The Right Game: Use Game Theory to Shape Strategy

Theory of Games and Economic Behavior

John von Neumann

Oskar Morgenstern

Rule based games "rules of engagement"

Free wheeling games no external contraints

For ever action there is a reaction

You can not take away more than you bring in

Focus on the choices of the other player(s)

Lose-lose to win-win

GM example WIN-WIN

Anticipate your competition

Greater chance new opportunities

Less resistance from competitors

Doesn't force competition to retaliate

imitation is beneficial

Game of Business

Creating Value

Capturing Value

Value Net

interact as transactions

Vertical Dimensions Company's customer and suppliers

Does not transact

Horizontal dimension are Substitutors and Complementors

Elements of the Game

PARTS

added values

rules

tactics

scope

Players

players are customers, suppliers, substitutors,
and complementors

what each player brings to the
game

a rule might arise
from law, custom, practicality, or contracts

shape the way players
perceive the game and hence how they play

the boundaries of the game

NetraSweet Example

TWA Example

Nintendo Power

Kiwi Air Lines

New Your Daily News

Sega Example

Traps of Strategy

Don't accept the game! You can change it

Don't think that changing must come at the expense of others. Look for cooperation

Don't think that you have to find
something to do that others can’t. Others will always imitate

Be sure to see the whole game.
What you don’t see, you can’t change.

Don't fail to think methodically
about changing the game.Be allocentric,
not egocentric.

"There is, after all, no end to the game of changing
the game"