Integrative thinking with clusters: Competing through cooperation

Integrative thinking with clusters: Competing through cooperation

Integrative Thinking

In their book Creating Great Choices: A Leader’s Guide to Integrative Thinking, Roger Martin and Jennifer Riel discuss how the concept of integrative thinking can be used to find novel solutions to business problems. According to Roger Martin, integrative thinking is “the ability to face constructively the tension of opposing ideas and, instead of choosing one at the expense of the other, generate a creative resolution of the tension in the form of a new idea that contains elements of the opposing ideas.”[1] Integrative thinking solutions challenge conventional wisdom by seeking out a novel, third way when faced with tensions rather than settling for a trade-off or compromise.

Integrative thinking is a tool that cluster organizations can use to solve virtually any problem they are facing. In constantly changing economic environments, cluster organizations are tasked with catalyzing the competitiveness of member firms. Firms within a cluster have the objective of maximizing profit either through competition (reducing costs, product differentiation, etc.) or by cooperating with competitors to achieve a common goal. But by choosing competition over cooperation or vice versa, a cluster organization will have to make a sacrifice in the trade-off, so neither choice is optimal. What then, is a case study of an integrative solution? 

Towards a coopetition strategy

A cluster organization that encourages competition has some distinct advantages. Firms can be supported by encouraging innovation and differentiation or by lowering costs. By solely focusing on competitiveness, however, firms forgo the ability to work towards a common goal such as tapping into foreign markets. On the other hand, cooperation between firms can remedy this issue, but the drawback is that it does not necessarily make local firms more attractive on regional or global markets. Furthermore, firms are entities that act alone and generally not for the greater good which makes cooperation difficult, if not impossible. Integrative thinking can lead to an ideal solution with elements of both: have firms cooperate with each other towards a common goal while also competing against each other, also known as ‘coopetition.’

Consider this arrangement as a two-stage game through the lens of game theory. Ultimately, each firm within a cluster seeks to maximize its own profit. A coopetition strategy can be implemented by taking advantage of this fact in which firms cooperate in stage one and are free to act independently during the second stage of the strategy. A cluster organization’s role is to catalyze the cooperation stage of this strategy since firms generally face significant barriers such as a lack of time, resources, or even trust.  Through cooperation in the first stage, companies understand that the whole is greater than the sum of the parts as they are able to work together to accomplish an otherwise unreachable a goal. Once a common goal is attained, the first stage is concluded and the group is no longer necessary. During the second stage, firms will optimize their own strategies by competing once again with each other on the basis of cost effectiveness or differentiation.

Case study: Coopetition in a Tuscan nautical cluster

Toscana Promozione (TP) is a regional agency founded to promote the internationalization of firms located in Tuscany, Italy in response to declining business opportunities around the turn of the millennium. TP takes advantage of the reputation Tuscany has as a place of deep historical and cultural influence and pushes “Brand Tuscany” internationally as a symbol of high quality, luxurious products. Tuscany’s nautical cluster has particularly benefited from TP’s branding image as well as through its support in promoting international partnerships through coopetition.

Resolving Tensions

Viareggio, Tuscany is known internationally for having one of the most elite yachting industries in the world thanks to firms that combine functionality with aesthetic design. In this cluster, many firms come together to provide services ranging from software solutions to boat production and refitting solutions. As yachting is a niche activity targeted mainly towards the wealthy, Tuscany had difficulty maintaining business during the economic recession. Austerity in the European Union meant that there were fewer potential customers willing to purchase yachts and/or services, so increasing competitiveness would have had little effect for firms. The only option is to seek out new opportunities abroad and so the nautical cluster enlisted the help of TP.

Toscana Promozione understood that competition alone was not enough to save the nautical cluster. Ideally, firms would cooperate in order to expand into new markets, but they lacked the resources to do so. To overcome these setbacks, TP set their sights on the Visun Group, a Shenzhen-based company that develops luxury real estate on China’s Hainan Island, as a potential destination to export services. It leveraged its status as a regional agency to build connections with local Chinese authorities that individual firms would not have been able to do own. From there, TP led a delegation of local yacht firms on a trade mission to the Visun Group and put forth a proposal to establish a yachting service center on Hainan Island. After inviting the Visun Group to Tuscany to see first-hand the services offered by the nautical cluster, a deal was signed that saw the joint establishment of an over 60,000 m2 yacht service center on Hainan Island.

Toscana Promozione’s financial and legal consulting support during the first, cooperation stage was crucial in bringing Tuscany’s nautical cluster to new, international markets. Cooperating with each other by joining TP in a delegation both reinforced the image that Tuscany is truly a luxurious brand and that the region is just as serious about business as it is about providing a world-class experience. Once a deal was signed and Italian yacht firms could operate on Hainan, firms returned to providing the best quality products through competition. Integrative thinking was instrumental in resolving the tension between cooperation and competition to arrive at an optimal solution.

Integrative thinking is a powerful method for resolving tensions between opposing ideas by creating a resolution that takes elements of each idea yet is superior to both. Many applications of integrative thinking are directly applicable to clusters or easily scaled up. To take advantage of the same benefits as Toscana Promozione, clusters, organizations, and businesses should incorporate the versatility of integrative thinking into their everyday operations.

To learn more about building successful clusters register for TCI 2018, the leading global clusters conference for businesses, government, and academia to make unexpected connections for economic growth and shared prosperity: www.tci2018.org.

Written by: Weseem Ahmed

Photo credit: oneren, istock

 

[1] I-Think. "What is integrative thinking?" Rotman I-Think. Accessed September 25, 2018. http://www.rotmanithink.ca/what-is-integrative-thinking/ 

Category: Training, Skills, Budgets, Clusters, Innovation