Co-Opetition - Adam M. Brandenburger [7]
Such techniques for sharing strategic thinking are increasingly needed at all levels of business. Decision making is becoming more complex and more decentralized. Rapid changes in markets and technology require rapid, strategically informed responses. Hence, the number of people in a company who will benefit from applying game theory is growing greater all the time.
Game theory is an approach you can expand and build on. It’s not a particular prescription suited to a particular moment in business history. It’s not a rule of thumb that stops working when conditions change. It’s a way of thinking that survives changing business environments.
In many cases, game theory can suggest options that otherwise might never have been considered. This is a consequence of game theory’s systematic approach. By presenting a more complete picture of each business situation, game theory makes it possible to see aspects of the situation that would otherwise have been ignored. In these neglected aspects, some of the greatest opportunities for business strategy are to be found.
What You’ll Find in This Book
We approach game theory mainly through real-life stories, involving characters and companies you’ll recognize. These stories tell of businesses competing and cooperating, succeeding and failing, sometimes with surprising outcomes. Some are war stories, others are peace stories. In both cases, they are more than anecdotes. We use game theory to explain the successes and failures. Each story is a case study accompanied by a full analysis of the principles involved. We interweave the stories with theory, and summarize the lessons in the form of checklists. This way, our analysis becomes more than descriptive. It becomes prescriptive, too. When you understand why a strategy worked—or didn’t—you can apply the lesson to other situations.
The numerous case studies have other functions as well. They’re not just a device for making the subject more entertaining or for showing how our concepts work in practice. They serve as an ongoing test of our theories. We’re skeptics, and we want you to be skeptical, too. We don’t want you to take what we say on trust. Our goal is to give you enough evidence through case studies to accept or challenge our conclusions. After you’ve seen game theory applied to large numbers of cases, you’ll discover its power, get a feel for how it works, and learn to apply it yourself.
Despite the current surge of interest in applying game theory to business, this is still a very new approach. Much of the terminology is new. In fact, some of the key terms were actually coined during the writing of this book. Even terms that seem familiar take on a new meaning in the context of game theory. Like any theory offering a new perspective, it requires some patience in the beginning. But if our explanations are successful, the new concepts will soon become so much a part of your thinking that you’ll wonder how you ever managed without them.
How This Book Is Organized
Part I, consisting of three chapters, outlines the game of business. It introduces all the basic concepts and shows how they fit together. The present chapter is intended to serve as an orientation session, a kind of advance briefing on where this book will take you.
Chapter 2 describes all the players and analyzes the elements of competition and cooperation among them. To make this clear, we construct a map for the game of business. We call this the Value Net. It’s a diagram that serves as a visual representation of the game of business. The Value Net locates all the various players relative to one another, and identifies the interdependencies among them. It’s particularly useful for pointing out the ways a relationship between players can combine competition and cooperation.
Chapter 3 introduces game theory. We explain how this academic discipline applies