Download The Game of Business

New Thinking on the Game of
Business
Ch. 1: War and Peace
&
Ch. 2: Coopetition
Ch. 1: War and Peace
* Conventional Wisdom in Strategy:
Traditional mindset claimed there had to be a
winner and a loser  Live and Let Die!
•
A Change in Mindset: Win-Lose  Win-Win
 Sounds great, but how?
Ch. 2: Coopetition

A term coined by the authors of this text to
describe simultaneous war and peace

Competition and cooperation combined to
form coopetition

Example?
Game Theory
One-sided View  Interaction View
 A tool used to focus strategic priorities
 Helps form correct decisions
 Further discussed in later chapters

Complementor
Def…”a complement to one product or
service is any other product or service that
makes the first one more attractive.”
 Ex. Mustard and hotdogs; GM and GMAC
 Change in mindset: Fight for the pie! 
Make the pie bigger!

Value Net: A New Picture of
Game of Business

Customers
 Complementors
 Suppliers
 Competitors
 Company
Symmetries of the Value Net
 Customers
and Suppliers play
symmetric roles (in value creation)
 Competitors
and complementors play
mirror-image roles: value enhancer or
value reducer
What I learned
Competition or Cooperation 
Competition and Cooperation
 Value Net: There is a duality in every
relationship
 Look for Complementary Opportunities as
well as Competitive Threats
– Ex) Stores locating next to one another

Two Questions
 Compare
Competition, Cooperation,
and Coopetition
 Describe
the Value Net.
Ch. 5 - Added Values
Added value is the primary
source of power in a game

Ways to create added value:
– Have a monopoly
– Improve quality or reduce costs
– Find Trade-Ons
– Create relationships with customers and
suppliers
– Healthy imitation
Nintendo’s Strategy

Had a monopoly
coupled with a
strategy of limiting the
added value of each of
the other players in the
game
 Their strategy shows
that a monopoly and a
shortage is twice as
nice
DeBeers Strategy

Holds back supply and
manages demand by
making people believe
that diamonds are scarce
 They have been unable to
keep demand ahead of
supply and has had to cut
back on its own supply
 Not as successful as
Nintendo in creating
Limiting Supply

Pros:
– Gets you a bigger slice of the pie
– May give you cachet
– May provide free publicity
– May lead customers to buy your slower-moving
products while waiting for the shortage to end
Limiting Supply

Cons:
– Shrinks the pie – costs you sales today
– May cost you a relationship and thereby future
sales
– Creates ill will
– Leaves a hole in the market, inviting entry
* So, what do you do?
Trade-Offs

There is a trade off between improving
quality or improving cost – You can have
higher quality or lower costs but not both

Example: TWA increased quality by
providing more legroom but there were
costs involved
Trade-Ons

When you end up with higher quality and
lower costs at the same time you have
achieved a trade-on

Example: Club Med
Create relationships with your
customers and suppliers*

Example: American Airline created the
frequent-flyer program to attract loyalty

A critical step in building a relationship is
saying thank you to your loyal customers
Nine Tips on Saying Thank
You

Say thank you in kind, not cash
 Save the best thank-you for your best customers
 Say thank you in a way that builds your business
 Don’t say thank you too quickly, or too slowly
 Say you’re going to say thank you
 Recognize that you may have to compete for loyalty
 Allow your competitors to have loyal customers too
 Don’t forget to say thank you even if you have a
monopoly
 Say thank you to your suppliers as well as to your
Healthy Imitation

Win-win + win-win  WIN-WIN

When every airline has a frequent flyer
program customers are more loyal. Price
cuts are less effective and price rises less
risky. There’s less incentive to compete on
price  greater price stability and loyalty
Unhealthy Imitation

Unhealthy imitation can be dealt with by
improving your products and your improvement
processes, and by keeping ahead of the game
 Ways to avoid the threat of imitation:
– Collect customer feedback to customize your product –
competitors can’t copy you because they don’t have
the information
– Create a brand identity
– Build volume to move down the learning curve
– Compete aggressively for volume so that competitors
Questions

What company successfully showed that the
distinction between the added value of a
company and a product is crucial?
– Nintendo

Is it possible for competitors to imitate a
strategy and both companies be successful?
– Yes!