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© Priiva Consulting Corporation 2016
“Using Game Theory Within Stage-
Gate to Launch Products That Can
Win”
For Stage Gate...
© Priiva Consulting Corporation 2016
Question #1
“Would you play chess
blind-folded?
© Priiva Consulting Corporation 2016
Question #2:
“Do you have a
structured process for
tracking events?
© Priiva Consulting Corporation 2016
Events are the Unit of Change in
Your Market
Events Heat Map
With each major event, i...
© Priiva Consulting Corporation 2016
Events Heat Map
• Choose a Lens: Use any of The Wide Lens
templates
• Color Code Even...
© Priiva Consulting Corporation 2016
Your Challenge Today…
Strategic Decision Making
Merge, Acquire, Invest, Divest,
Chann...
© Priiva Consulting Corporation 2016
The Priiva Process…A Different
Approach
Who is involved?
Players
What can they do ?
O...
© Priiva Consulting Corporation 2016
Sample of Priiva Success References
Company Issue Incoming
Bias
Priiva
Analysis
Obser...
© Priiva Consulting Corporation 2016
Deliverables - Quantitative
Niche Player
Struggling
Incumbent
Technology
Player
DivMu...
© Priiva Consulting Corporation 2016
Deliverables – Qualitative
Standoffs
Tradeoffs
Zero Sum vs. Rising
Tide
Deadlocks
Auc...
© Priiva Consulting Corporation 2016
Benefits of Game Theory and the Priiva Process
Strategic Action Plan
Predictable
Outc...
© Priiva Consulting Corporation 2016
Autonomous Vehicles
Our Working Session
© Priiva Consulting Corporation 2016
Auto Industry Disruption
Autonomous
Vehicles
Internet of
Things
Electrification
Direc...
© Priiva Consulting Corporation 2016
Autonomous is a Continuum
Level 1 Level 2 Level 3 Level 4
Primitive
Controls
More
Con...
© Priiva Consulting Corporation 2016
Recent Headlines
• Mar 11, 2016 – GM Acquires Cruise Automation for
$1B to Accelerate...
© Priiva Consulting Corporation 2016
Recall the 3 Inputs to a Model
© Priiva Consulting Corporation 2016
Our Players
1. Tech Player – Apple, Google, MSFT
2. Car Mfg Incumbent – Ford, Fiat-
C...
© Priiva Consulting Corporation 2016
Players and Options
Tech Player
1 Dev Full Stack (Car and OS)
Car Mfg Incumbent
2 Dev...
© Priiva Consulting Corporation 2016
Preference Tree Syntax
Preference Tree
Car Mfg Incumbent
-1
-16
18
13
-17 More Import...
© Priiva Consulting Corporation 2016
Players
Player Persona
Tech Player (Google,
Apple, MSFT)
Aggressive technology disrup...
© Priiva Consulting Corporation 2016
Lets do the first preference tree together
Preference Matrix
Tech
Player
Car Mfg
Incu...
© Priiva Consulting Corporation 2016
Build Preference Trees for
all other Players …
Player's interests are directly reflected in the
preference trees
Player Represents Description
Tech Player (Google,
Apple...
Simulation Summary
• The Natural Outcome:
• Will develop quickly…there are no
deadlocks to slow down the market
• Govt has...
Influence
Tech Player
Car Mfg
Incumbent
GMCar Disruptor
Car as a Service
Govt
The Influence Chart measures a
player's abil...
Self Importance
Tech Player
Car Mfg Incumbent
GM
Car Disruptor
Car as a Service
Govt
Sensitive to Others Self Focused
The ...
Natural Outcome vs. Player’s Interests
0
20
40
60
80
100
Tech Player
Car Mfg
Incumbent
GM
Car Disruptor
Car as a Service
G...
Change Seeking
Tech Player
Car Mfg Incumbent
GM
Car Disruptor
Car as a Service
Govt
Prefers Status Quo Seeks Change
The Ch...
Interest Alignment
Tech Player Car Mfg IncumbentGM Car Disruptor Car asa Service Govt
Tech Player
Car Mfg Incumbent
GM
Car...
Tech
Player,
Govt, and
CaaS
interests
align well
with the
Natural
Outcome
The Natural Outcome
Tech
Player
Develops their o...
Game Model Progression
Players Option List Moves
Tech Player Dev Full Stack (Car and OS) N → Y Y Y
Car Mfg Incumbent Dev t...
