Sleeping with the enemy

Written by Rick Spence

Superman teaming up with Lex Luthor? Blade working with vampires instead of slaying them?

It happens often. Whenever fiction writers need a spark of creative energy, they reverse their routine and make heroes work with enemies. It lets the writers explore new levels of interaction, and usually results in each side learning from the other.

Surprisingly, this could also work in your business.

John Breakey, co-founder and CEO of systems integrator Unis Lumin Inc. in Oakville, Ont., is a relentless student of business. In his spare time, he chairs Innovators Alliance, a self-help association that puts Ontario entrepreneurs into non-competitive groups for professional development and knowledge-sharing. But he has also co-founded a coalition of competitors. The group set out to share knowledge and help each other whenever possible, but it’s working so well that the 16 member companies are repositioning their alliance as a marketing powerhouse.

Breakey admits there can be tensions, but he sees the process as a natural evolution. It’s a model that could work whenever geographically diverse competitors can draw on each other’s expertise to serve their clients better.

Working with competitors is nothing new at Unis Lumin, which designs and builds data networks and e-business systems for major organizations. “We’re bidding against Rogers for a piece of long-distance and data work, but we also do business with Rogers,” says Breakey. “Sometimes we kick IBM’s ass on projects, and sometimes we’re joint-bidding a deal.”

But few competitors get as cozy as the members of the coalition Breakey co-founded in 1998, 1nService (pronounced “one in service”). At the time, big clients were urging Breakey to take Unis Lumin North America-wide so its people could work on their systems all across the continent. Wary of expanding too quickly, Breakey created a “reciprocal referral network” for systems integrators around the continent. If a client office in New York or Seattle wants work done, Breakey can call in trusted local experts whenever that’s more efficient than sending his own teams. Started with eight companies, 1nService now has 16 members in 14 U.S. cities plus Toronto and Calgary, and is negotiating with a potential member in Halifax.

The coalition lets each integrator accept bigger projects than normal, or tap partners for expertise they lack. In all, Breakey says, Unis Lumin subcontracts out about 5% to 10% of its work to competitors but garners 20% of its revenue from deals with rivals.

There’s a longer-term benefit, too. The CEOs and heads of sales and technology hold monthly teleconferences with their peers, in which they talk shop and discuss common problems, such as setting sales commissions. “Life is a great teacher,” says Breakey. “The only problem is, life gives you the test before the lesson. If we can teach each other what we’ve already learned, we can save time and money.”

The CEOs also meet in person four times a year, while an annual conference unites each firm’s top three people for four days of seminars and problem-solving. In February, the groups were scheduled to meet in San Jose, Calif., to meet vendors, take part in panels on network convergence and security, and get fired up about teamwork with a speech from “Wingman” Waldo Waldman, a former U.S. Air Force fighter pilot.

Of course, teaming up with potential competitors can leave smaller firms out on a wing. Recently, one contractor (not a 1nService member) violated a written agreement with Breakey and tried to hire away some of his employees. “That’s [a] real danger,” says Breakey. “They get exposed to some of your people and you end up getting poached.” None of his staff accepted, but, says Breakey, “We won’t do business with him again.” The incident prompted Breakey to beef up his contracts; now he demands that partnering contractors pay a $100,000 penalty if they steal his staff. Breakey isn’t sure how enforceable that is, but he knows it will make his partners think twice.

Breakey dismisses concerns that partners who are also rivals will steal your pricing secrets: “At the end of the day, your competitor can always figure out your prices. It’s not a huge deal. Our ‘secret sauce’ is the culture of our company, not a particular price book.” Still, he imposes strict rules on what his people can talk about with staff from other companies: no discussing the size of the company, number of staff or other projects.

Breakey says formal networks help control partners’ behaviour. 1nService vets new members carefully and imposes a code of conduct that covers everything from confidentiality to ground rules for moving into each other’s territory. Plus, developing personal relationships is key, says Breakey: “If they screw up, they know they have to face me.”

In fact, clients who have worked with 1nService have said it’s “better integrated than IBM.” When multinationals hand off a client project to a local office, the partners have probably never even met the local people. “I know what my partners can do because I get to know them,” says Breakey.

In fact, that sense of unity is launching 1nService into its next phase. Jo Miller, the network’s Minneapolis-based director of partner relations, is leading a branding initiative that will position 1nService as a seamless provider of one-stop solutions rivalling industry giants. “We may be individual companies, but we’re looking at them as individual offices,” she says. With combined revenue of US$450 million, 1nService is ready to fly high. And Superman would surely approve.

© 2006 Rick Spence

Originally appeared on PROFITguide.com