The Right Game: Use Game Theory to Shape Strategy

1
The Right Game Use Game Theory to Shape Strategy

• Adam M. Brandenburger, Barry J. NalebuffHarvard
  Business Review,
• July-August, 1995

2
The Right Game Use Game Theory to Shape
StrategyAdam 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.

3
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

4
Co-opetition

• Businesses must both cooperate to create value,
  even while competing to divide this value among
  themselves

5
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

6
Competition and Cooperation
7
Elements of the Game

• Players
• Added Values
• What each player adds to the value inherent in
  the total game
• Rules
• Tactics (Perceptions)
• Scope

8
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?

9
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?

10
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
• Free agency in sports

11
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 youre serious

12
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