What CarMfgIncumbent Should Do
• Tech Player’s option to Dev Full Stack and Govt’s Option for Moderate
Regulation are powe...
© Priiva Consulting Corporation 2016
Events are the Unit of Change in
Your Market
Events Heat Map
With each major event, i...
© Priiva Consulting Corporation 2016
Your Stage-Gate Process
• Track and codify
events as they
occur
• Apply structured
ap...
© Priiva Consulting Corporation 2016
Benefits of Game Theory and the Priiva Process
Strategic Action Plan
Predictable
Outc...
© Priiva Consulting Corporation 2016
About Priiva
1. A boutique strategy consulting firm.
2. Specialized in applying game ...
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Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

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This presentation was given at Stage-Gate International's Voice of the Ecosystem Summit in Jun 2016. It proposes using player-centric competitive response scenarios in a Stage-Gate model. Digital disruption in the auto industry is used as the illustration.

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Digital Disruption in the Automotive Industry - Using Game Theory Within Stage-Gate to Launch Products That Can Win

  1. 1. © Priiva Consulting Corporation 2016 “Using Game Theory Within Stage- Gate to Launch Products That Can Win” For Stage Gate Intl VOE Summit June 15,16 2016 By Bill Forquer @billforquer Moving Beyond Competitive Analysis to Competitive Response
  2. 2. © Priiva Consulting Corporation 2016 Question #1 “Would you play chess blind-folded?
  3. 3. © Priiva Consulting Corporation 2016 Question #2: “Do you have a structured process for tracking events?
  4. 4. © Priiva Consulting Corporation 2016 Events are the Unit of Change in Your Market Events Heat Map With each major event, is our position strengthening or eroding? Can be applied to Acquirers, Differentiators, Product Roadmap, Standoffs, etc … Software Inc. Strategic Events Heat Map: for Recent Events Dec-2010 Dec-2010 Dec-2010 Oct-2010 Sustained economic downturn. Unprecedented consumer adoption of smartphone and tablet devices. SaaS Ankle Biter Inc announces expanded partnership with Infor. Won 3 year deal with Anderson Windows Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/Unfavo rable Overall Impact Low Medium High High Low /Medium/High High Software Inc., Strategic Lens Vision and Differentiation Sustainability Improve the credibility of our Vision? Our soln has an ROI in 6 months. If w e had some vision in this area, it could help. If w e had some vision in this area, it could help. Great referencable account. Improve sustainability of our #1 Differentiator…adaptive to change? Creates hesitation to rip & replace incumbent supply chain softw are investments. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #2 Differentiator…lower TCO? We have lots of proof points. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers? New construction is dow n; rehab construction is up. No demands coming from this segment as of yet. We continue to dominate…Infor likely to target our accounts. Great referencable account. Relationship Position & Strength Improve our position with Top 5 Rev Producing Customers? Doesn’t help; doesn't hurt. No demands coming from this segment as of yet. Infor likely to target these accounts. Great referencable account. Improve our position with Top 5 Prospective Rev Customers? Doesn’t help; doesn't hurt. Apparel prospects are asking about our plans. We can still w in against Infor in apparrel. Need to leverage this into appareI. Improve our position with #1 Partner? Law son also positioned as the low er TCO ERP supplier of choice. No demands from Law son as of yet. Law son w ill deepen partnership w ith us to fight Infor. Not a Law son customer, but a great reference anyw ay. Improve our position with #1 Current Competitor? Doesn't help; doesn't hurt. Ankle Biter has nothing either. More competitive landscape. This w as a fierce battle to not loose this account to Ankle Biter. Improve our position with #1 Future Competitor? Doesn’t help; doesn't hurt. IBM/SAP all very aggressive in mobility. SAP/IBM tolerates us over Infor+Ankle Biter. Great reference account. Improve our position with #1 Targeted Strategic Buyer? Stunted organic grow th by SAP w ill force them to acquire. IBM/SAP all very aggressive in mobility. SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter. SAP/IBM/Law son may acquire us to get a toehold in construction manufacturers. “Would you play chess blind-folded?
