#1: Games managers should play (ZT from Mckinsey Quarterly) (1472 reads) 作者: 八袋长老, 来自: 大陆到小陆时间: 2005-10-17 周一, 17:31 作者:八袋长老 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Games managers should play (ZT)
Game theory can help managers make better strategic decisions when facing the uncertainty of competitive conduct. If you don't change your game to gain advantage, one of your competitors will.
HUGH G. COURTNEY
Call it revenge of the nerds if you like, but many high-school chess club presidents are landing the most coveted strategic-planning positions at major corporations. Chess players realize that good strategic decisions require you to take into account the likely moves and countermoves of other players. They study their competitors’ approaches to the game and identify the likely sequence of moves that will follow any particular move they make. By looking forward and reasoning backward, they drive the game toward a checkmate victory.
This ability to look forward and reason backward is enormously valuable to strategic-decision makers. When a company builds a new chemical plant or paper mill, its profitability will often turn on whether or not competitors add capacity as well. Similarly, the success of new marketing or pricing strategies depends on whether competitors replicate them. In oligopoly markets, it is hard to identify a strategic decision that isn’t influenced by the retaliatory countermoves it sets off. The best business strategists must be skilled at predicting future rounds of competitive conduct.
Yet this is easier said than done. Uncertainty often surrounds competitive conduct, and many managers either expect the companies they compete against to engage in the kind of competitive behavior they see as normal or make some other educated guess. But such assumptions can be dangerous. Managers unwittingly set off value-destroying price wars, get buried when incumbents retaliate in markets those managers have attempted to enter, and cannibalize their own core markets because they have either ignored or made the wrong guesses about the reactions of competitors.
The good news is that game theory provides a structured process that can help managers make better strategic decisions when faced with the uncertainty of competitive conduct. Game theory isn’t new; economists, mathematicians, and political scientists have been developing it for more than 50 years. What is new is an increased emphasis on game theory as a practical tool that real-world managers can use for making strategic decisions. For example, most participants in the recent US personal communications services (PCS) spectrum auctions hired game theorists to develop their bidding strategies. What follows is a systematic game theory process that has been applied successfully in more than 100 company situations in the past five years.
The rules of the game
A good game theorist gets inside the heads of other players to understand their economic incentives and likely behavior. To do this, you should focus on five key elements of competitive intelligence.
Define the strategic issue
What decision are you trying to make: pricing, capacity, market entry? How is it related to other strategic decisions being made in the market? If you are trying to make a decision on capacity investment, for example, it is vital that you know whether others in the market are also considering entering or leaving it.
Determine the relevant players
Which players’ actions will have the greatest impact on the success of your strategy? A common mistake is to assume that all your strategic games are played against competitors and that there is always a winner and a loser. Many of your strategic decisions turn on the actions of other players in the market—suppliers, distributors, providers of complementary goods—and "win-win" outcomes are attainable. For example, a computer hardware manufacturer attempting to stimulate demand for its product must focus on the economic incentives of software producers to provide products consistent with its operating system. A thorough understanding of these incentives allows the hardware producer to structure contracts, joint ventures, or alliances that make both parties better off.
Identify each player’s strategic objectives
In real business games, players often base decisions, at least in the short run, on criteria such as market share or growth
Textbook game theory commonly assumes that the players seek rational, profit-maximizing objectives. However, in real business games players often base decisions, at least in the short run, on criteria such as market share or growth. It is extremely important to get such criteria right. If you make the decision to enter a new market in the belief that the incumbent players are profit maximizers when they are really driven primarily by short-run market share objectives, you might suffer unexpected losses when the incumbents slash prices to maintain share.
Identify the potential actions for each player
For each player in the game, including yourself, develop a list of potential actions on the strategic issue. Generate this list from the perspective of the other players, not just your own. What options might they be considering? How will they evaluate these options? Don’t assume that you and your competitors have the same set of strategic options. Competitive role-playing exercises involving external experts and your management team can help generate these lists.
Determine the likely structure of the game
Will decisions be made simultaneously, in isolation, or sequentially, over time? If sequentially, who is likely to lead and to follow? Will this be a one-shot decision, or will it be repeated? Most business games are repeated, sequential games; pricing decisions, for example, are made over and over in sequence in most markets.
Playing the game: Chemco vs. Matco
These five elements of competitive intelligence define your business game, but more work is generally required before such information can be used to "solve" it. A thorough economic analysis of the industry—including market research and estimates of your competitors’ costs and capacity—is usually needed to estimate the payoffs of different strategies for different players, given their strategic objectives. This information is summarized in a payoff diagram (Exhibit 1) and can be used to guide strategic decision making.