Every strategic decision a founder makes about a competitor reduces to one question, and most founders have never asked it explicitly: in this arena, right now, am I growing the pie or fighting for a slice? Business is two games played at once. Creating value is a cooperative game: the market gets bigger when customers are educated, infrastructure is shared, and trust in the category rises. Capturing value is a competitive game: the slice you win is a slice someone else does not. Brandenburger and Nalebuff, the Yale and Harvard strategists who built co-opetition theory on game-theoretic foundations, put it plainly: you cooperate to create value and compete to divide it, and firms that only know how to divide routinely destroy the very pie they are fighting over (1)(2). The founder who learns to name which game a given move belongs to stops making the most expensive category of strategic mistake: bringing a knife to a bakery.
Key Takeaways
- Business is two games at once. Value creation is cooperative and grows the market; value capture is competitive and divides it. Confusing the two is the root of most bad compete-or-partner decisions (1)(2).
- The question that settles any move: is most of the value in this arena still uncreated (grow the pie) or already on the table (split the pie)?
- In thin markets, which describes most East African categories, the uncreated value dwarfs the contested value. Africa’s fintech revenues are projected to grow roughly eightfold in a decade, which means today’s rivals are mostly fighting over the sliver that already exists (4).
- Pie-growing moves include category education, shared rails, and interoperability. Mobile money interoperability grew every operator’s volumes, and the sector now moves $1.4 trillion a year in Sub-Saharan Africa (5)(6).
- Fighting for a slice of a pie that does not exist yet is negative-sum: price wars in nascent categories destroy the trust and margin the category needed to form.
- The discipline is the Pie Test, asked before any competitive move: what fraction of this market’s ten-year value exists today, who else gains if it forms, and does this move grow the whole or only my share?
Why do founders default to fighting for slices?
Because competition is visible and creation is abstract. The rival’s shop is across the street; the customers who buy from nobody are invisible. So the instinct under pressure is to undercut, imitate, and outshout the competitor you can see, rather than to enlarge the market you cannot.
The cost of that instinct is highest exactly where most East African founders operate: in thin markets where the category itself is young. When a market is nascent, the real enemy is not the rival. It is ignorance, distrust, and no-decision. Two solar companies educating a district about pay-as-you-go do more for each other’s sales than either does for itself alone; the first company’s customer becomes the second company’s best advertisement, because the category now has proof. Fight instead, and the price war signals to every watching customer that the product is a commodity not worth trusting at full price. The pie shrinks before it ever formed. This is the deep logic explored across the flagship essay of this series: a market has a floor, the shared infrastructure of trust and access that everyone needs, and a ceiling, the differentiated offers where rivalry belongs. The pie question is how you tell which layer you are standing on.
The theory behind this is not motivational poster material. It is game theory. Brandenburger and Nalebuff’s foundational work showed that real business games are neither purely win-lose nor purely win-win; they are both simultaneously, and the players who model only the competitive half systematically underinvest in the moves that would have made everyone, including themselves, richer (1)(2). Their book Co-opetition built the vocabulary an entire generation of strategists now uses, and its first lesson is the one this essay carries: the pie is the point.
What does growing the pie look like in practice?
It looks like the most successful infrastructure story on the continent. For years, mobile money operators ran walled gardens: a Safaricom customer could not send to an Airtel wallet without friction and fees. Every operator was protecting its slice. When interoperability finally arrived, pushed by regulators and eventually embraced by operators, transaction volumes rose across the board, because the network became more useful to every participant the moment it connected (5). The sector that learned to share its rails now processes about $1.4 trillion a year in Sub-Saharan Africa, and the operators’ slices of that enlarged pie dwarf what their walled gardens ever held (6). McKinsey’s projection that African fintech revenues could grow roughly eight times over a decade is a statement about uncreated value: the overwhelming majority of the pie these firms will eat has not been baked yet (4).