  5. 5. © Priiva Consulting Corporation 2016 Events Heat Map • Choose a Lens: Use any of The Wide Lens templates • Color Code Events each quarter as {Fav, Unfav} and {High, Medium, Low} against the chosen lens • Consider events from World, Macro Market, Specific Market, and Internal See Events Heat Map Handout Example
  6. 6. © Priiva Consulting Corporation 2016 Your Challenge Today… Strategic Decision Making Merge, Acquire, Invest, Divest, Channels, Partners, Gov’t Affairs, Innovation/Consolidation, Litigation, … Endless debate Urgency Increasing Business Complexity and Market Disruption Board of Directors Scrutiny “More analysis” “More action”
  7. 7. © Priiva Consulting Corporation 2016 The Priiva Process…A Different Approach Who is involved? Players What can they do ? Options What do they want ? Preferences Where can we get to ? Predicted outcomes How do we get there ? Tactics What did we learn ? Insights Game Theory MODEL INPUTS MODEL OUTPUTS |----------------------------------Process duration is 4-6 weeks----------------------------------| |---------------- Executive Time Commitment is two half-day workshops-----------------|
  8. 8. © Priiva Consulting Corporation 2016 Sample of Priiva Success References Company Issue Incoming Bias Priiva Analysis Observation Strategic Action Plan Large information technology provider Fear of disruptive entry by “gorillas” Find lucrative replacement market or sell-out now Model overall industry structure Current competitors and new entrants all favor status quo fearing cascading auction Grow and scale with targeted acquisitions since consolidation is further away than anticipated Information Services Provider “Googlization” and eroding demand for traditional services. Expand into adjacent services Analyze competitive and cooperative reaction of adjacent services Expansion actually accelerates traditional services erosion Change competitive positioning of the expanded services. Improve sales tools. Large multinational manufacturer Enter adjacent market Alliance w/ selected competitor Customers, regulators, and competitors Trigger unilateral capacity expansion eroding price margins Alliance with market leader rather than the selected competitor Green Energy Provider Market structure unknowns Focus on USA market Regional market variations Asian markets more ready, lucrative, and provides USA toe- hold Invest in Asian market development; advocacy only in USA market
  9. 9. © Priiva Consulting Corporation 2016 Deliverables - Quantitative Niche Player Struggling Incumbent Technology Player DivMultiNat Customer New Entrant Influence 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Strong Agreement Strong Disagreement Option Agreement 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Significant Insignificant Option significance Niche Player Struggling Incumbent Technology Player DivMultiNat Customer New Entrant PrefersStatus Quo Seeks Change Change Seeking Niche Player Struggling Incumbent Technology Player DivMultiNat Customer New Entrant Sensitive to Others Self Focused Self- importance US Gov't Favor FC N N N N N → Y Y Y Favor wind, solar N N N N N → Y Y Y European Gov't Favor FC N N → Y Y Y Y Y Y Favor wind,solar N N → Y Y Y Y Y Y Asian Gov't Favor FC N → Y Y Y Y Y Y Y Favor wind,solar N → Y Y Y Y Y Y Y Investors Invest in FC N N N N N N → Y Y Invest in wind,solar N N N N N N → Y Y Utility Providers Promote FC N N N N N N N → Y Promote wind,solar N N N N N N N → Y System Integrators Increase outsourcing/JD N N N → Y Y Y Y Y Develop FC internally N N N → Y Y Y Y Y Acquire stack developer N N N → Y Y Y Y Y Large Multinationals Increase FC investment N N N N → Y Y Y Y Increase Outsource/JD N N N N → Y Y Y Y Acquire stack developer N N N N → Y Y Y Y Increase Wind,solar investment N N N N → Y Y Y Y Early End Users AdoptersFavor FC N → Y Y Y Y Y Y Y Favor wind,solar N → Y Y Y Y Y Y Y US DoD Favor FC N N N N N N N → Y Favor wind,solar,battery N N N N N N N → Y Outcomes What is the progression to the outcome? Who wields the power? What options do players care the most about? What options are divisive (aka “domino” events)? Who favors change? Who favors status quo? Who is self focused? Who is sensitive to the action of others? US Gov't Favor FC N N N N N → Y Y Y Favor wind, solar N N N N N → Y Y Y European Gov't Favor FC N N → Y Y Y Y Y Y Favor wind,solar N N → Y Y Y Y Y Y Asian Gov't Favor FC N → Y Y Y Y Y Y Y Favor wind,solar N → Y Y Y Y Y Y Y Investors Invest in FC N N N N N N → Y Y Invest in wind,solar N N N N N N → Y Y Utility Providers Promote FC N N N N N N N → Y Promote wind,solar N N N N N N N → Y System Integrators Increase outsourcing/JD N N N → Y Y Y Y Y Develop FC internally N N N → Y Y Y Y Y Acquire stack developer N N N → Y Y Y Y Y Large Multinationals Increase FC investment N N N N → Y Y Y Y Increase Outsource/JD N N N N → Y Y Y Y Acquire stack developer N N N N → Y Y Y Y Increase Wind,solar investment N N N N → Y Y Y Y Early End Users AdoptersFavor FC N → Y Y Y Y Y Y Y Favor wind,solar N → Y Y Y Y Y Y Y US DoD Favor FC N N N N N N N → Y Favor wind,solar,battery N N N N N N N → Y Sensitivity of Outcomes What is the outcome if we change a player’s behavior?
