General Motors and Lyft; Target and Walmart; Netflix and Amazon - we call these “frenemies”. A strange trend is emerging as unlikely partner companies join forces, and they’re transforming industries around the world. Understanding what's driving the frenemies trend, knowing what options best fit your needs, and making yourself an effective partner are all critical to success.

1. ˙fren mi/e
noun
a person with whom one is friendly
despite a fundamental rivalry.

2. | 2 |
General Motors invested a half billion dollars into Lyft—a ride
sharing service that provides an alternative to buying a car. Netflix
eliminated its IT infrastructure and instead partnered with
Amazon—which offers a nearly identical, competing media stream-
ing service. Target and Walmart joined forces to build a mobile
payment system consumers can use across dozens of retailers.
A strange trend is emerging as unlikely partners join forces.
Whether they seem more like competitors or seem incompatible
these surprising partnerships are popping up across industries
and includes some of the biggest names in business.
Getting partnerships right can make the difference between decline
and transformative growth. But there isn’t a formula for entering
the perfect relationship. It’s art, not science. It requires taking
some risk, having confidence in your brand, and a vision for tomor-
row that’s bigger than the tasks of today. Understanding what's
driving the frenemies trend, knowing what options best fit your
needs, and making yourself an effective partner are all critical
to success.
HOW
UNEXPECTED
BUSINESS
PARTNERSHIPS
ARE REDEFINING
COMPETITION

3. | 3 |
EXPLAINING
THE WEIRDNESS
Beyond fawning press releases and happy photo-ops, there's a calculation that a
diverse set of business leaders are making. At its most basic, the logic is simple: we
can't do this alone.
Despite their differences, leaders across industries are grappling with a fundamental
economic shift: people no longer buy products, they buy services. Today, automakers
don’t sell cars, they sell mobility. Hotels don’t just sell rooms, they sell wellness.
Telecoms don’t just sell cell phones and service plans, they sell productivity. Products,
software, and other platforms have become the conduit for an experience. And so
across industries companies face similar challenges:
THE NEW SET OF CUSTOMER EXPECTATIONS
Customers increasingly look for a one-stop-shop, fully integrated experience. They
don't want to move between locations or, even different applications, to get the
services and conveniences they demand. That means it is now all about offering a
brand experience: an immersive, curated, custom interaction with customers.
THE QUICKENING PACE OF TECH DISRUPTION
The pace of new technology is challenging every business. For large businesses, the
culture shock is most severe. How do automakers—with lengthy production cycles—
compete with tech companies that churn out new products at a fundamentally different
pace? Organizations are struggling to keep up.
THE EMERGENCE OF PERVASIVE CONNECTIVITY
More and more business assets and customer products communicate with one
another. This change allows under-utilized assets to be identified and deployed
on-demand (part of what’s fueling the gig economy). That's why we see Nordstrom
working with off-hour Uber drivers to provide same-day deliveries.
Customer demands, transformative technology, and pervasive connectivity: companies
now sell high-value experiences over low-margin products. The result is tantalizing
business opportunities that feel just beyond reach, in danger of being captured by
fast-moving newcomers.
Rather than get into a bidding war over the next best thing—or being overtaken by
it—we're seeing big business handle the pressure differently. They're reaching
agreements with old enemies to outsmart the emerging competition. They're creating
friendships with newcomers and parallel industries to benefit from new sources of
innovation without giving up market share (and maybe even growing it). They're seeking
out total opposites to rethink the value chain and the brand experience.
And getting partnerships right starts with understanding your options.

4. | 4 |
IT TAKES TWO: FINDING
THE RIGHT PARTNER
Pressured by customer demand for immersive, comprehensive experiences, competitors are forming partnerships that once seemed
unimaginable. Frenemies, unite!
IF YOU NEED TO
Adapt to changing competition, and
redefine your industry's value proposition.
Double down on your strengths, and
outsource your weaknesses.
Transform what you do, how you do
it, and/or where you do it.
A LOVE-HATE
RELATIONSHIP
A MARRIAGE OF
CONVENIENCE
TO BE THE
ODD COUPLE
"The enemy of my enemy is my friend."
—ancient proverb
"Anything is better alone, but I don't think I
can handle it alone.” —Ernest Hemingway
"We go together because opposites attract."
—Paula Abdul
THEN YOU WANT
IF YOU NEED TO
THEN YOU WANT
IF YOU NEED TO
THEN YOU WANT
When faced with new industry
entrants, old enemies have good
reason to band together. With
disruptive start-ups and fast-changing
technology, competitors are finding
common ground, like setting industry
best practices, co-investing in new
infrastructure to support capabilities,
our developing mechanisms for
sharing cyber security threats. When
the future of your industry is at stake,
partnering with someone who
understands your business as well as
you do—your biggest competitor—can
be surprisingly valuable.
As tech giants forego traditional
industry boundaries—retail, entertain-
ment, manufacturing, payment
processing and more—you'll find that
you compete with a business in one
market, but not in another. For
example, Netflix and Amazon compete
on on-demand video services, but only
Amazon offers cloud services. So
while House of Cards goes head-to-
head with The Man in the High Castle,
Netflix relies on Amazon Web Services
infrastructure. Knowing what your
value proposition is, while remaining
open-minded to find partners to
deliver it to your customers, is
increasingly critical.
To give your customers an integrated
brand experience, you need to
consider every interaction, from the
moment the customer has a want or
need, through purchase and delivery.
But consistency is hard to deliver
when customers demand so much
variety. Delivering a unified experience
across platforms and products—from
your phone to car, to home—can't be
done in isolation, no matter how big
the company. You can't succeed in
isolation or with traditional partner-
ships alone. Don't be afraid of the
unexpected partnership with the pizza
company, the health care conglomer-
ate, or the unique tech start-up.
Those partnerships mean more
opportunities to stay connected to
your customers, increase your
interactions, and grow.

