Co-opetition

Business as a Game

Many people think of business as a war, wherein companies are involved in “outsmarting the competition, capturing markets, making a killing” and otherwise gaining victory. However, this is not a good business approach, since wars (such as pricing battles) can result in losses for all parties involved. Rather, think of business as a blend of war and peace: You need to cooperate with others to create or expand the pie, as well as compete when dividing it.

Game theory brings competition and cooperation together into a more accurate model of the way business really works. Mathematician John von Neumann and economist Oskar Morgenstern established the theoretical foundations of game theory in 1944, when they published Theory of Games and Economic Behavior. The game theory approach has gained many adherents in the academic and scientific world. However, it is applicable to the business world, too. You can use it to act more strategically when making decisions.

The Particpants

A link exists among a game’s four players – “customers, suppliers, competitors and complementors” – forming a “Value Net.” Imagine this link as a map in the...