The same pattern repeats at every scale. Payment rails like PAPSS are being co-built by banks that compete fiercely for customers, because the rail is the floor and the customer relationship is the ceiling. Airlines that fight for every passenger formed alliances covering shared networks, because no single carrier could build a global route map alone (3). Even the frontier of AI runs on the same grammar: Microsoft funds OpenAI while competing with it, Amazon invests billions in Anthropic and OpenAI at once, because the platform layer grows the pie all of them need (7)(8). For a Kampala founder, the applications are humbler and more decisive: the association that standardizes quality in your sector, the shared cold-storage facility, the joint market-education campaign, the agreement not to poach each other’s trained apprentices for six months. None of these are softness. They are investments in the only asset every competitor holds in common: the size of the market itself.
What is the Pie Test?
Three questions, asked out loud before any competitive move.
First: what fraction of this market’s ten-year value exists today? If the honest answer is a small minority, you are in a creation game, and moves that grow trust, access, and category awareness outrank moves that take share. If the market is mature and saturated, capture logic applies and rivalry is the right posture.
Second: who else gains if this market forms, and can their effort be joined to mine? The complementors and even the competitors who benefit from category growth are potential co-investors in the floor. A rival educating the market is doing you a favor; consider doing it together, deliberately, where the law allows.
Third: does this specific move grow the whole pie or only my share, and at what cost to the whole? Price cuts, exclusivity locks, and talent raids in a nascent category often win a slice while shrinking the pie. The test is not whether the move helps you; it is whether it helps you more than it costs the commons you also depend on.
A founder who runs these three questions weekly will partner more than pride prefers and fight less than fear demands. That is not idealism. It is arithmetic: in a market where most value is uncreated, the return on baking beats the return on knife-fighting, and the founders who understand this are the ones whose firms are still standing when the category finally forms. Faithful stewardship, for the Kingdom-minded builder, includes stewardship of the commons a market runs on; you compete hard on the ceiling precisely because you helped build a floor sturdy enough to compete on.
FAQ
What is the difference between value creation and value capture?
Value creation grows the total worth available in a market: educated customers, shared infrastructure, category trust. Value capture divides that worth among players: pricing, differentiation, share-taking. Every business plays both games at once, and strategy is knowing which move belongs to which game.
When should a business cooperate with competitors?
When most of the market’s value is still uncreated: nascent categories, thin markets, missing infrastructure. Cooperation on the floor (standards, rails, education) grows the pie everyone will divide later. Compete once the value exists and differentiation determines who captures it.
What is the Pie Test?
Three questions before any competitive move: what fraction of this market’s ten-year value exists today; who else gains if the market forms; does this move grow the whole pie or only my share, and at what cost to the whole?
Is growing the pie realistic in East African markets?
It is the dominant logic there. Mobile money interoperability lifted every operator, and African fintech revenue is projected to grow roughly eightfold, meaning today’s contested value is a sliver of what cooperation could create.
Where does the idea come from?
From co-opetition theory, developed by Adam Brandenburger and Barry Nalebuff on game-theoretic foundations: businesses cooperate to create value and compete to divide it, and both games run simultaneously.
Related Reading
- Co-build the Floor, Compete on the Ceiling
- The Value Net: Your Competitor Is Only One of Four Players
- The Five Green Lights for Partnering With a Competitor
- The Single Currency Is Dead: Long Live the Payment Rail
Sources and Evidence
- Brandenburger and Nalebuff, “The Right Game: Use Game Theory to Shape Strategy,” Harvard Business Review (1995): the founding statement of co-opetition, cooperate to create value, compete to divide it.
- Co-opetition (Brandenburger and Nalebuff, 1996), overview: the book that built the vocabulary of simultaneous cooperation and competition.
- Airline alliances, overview: rivals sharing networks no single carrier could build alone.
- McKinsey, “Fintech in Africa: The end of the beginning”: African fintech revenue projected to grow roughly eightfold, most category value uncreated.
- GSMA, “Understanding mobile money interoperability”: interoperability’s evolution and its lift to sector volumes.
- GSMA, “Maturing global mobile money market hits $1.4tn in transaction value”: the scale of the shared-rails economy.
- CNBC, “OpenAI touts Amazon alliance”: frontier-AI co-opetition among rivals and patrons.
- TechCrunch, “AWS boss explains investing billions in both Anthropic and OpenAI”: one investor growing the pie across competing labs.