5. | 5 |
IT’S NOT YOU, IT’S ME:
BEING A GOOD PARTNER
These peculiar new partnerships aren't only intriguing, they're increasingly necessary. Finding the right partners is key, but you need to
be a good partner to attract them. It takes the right organization to have the confidence, focus, and agility to get a frenemy alliance right.
Here are some tips:
THE DO'S OF GOOD PARTNERS
DO know where you want to go.
When you see frenemy alliances popping
up all over your industry, there's a natural
impulse to go with the crowd and make a
move. Good idea. But first, make sure you
have a clear sense of where you're going to
know what you need. Define and regularly
evolve this vision by engaging with your
customers and your staff. And it's OK to
adapt your vision with where your partners
are headed. Collaborate, iterate, and shape
the future together.
DO embrace the turbulence.
Could you lose talent, IP, profit, or market
share by partnering with your frenemies?
Yes. Some bad things might happen. But
have confidence that the overall impact
will be positive. Together, you’ll expand your
potential: tapping into new talent and IP;
maximizing R&D funding; and increasing
access to new customer pools. If it feels
like you’re taking a risk, embrace it. The
only thing more risky than joining forces
with your frenemies is doing nothing at all.
DO be real about who you are.
You need to know what you're good at,
what your core business value proposition
is and what you bring to a new partner-
ships. But focusing on strengths is only
one step. You have to admit where you
need help. Make an honest assessment of
your operational limitations. Understand
where you'll struggle to provide new
services to customers. Keep an eye on new
technologies, even when you aren’t sure
exactly how they’ll impact your industry.
Self-assessment, especially when it
becomes part of who you are, helps you
identify the types of partners you need.

6. | 6 |
THE DON'TS OF GOOD PARTNERS
DON'T lose sight of your brand.
The sustainability of your business
depends on your brand. Without it, you risk
going from your special connection to your
customer. As you engage your frenemies,
stay brand conscious. Communicate clearly
about who you are. Your evolution, driven
in part by frenemy alliances, doesn’t have
to undermine your core value proposition.
Don't partner with companies that
have values you can't live with or force
fundamental change in what you do best.
DON’T forget that this about people.
This isn't just about C-suite handshakes
and photo ops. To make a partnership
work, there needs to be open communica-
tions and trust. That requires personal rela-
tionships. The challenge is to find the right
personalities on both sides to champion
connections that make your businesses
better. Internally, you need catalysts who
know how to navigate change, and advo-
cate for the frenemy model. On the flip
side—you need to find the right connection
points into your frenemy. People who get
your business and share your vision, have
clout within their organization, and know
how to play matchmaker.
DON'T go it alone.
Savvy leaders seek partners—big and
small, rather than doing everything
in-house. Even with your strengths,
there's opportunity to do better, faster.
New customers to reach and new services
to offer. While big acquisitions were a
dominant tactic in the old model, they
can be constraining in today's fluid market.
Technology disrupts and customer
demands shift suddenly. Recognizing the
need to quickly learn from others,
companies are increasingly turning to
venture capital investments, R&D partner-
ships, and joint offerings. Diversify your
frenemy relationships so you can readily
adapt. Don’t just bet the business on
one partnership.

7. | 7 |
HAPPILY EVER AFTER
Great advice for navigating these relationships stems from the second law of thermodynamics: entropy.
Over time, your relationship will cool down, and you might drift apart. With your frenemies, that leaves
you two options:
1. Know how to get out. Avoid a quagmire. Have an exit strategy.
2. Keep the relationship fresh. Keep challenging each other, especially when things are going well.
With the right mindset, you'll find success from unconventional partnerships. Together with your diverse
set of frenemies, you can tackle new challenges, inspire your talent, captivate your customers, and
grow your businesses. Of course, an alliance between frenemies will have inherent tension. Remember
that you’re different. The whole point of the frenemy alliance was to benefit from each other’s differenc-
es. The near incompatibility and unlikely partnership is what gives these relationships their power.
Even the best can’t win by themselves anymore. Market leaders will boldly–but smartly–form novel and
surprising relationships. Look for your match now, before the most appealing partners are gone.

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Vice President
labarre_sedar@bah.com
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Principal
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www.boozallen.com