Amazon’s EC2 cloud platform. Netflix has pushed EC2 to its limits, forging a strong partnership between the two companies to meet its needs. Yet at the same time, Amazon’s Prime content streaming service competes head-on with Netflix – not only for content dollars, but hours as well – a battleground that’s only set to become a lot more heated in the next few years.

Of course, any successful partnership can quickly unravel when the digital landscape shifts. When Apple launched the iPhone in 2007, it featured several embedded Google apps. But just two years later, Eric Schmidt – a founder of Google – resigned his Board seat at Apple as the iOS versus Android battle started to heat up. No doubt Steve Jobs’ impassioned declaration of “I’m going to destroy Android” made for some uncomfortable conversation over coffee. Since then, Google has been relegated in iOS and any sense of a partnership has been lost.

Warring titans of Silicon Valley aside, B2B partnerships are becoming an everyday part of running a successful digital business. Whether you’re selling a capability that underpins your core business, or want to buy access to that capability, success in the digital economy is all about focusing on your strengths and leveraging the strengths of partners to help you succeed.

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