  10. 10. © Priiva Consulting Corporation 2016 Deliverables – Qualitative Standoffs Tradeoffs Zero Sum vs. Rising Tide Deadlocks Auction Robustness Credible Signaling
  11. 11. © Priiva Consulting Corporation 2016 Benefits of Game Theory and the Priiva Process Strategic Action Plan Predictable Outcomes Efficient Process Aligned Executive Team Robust Competitive Response as Gate Criteria Deep Insights
  12. 12. © Priiva Consulting Corporation 2016 Autonomous Vehicles Our Working Session
  13. 13. © Priiva Consulting Corporation 2016 Auto Industry Disruption Autonomous Vehicles Internet of Things Electrification Direct to Consumer Sharing Economy Car as a Service
  14. 14. © Priiva Consulting Corporation 2016 Autonomous is a Continuum Level 1 Level 2 Level 3 Level 4 Primitive Controls More Controls Cede Driving Driverless Eg, Cruise Control Eg, Crash Detection Still requires a driver A living space Levels 1-4 are the adopted definitions imposed by FHTSA
  15. 15. © Priiva Consulting Corporation 2016 Recent Headlines • Mar 11, 2016 – GM Acquires Cruise Automation for $1B to Accelerate Autonomous Vehicles • Apr 27, 2016 - Ford and Google Lead Lobbying Coalition • Apr 28, 2016 – Google and Fiat-Chrysler Nearing Tech Agreement • May 5, 2016 – Ford Invests $182M in Pivotal to Strengthen Mobility Software • May 14, 2016 – Apple Invests $1B in Didi • May 24, 2016 – Uber & Toyota Confirm Strategic Investment and Leasing Deal • …
  16. 16. © Priiva Consulting Corporation 2016 Recall the 3 Inputs to a Model
  17. 17. © Priiva Consulting Corporation 2016 Our Players 1. Tech Player – Apple, Google, MSFT 2. Car Mfg Incumbent – Ford, Fiat- Chrysler, Honda, Toyota, BMW, … 3. GM 4. Car Disruptor – Tesla, Faraday Future, … 5. Car as a Service – Uber, Lyft, Car2Go 6. Govt – Federal, state, local Who is involved? Players
  18. 18. © Priiva Consulting Corporation 2016 Players and Options Tech Player 1 Dev Full Stack (Car and OS) Car Mfg Incumbent 2 Dev their own Car OS 3 Partner Exclusively with a Tech Player for Car OS 4 Partner Non-Exclusively with Tech Player(s) for Car OS 5 Partner with GM for Onstar as Car OS GM 6 Aggressively fund OnStar to be ubiquitous Car OS 7 Sunset OnStar Car Disruptor 8 Dev their own Car OS 9 Partner Exclusively with a Tech Player for Car OS Options What can they do ? Options 18 total options Each option has a unique identifier
  19. 19. © Priiva Consulting Corporation 2016 Preference Tree Syntax Preference Tree Car Mfg Incumbent -1 -16 18 13 -17 More Important 4 IF (17) -6 + Denotes Desire -12 -14 - Denotes Fear -15 7 IF Denotes Conditional -11 -9 Less Important or Indifferent -10 -8 -2 3 5 Players and Options Tech Player 1 Dev Full Stack (Car and OS) Car Mfg Incumbent 2 Dev their own Car OS 3 Partner Exclusively with a Tech Player for Car OS 4 Partner Non-Exclusively with Tech Player(s) for Car OS 5 Partner with GM for Onstar as Car OS GM 6 Aggressively fund OnStar to be ubiquitous Car OS 7 Sunset OnStar Car Disruptor 8 Dev their own Car OS 9 Partner Exclusively with a Tech Player for Car OS 10 Partner Non-Exclusively with Tech Player(s) for Car OS 11 Partner with GM for OnStar as Car OS Car as a Service 12 Favor Tech Players 13 Favor Car Mfg Incumbents 14 Favor GM 15 Favor Car Disruptors Govt 16 Impose Light Regulations 17 Impose Moderate Regulations 18 Impose Heavy Regulations
