What is game theory? Is it video games? Puzzles? Certainly not!
Game theory in business competition resembles a game with players and strategies to win. If you believe in this game theory, then your success is not solely determined by your actions but also by competitors' chosen strategy.
Occasionally, maintaining your organization's competitiveness does not require active intervention. Instead, it relies on the strategies employed by your competitors. In other words, you may wait for competitors to adopt ineffective strategies, allowing you to sustain the existing strategy. However, it is crucial to realize that the success of your strategy can also be due to competitors not doing anything. It is noteworthy that the outcomes can be different when competitors respond to your strategy.
This is what is called a game theory. Game theory is crucial in disruptive competition. The fiercer the competition, the more exciting the game. The game theory requires you to identify who your competitors are. Let's discuss more about it.
Who is the main actor?
The main actor in game theory is the Challenger. Business operates like politics, where political skills are critical in determining victory. You have to know your competitors thoroughly. Imagine the advantages of understanding your competitors' mindset; such insight can assure your victory in the competition. Do you know who the important people in your competitors are?
There are at least four strategic archetypes: Prospector, Defender, Connector, and Reactor
Defenders emphasize operating efficiently
Prospectors prioritize innovating new products and services for customers
Reactors are often difficult to predict because they consistently create strategic decisions based on the game's situation and conditions
Connectors establish strategic alliances with partners to build a business ecosystem
Imagine you are a Reactor facing a Prospector competitor. The game becomes predictable for you. You simply wait to see when and what new products your competitors launch. If you can replicate a new product, you strive to offer it at a lower price. Yet, when replication is not feasible, you will inevitably compete fiercely by lowering prices or enhancing your services. So, are your competitors Prospectors?
Perhaps you are a Reactor, while your competitor is a Connector? In this game, prediction also comes effortlessly to you. Your focus lies in anticipating the moves of your competitors and their partners. You definitely try to build similar partnerships with other entities, even if they directly compete with your rivals. The success of your strategy lies in your ability to convince your rival partners. For instance, if your competitor teams up with Gojek, you oppose by forming an alliance with Grab. Would you classify your competitors as connectors?
Now, what if you are a Reactor and your competitor acts as a Defender? The game is also easy for you to predict. You are definitely aware that the various strategies offered to customers remain relatively consistent when your competitors are defenders. Competitors' strategists are likely occupied with internal improvements as part of perfecting products and services for customers while also focusing on addressing weaknesses and eliminating threats. You simply observe these internal improvements to devise a strategy to attack. When many competitors choose Defenders, the business environment tends to be calm and stabilized. How is everything on your end? Is your business environment stable enough? If so, there must be a significant number of defenders.
What if Reactor meets Reactor?!
This scenario is exciting because you, as a Reactor, encounter competitors who are also Reactors, making the game much more dynamic. Predicting the direction of competition will undoubtedly be challenging. When reactors meet reactors, it is like you are doing business at the Emergency Room. All strategic moves flooded the market rapidly and were full of surprises. You must immediately realize that business is politics. Developing political skills is imperative, as is having a multitude of alternatives to anticipate competitors' moves. Failure to anticipate could significantly impact your organization's competitiveness.
Perhaps you are brimming with questions. What happens when the defender encounters the Connector, the defender crosses paths with the Prospector, and the Connector engages with the Prospector? Moreover, what if Prospector versus Prospector, Defender versus Defender, Connector versus Connector? The answer is the game will definitely be thrilling. What exactly are strategic archetypes? Samsung vs. Apple, Facebook vs. Instagram, Unilever vs. P&G, Gojek vs. Grab, Nike vs. Adidas, Toyota vs. Tesla, Amazon vs. Alibaba?
Let's map who you are and who your competitors are. The key is for you and your leaders to agree on the strategic archetype within your organization, simplifying the application of game theory to win in the competition. Another interesting question for you is, Is it possible to use double or triple strategic archetypes to win the game?
Make it a good day!
Greeting transformation
