I am sure all of you know that in every junction, the decisions you make is essential to the success of your business. You have to make the right decisions to compete with other businesses; you have to make the right decisions to make it through the initial startup stage. You have to know the game you are playing…
Are you playing the right game?
How do you know you are playing the right game? Are you successful with your business and are you satisfied with where you are? Do you know what you need to do so you can be successful with your business? Do you know whom you need to friend with and whom you need to strategize against? Like I said in my opening paragraph, these are all the questions that go through the minds of a typical Executive or a Manager on a daily basis. You need to know at all times, if you change the way you provide a service or if you add an incentive for the customer, how will that change your game and how will it change the game for the market participants. Now who are the market participants? These are your suppliers, competitors, customers and affiliates.
I recommend you read the book “The Right Game – Use Game Theory to Shape Strategy” by Adam M. Brandenburger and Barry J. Nalebuff. The Game Theory explains the importance of focusing on others. In this book, the author uses game theory to explain and map the interdependencies among the participants in your marketplace. It is important for you to understand who is playing the game with you and what values they add to the game. If you have all of that figured out, you should be able to make strategic moves that will benefit you or even the whole industry.
For example, let’s say you operate a blog. Your blog provides information on all of the new movies as they are released. It is an established blog and you are able to get in front of the line to get real-time interview with the stars. However, there are about 5 other sites that do the same thing. One day you woke up and decided you want to change the game. You want to gain a higher market share and provide more information. So you take the steps to understand the current marketplace. You spend time understanding the value provided by other sites. You spend time understanding the audience. You spend time understanding the success rate of getting an interview with a star.
Once you have all of this information in front of you, you can use Game Theory to map it all out. You can give points to each possible move. Your moves can be to go aggressive or try to partner with other sites. Your aggressive move can be something like offering an incentive for your customer such as free movie passes or coup0ns for snacks. You can also give your customers access to live interviews. Introduce something that will put your competitors at a disadvantage. Before you do this, you need to figure out how they will react to this. Are your competitors large enough to provide the same kind of incentives? In your mapping exercise, you need to map all possible scenarios so you can figure out the best move that will either place you in a better position than where you are today or it will place the hold industry in a better position. You probably won’t want to make a move that will hurt your business.
Once you map it all out, you should be able to decide which move will make you even more successful. This sort of exercise is much better than holding status quo. As an Executive or a Manager, you need to always think about this. You need to know the game you are playing and you need to know what moves you have in your fingertips at all times.
You should read my previous post on “getting to know your competitions.” This story should help you identify your opponents well.
Please let me know if you have any views on this. Thank you.