  20. 20. © Priiva Consulting Corporation 2016 Players Player Persona Tech Player (Google, Apple, MSFT) Aggressive technology disruptor Car Mfg (Ford, Fiat- Chrysler, BMW, Audi, Toyota, Honda, Kia, et al) Incumbents from USA, Germany, Japan, Korea, etc GM Incumbent with connected car toehold via OnStar, CaaS toehold in Lyft, and Cruise Acquisition Car Disruptor (Tesla, Faraday Future) Disruptive with autonomous features as well as electrification, biz model, and driver experience Car as a Service (Uber, Lyft, Car2Go et al) Disruptor wanting to end personal car ownership Govt Regulates transportation and safety Who is involved? Players
  21. 21. © Priiva Consulting Corporation 2016 Lets do the first preference tree together Preference Matrix Tech Player Car Mfg Incumbent GM Car Disruptor Car as a Service Govt Tech Player 1.) Dev Full Stack (Car and OS) Car Mfg Incumbent 2.) Dev their own Car OS 3.) Partner Exclusively with a Tech Player for Car OS 12 -1 -1 -1 -18 1 4.) Partner Non-Exclusively with Tech Player(s) for Car OS 4 -16 -16 -18 16 4 5.) Partner with GM for Onstar as Car OS 3 18 18 16 1 8 GM -18 13 14 15 4 6 6.) Aggressively fund OnStar to be ubiquitous Car OS 16 -17 5 8 10 10 7.) Sunset OnStar 1 4 IF (17) 11 10 9 17 Car Disruptor -2 -6 -3 9 3 12 8.) Dev their own Car OS 10 -12 -2 -17 11 15 9.) Partner Exclusively with a Tech Player for Car OS 9 -14 -4 -11 5 14 10.) Partner Non-Exclusively with Tech Player(s) for Car OS -11 -15 -8 -12 6 13 11.) Partner with GM for OnStar as Car OS -14 7 -9 -13 -17 5 Car as a Service -8 -11 -10 -14 -7 -2 12.) Favor Tech Players -5 -9 -17 -4 -2 3 13.) Favor Car Mfg Incumbents -17 -10 -7 2 -8 -7 14.) Favor GM 13 IF (3) -8 6 3 12 9 15.) Favor Car Disruptors -6 -2 -12 5 15 11 Govt 7 3 -13 7 13 -18 16.) Impose Light Regulations 15 IF (9) 5 -15 -6 14 -16 17.) Impose Moderate Regulations 18.) Impose Heavy Regulations Preference Matrix Tech Player Car Mfg Incumbent GM Car Disruptor Car as a Service Govt Tech Player 1.) Dev Full Stack (Car and OS) Car Mfg Incumbent 2.) Dev their own Car OS 3.) Partner Exclusively with a Tech Player for Car OS 12 -1 -1 -1 -18 1 4.) Partner Non-Exclusively with Tech Player(s) for Car OS 4 -16 -16 -18 16 4 5.) Partner with GM for Onstar as Car OS 3 18 18 16 1 8 GM -18 13 14 15 4 6 6.) Aggressively fund OnStar to be ubiquitous Car OS 16 -17 5 8 10 10 7.) Sunset OnStar 1 4 IF (17) 11 10 9 17 Car Disruptor -2 -6 -3 9 3 12 8.) Dev their own Car OS 10 -12 -2 -17 11 15 9.) Partner Exclusively with a Tech Player for Car OS 9 -14 -4 -11 5 14 10.) Partner Non-Exclusively with Tech Player(s) for Car OS -11 -15 -8 -12 6 13 11.) Partner with GM for OnStar as Car OS -14 7 -9 -13 -17 5 Car as a Service -8 -11 -10 -14 -7 -2 12.) Favor Tech Players -5 -9 -17 -4 -2 3 13.) Favor Car Mfg Incumbents -17 -10 -7 2 -8 -7 14.) Favor GM 13 IF (3) -8 6 3 12 9 15.) Favor Car Disruptors -6 -2 -12 5 15 11 Govt 7 3 -13 7 13 -18 16.) Impose Light Regulations 15 IF (9) 5 -15 -6 14 -16 17.) Impose Moderate Regulations 18.) Impose Heavy Regulations Which option 1-18 is the most important to Tech Player?
