The Right Game: Use Game Theory to Shape Strategy
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The Right Game: The Right Game: Use Game Theory to Use Game Theory to
Shape StrategyShape Strategy
Adam M. Brandenburger, Barry J. Nalebuff
Harvard Business Review,
July-August, 1995
The Right Game: Use Game Theory to Shape Strategy
Adam M. Brandenburger, Barry J. NalebuffHarvard Business Review, July-August, 1995
“Successful business strategy is about actively shaping the game you play, not just playing the game you find.”
Lessons from Game Theory
Look at the situation from the perspective of all others’ involved
Look for win-win, not just win-lose opportunities
Look for opportunities to “change the game” for the better
“Co-opetition”
Businesses must both cooperate to create value, even while competing to divide this value among themselves
The Value Net
Company Customers Suppliers Substitutors
– Companies / products which could substitute for what you have to offer
Complementors– Companies / products which
complement what you have to offer
Competition and Cooperation
Elements of the Game
Players Added Values
– What each player adds to the value inherent in the total game
Rules Tactics (Perceptions) Scope
Changing the Players
Players are participants in the Value Net– The Company itself, and its Customers,
Suppliers, Substitutors, Complementors
– How does the game change as players come in or out?
• Canadian Airlines no longer exists in the Canadian airline industry.
Changing Added Value
What added value does each player bring to the game?– If a player were not participating at all,
how would the value of the overall game be affected?
• Bobby Hull joining the Jets gave the WHA instant credibility.
Changing the Rules
Rules determine how the game is played
– Can the rules be changed to make the game more favorable for one, or for all?
• Guarantees to match lowest price
• Funding rules for universities in Manitoba
Changing Perceptions
Players’ perceptions of the game influences the way they play it.
– Commitment strategies, (as ploys)• Publicly committing to something to make
others perceive you’re serious
Changing the Scope
Scope is the boundaries of the game
– Tying issues together in negotiations• Softwood lumber and energy?
– Opening a “second front” in competition• Hezbullah attacking Israel from Lebanon
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