Adam M. Brandenburger of Harvard
Business School & Barry Nalebuff of Yale
School of Management, utilized game
theory- the mathematical study of decision
making to business strategy.
In May 1996 they published their signature
work , “ Coopetition” which formed an
exciting new approach to strategy.
Business is a game, just like many think it is. But
business is a game with a difference.
In any game someone must lose in order for
you to win;
As Gore Vidal puts it, it is not enough to
succeed, Others must fail “
Things are just the opposite in business. “ In
business” your success doesn’t require others
to fail – there can be multiple winners.
In short business is war, but it is also peace.
You have to compete, but if you are smart,
you will also cooperate.
You must do the same simultaneously.
Business is cooperation when it comes to
creating a pie and competition when it
comes to dividing it up. In other words
business is War & Peace simultaneously.
Most importantly, game theory not only
shows you how to play the game of
business but actually change the game to
one closer to your liking. That is where
,the authors suggest the big payoff from
game theory comes in.
Changing the game of business starts with changing the parts. In
any game, there are five basic elements:
Players- the participants in the game
Added values- the value the participants bring to
Rules – the regulations governing how the game is
Tactics- the moves players can make to gain
Scope- the boundaries of the game
To change the game,one needs to change one or more of its
elements. Change one of the parts and you change the whole
With regard to changing the players, before you
enter game, asses your added value. If you have
a high added value, you’ll make money in the
game; so go ahead and play. But if you don’t have
much added value--- you may still be able to
make money by changing the game---- consider
bringing in in customers, suppliers,
complementors and even competitors. Any time
the cast of players changes, so do added values.
E.g. IBM with Intel.
Compaq and Dell with Intel
Changing the game by Changing the
Limit supplyNintendo and Harley- Davidson
Bajaj Scooters in the 1980’s and early 1990’s
Make your product better.
Create Customer Loyalty.
Changing the game by Changing Rules:
Using MFC’s ( most favored customer)
Wal- Mart’s tie up with Bharti
Changing the game by Changing tactics:
Changing Perceptions- Gillette’s Sensor Shaving
Reliance Power- IPO .
Microsoft’s PowerPoint vs. Harvard Graphics
Changing the game by Changing Its Scope :
For example you wan to get into a game , but
there is already a powerful player. Do you
challenge him or her on the existing turf, or do
you change the game and create some turf of
your own ?
ExamplesSega did to Nintendo in the late 1980’s.
Reliance Refinery at Jamnagar vs. Shell’s plans
Tata small car project-Nano
Changing the game is not something one
want to do once and then forget about .
It’s best viewed as an ongoing process. No
matter how successfully you have seized
your current opportunities, new ones will
appear that can be best utilized by changing
the game again. There is no end to the
game of changing the game.