  22. 22. © Priiva Consulting Corporation 2016 Build Preference Trees for all other Players …
  23. 23. Player's interests are directly reflected in the preference trees Player Represents Description Tech Player (Google, Apple, MSFT) Aggressive technology disruptor Wants every car depending on their Car OS. Wants govt to impose light regulations. Will manufacture cars (ie, the full stack) if that is the pre-requisite to winning every car. Doesn’t want incumbents or Car Disruptors developing their own OS, but are not overly sensitive to that because they believe those players will fail doing so. Car Mfg (Ford, Daimler, BMW, Audi, Toyota, Honda, Kia, et al) Incumbents from USA, Germany, Japan, Korea, etc Favors status quo and fears disruption. Fears Tech Players entering with a full stack. Fears that govt will be light handed but wants them to be heavy handed to slow down others giving themselves more time to develop. Needs to win new car sales of CaaS fleets. Does not view Onstar as a viable Car OS. Tech Players need to fail at manufacturing so they become more amenable to partnering for the Car OS. GM Incumbent with connected car toehold via OnStar Not as fearful as Car Mfg incumbents as Onstar and Lyft investment provide toeholds. Fears the govt will be light handed but wants them to be heavy handed to slow down others and would like others to fail at their own Car OS efforts falling back to OnStar partnerships triggering more aggressive Onstar development. Car Disruptor (Tesla, Faraday Future) Disruptive with autonomous features as well as electrification, biz model, and driver experience Fears Tech Players entering with a full stack. Fears heavy regulations and wants light regulation to favor autonomous features and electrification. Wants to win new car sales of CaaS fleets and is prepared to develop their own OS to do so. Not fearful of the actions by Car Mfg incumbents, GM, and does not view Onstar as a viable Car OS. Car as a Service (Uber, Lyft, Car2Go et al) Disruptor wanting to end personal car ownership Wants govt out of the way and all parties to succeed getting genuine driverless cars to market which triggers their purchase of a fleet of driverless vehicles from multiple vendors and eliminates their expense of drivers. Govt Regulates transportation and safety Wants all players to be successful achieving driverless status as a means for the USA to regain worldwide dominance in the auto industry. Will exert moderate regulations so as to not stifle innovation and not compromise safety.
  24. 24. Simulation Summary • The Natural Outcome: • Will develop quickly…there are no deadlocks to slow down the market • Govt has lots of tradeoffs • Tech Player and Govt are the power players and exert their options early • Tech Player, Govt, and CaaS interests align well with the Natural Outcome • Car Mfg Incumbent, GM, and Car Disruptors must act quickly
  25. 25. Influence Tech Player Car Mfg Incumbent GMCar Disruptor Car as a Service Govt The Influence Chart measures a player's ability to influence the behavior of other players. The larger the slice… • the more importantly other players view their options • the more influence they have over the behavior of the other players
  26. 26. Self Importance Tech Player Car Mfg Incumbent GM Car Disruptor Car as a Service Govt Sensitive to Others Self Focused The Self Importance Chart measures how important the player's owned options are to themselves. The more important the player is, the less likely they are to be influenced by the behavior of others. The less important a player is, the more likely they are to be influenced by the actions of others.
  27. 27. Natural Outcome vs. Player’s Interests 0 20 40 60 80 100 Tech Player Car Mfg Incumbent GM Car Disruptor Car as a Service Govt Radar Natural Outcome R6 The Radar Chart •Maps how well aligned Outcomes are with the different player's Interests •A point near the origin represents the least preferred outcome •A point near the terminus represents the most preferred outcome The Happiness Map
  28. 28. Change Seeking Tech Player Car Mfg Incumbent GM Car Disruptor Car as a Service Govt Prefers Status Quo Seeks Change The Change Seeking Chart measures a player's appetite for change to occur. A preference toward the status quo may indicate fear of consequences of change as well as preference for the status quo.
  29. 29. Interest Alignment Tech Player Car Mfg IncumbentGM Car Disruptor Car asa Service Govt Tech Player Car Mfg Incumbent GM Car Disruptor Car asa Service Govt The Interest Alignment Chart reflects alignment of interests. Green indicates good alignment and may reveal hidden allies. Red indicates mis-alignment and may reveal hidden enemies.
  30. 30. Tech Player, Govt, and CaaS interests align well with the Natural Outcome The Natural Outcome Tech Player Develops their own full stack and non- exclusively licenses their Car OS. More regulation than they prefer. Car Mfg Incumbent Non exclusively licenses Car OS. Operates in fierce competition and with less regulation than desired. Expect consolidation. GM Eventually develops OnStar due to a late developing partnership. Lyft toehold may be an (expensive) savior. Car Disruptor Non exclusively licenses Car OS. Operates in fierce competition amongst its differentiators. Car as a Service Has lots of options to own driverless car fleets and cut driver costs. Govt Imposes moderate regulation so as to stimulate innovation and ensure safety.
  31. 31. Game Model Progression Players Option List Moves Tech Player Dev Full Stack (Car and OS) N → Y Y Y Car Mfg Incumbent Dev their own Car OS N N N N Partner Exclusively with a Tech Player for Car OSN N → Y Y Partner Non-Exclusively with Tech Player(s) for Car OSN N → Y Y Partner with GM for Onstar as Car OS N N N → Y GM Aggressively fund OnStar to be ubiquitous Car OSN N N → Y Sunset OnStar N N N N Car Disruptor Dev their own Car OS N N → Y Y Partner Exclusively with a Tech Player for Car OSN N → Y Y Partner Non-Exclusively with Tech Player(s) for Car OSN N → Y Y Partner with GM for OnStar as Car OS N N N N Car as a Service Favor Tech Players N N N → Y Favor Car Mfg Incumbents N N N → Y Favor GM N N N → Y Favor Car Disruptors N N N → Y Govt Impose Light Regulations N N N N Impose Moderate Regulations N → Y Y Y Impose Heavy Regulations N N N N 1. Government imposes moderate regulations to encourage broad investment in AV. 2. Tech Players invest in full stack dev, especially knowing moderate regulation. 3. Car Disruptors pursue all their options. 4. Car Mfg Incumbent’s attempt to partner with Tech Players 6. CaaS are agnostic, looking to drive down costs via aggressive competition 5. GM and a Car Mfg Incumbent finally partner triggering OnStar development
  32. 32. What CarMfgIncumbent Should Do • Tech Player’s option to Dev Full Stack and Govt’s Option for Moderate Regulation are power events that occur early and largely dictate the Natural Outcome. • Car Mfg Incumbent needs to alter or embrace one or both of those player options IMMEDIATELY • Incumbents could tie other investments with regulations favorable to incumbents • Incumbents should establish an early partnership with a Tech Player and a CaaS player • Incumbents should explore if the insurance lobby can increase govt regulation and slow down the market • Incumbents should innovate new car features that stave off eroding personal car ownership as driven by CaaS • Incumbents interests align well with Car Disruptor. Explore partnering opportunities. • Incumbent(s) could partner with GM and tie further Onstar investment with regulations favorable to incumbents
  33. 33. © Priiva Consulting Corporation 2016 Events are the Unit of Change in Your Market Events Heat Map With each major event, is our position strengthening or eroding? Can be applied to Acquirers, Differentiators, Product Roadmap, Standoffs, etc … Software Inc. Strategic Events Heat Map: for Recent Events Dec-2010 Dec-2010 Dec-2010 Oct-2010 Sustained economic downturn. Unprecedented consumer adoption of smartphone and tablet devices. SaaS Ankle Biter Inc announces expanded partnership with Infor. Won 3 year deal with Anderson Windows Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/Unfavo rable Overall Impact Low Medium High High Low /Medium/High High Software Inc., Strategic Lens Vision and Differentiation Sustainability Improve the credibility of our Vision? Our soln has an ROI in 6 months. If w e had some vision in this area, it could help. If w e had some vision in this area, it could help. Great referencable account. Improve sustainability of our #1 Differentiator…adaptive to change? Creates hesitation to rip & replace incumbent supply chain softw are investments. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #2 Differentiator…lower TCO? We have lots of proof points. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers? New construction is dow n; rehab construction is up. No demands coming from this segment as of yet. We continue to dominate…Infor likely to target our accounts. Great referencable account. Relationship Position & Strength Improve our position with Top 5 Rev Producing Customers? Doesn’t help; doesn't hurt. No demands coming from this segment as of yet. Infor likely to target these accounts. Great referencable account. Improve our position with Top 5 Prospective Rev Customers? Doesn’t help; doesn't hurt. Apparel prospects are asking about our plans. We can still w in against Infor in apparrel. Need to leverage this into appareI. Improve our position with #1 Partner? Law son also positioned as the low er TCO ERP supplier of choice. No demands from Law son as of yet. Law son w ill deepen partnership w ith us to fight Infor. Not a Law son customer, but a great reference anyw ay. Improve our position with #1 Current Competitor? Doesn't help; doesn't hurt. Ankle Biter has nothing either. More competitive landscape. This w as a fierce battle to not loose this account to Ankle Biter. Improve our position with #1 Future Competitor? Doesn’t help; doesn't hurt. IBM/SAP all very aggressive in mobility. SAP/IBM tolerates us over Infor+Ankle Biter. Great reference account. Improve our position with #1 Targeted Strategic Buyer? Stunted organic grow th by SAP w ill force them to acquire. IBM/SAP all very aggressive in mobility. SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter. SAP/IBM/Law son may acquire us to get a toehold in construction manufacturers. “Would you play chess blind-folded?
  34. 34. © Priiva Consulting Corporation 2016 Your Stage-Gate Process • Track and codify events as they occur • Apply structured approach for your bigger bets (i.e., M&A) Software Inc. Strategic Events Heat Map: for Recent Events Dec-2010 Dec-2010 Dec-2010 Oct-2010 Sustained economic downturn. Unprecedented consumer adoption of smartphone and tablet devices. SaaS Ankle Biter Inc announces expanded partnership with Infor. Won 3 year deal with Anderson Windows Overall Favorable or Unfavorable Favorable Unfavorable Highly Divisive Favorable Favorable/Unfavo rable Overall Impact Low Medium High High Low /Medium/High High Software Inc., Strategic Lens Vision and Differentiation Sustainability Improve the credibility of our Vision? Our soln has an ROI in 6 months. If w e had some vision in this area, it could help. If w e had some vision in this area, it could help. Great referencable account. Improve sustainability of our #1 Differentiator…adaptive to change? Creates hesitation to rip & replace incumbent supply chain softw are investments. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #2 Differentiator…lower TCO? We have lots of proof points. We have no plan for smartphones or tablets. Infor+Ankle Biter messaging the same as our differentiator. Great referencable account. Improve sustainability of our #3 Differentiator…dominate in construction industry suppliers? New construction is dow n; rehab construction is up. No demands coming from this segment as of yet. We continue to dominate…Infor likely to target our accounts. Great referencable account. Relationship Position & Strength Improve our position with Top 5 Rev Producing Customers? Doesn’t help; doesn't hurt. No demands coming from this segment as of yet. Infor likely to target these accounts. Great referencable account. Improve our position with Top 5 Prospective Rev Customers? Doesn’t help; doesn't hurt. Apparel prospects are asking about our plans. We can still w in against Infor in apparrel. Need to leverage this into appareI. Improve our position with #1 Partner? Law son also positioned as the low er TCO ERP supplier of choice. No demands from Law son as of yet. Law son w ill deepen partnership w ith us to fight Infor. Not a Law son customer, but a great reference anyw ay. Improve our position with #1 Current Competitor? Doesn't help; doesn't hurt. Ankle Biter has nothing either. More competitive landscape. This w as a fierce battle to not loose this account to Ankle Biter. Improve our position with #1 Future Competitor? Doesn’t help; doesn't hurt. IBM/SAP all very aggressive in mobility. SAP/IBM tolerates us over Infor+Ankle Biter. Great reference account. Improve our position with #1 Targeted Strategic Buyer? Stunted organic grow th by SAP w ill force them to acquire. IBM/SAP all very aggressive in mobility. SAP/IBM/Law son may acquire us to compete w ith Infor+Ankle Biter. SAP/IBM/Law son may acquire us to get a toehold in construction manufacturers.
  35. 35. © Priiva Consulting Corporation 2016 Benefits of Game Theory and the Priiva Process Strategic Action Plan Predictable Outcomes Efficient Process Aligned Executive Team Robust Competitive Response as Gate Criteria Deep Insights
  36. 36. © Priiva Consulting Corporation 2016 About Priiva 1. A boutique strategy consulting firm. 2. Specialized in applying game theory methodology to optimize the outcome of strategic business decisions. 3. Our clients engage us for… a) Strategy development b) Executive development (on competitive landscape and external environment) c) Mgmt retreat curriculum (on competitive landscape and external environment) d) Risk mitigation (ie, 2nd opinion on a decision already taken) 4. Principals are industry executives from IT, Energy, Chemicals, Financial Services, and Automotive industries. 5. Hundreds of business cases analyzed with 85% prediction accuracy. 6. Fixed price consulting engagement OR fixed price insights report on an industry topic. Bill Forquer Principal Priiva Consulting Bio: www.priiva.com/Bill.html Twitter: @billforquer

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