In this second in our series to assist businesses and individuals on how to increase the predictability of their decisions, we will focus on players. Some nomenclatura first; as we will be using it, a “player” is neither a brand of cigarette from Nottingham, nor a womanizing/manizing clubber. As we use it here, a player is someone in your game – whether it is a business competitor, supplier, tax collector, business, legislature, executive, yourself or any combination of these parties. Every dynamic with two or more people has players. Most people impanel their team of lawyers, accountants and employees not fully understanding their odds of success given all the people that can influence the outcome of their goals.
Knowing who the players are supports our notion that Game Theory can be used practically (and you don’t even have to know differential equations). In our first installment, we discussed basic our option generator. Now we introduce the players that can impact the outcomes we’ve decided are likely.
You are the first player. And knowing yourself, your reaction to inputs, is critical. Game theory. Recall that our reaction based on others’ reaction is essential in determining success probabilities. Recall our analogy. Unlike a pure logical relationship that changes by natural processes, such as when a thermometer is put into a glass of water, by necessity, it must actually remove energy from the glass, in the form of heat to get a reading; so the thermometer changes the outcome of the very system it seeks to measure objectively. The interaction in this system is closed, the laws of thermodynamics do not have multiple outcomes. Game theory has different outcomes. When a negotiator enters a negotiation, their presence changes the game like the thermometer, but the other “player” has choices on how to respond. The random elements are those darn humans. So how do you react when someone confronts you, do you get loud, freeze, run, or do you like it? All are possible reactions. When a competitor buys a smaller competitor, how will your board react? So the first player is of course, yourself. What outcomes are likely to happen? Look to our outcome generator if you are stumped. There are more robust models I will publish later. To do a deal right, you really need to analyze yourself given the other side’s move. Do not lie to yourself, if you are likely to take an action (because you did it several times before), own it and work that into your analysis. Behavior modification may not be an option for you. Remember the words of Polonius, “This above all to thine own self be true.”
We tend to focus on competition. Which is limiting in several ways. The competitor is the obvious player that we try to keep ahead of, and this is the reason we enjoy great goods and services at competitive prices. But should you be in that game at all with a monopolist or oligopolist? Many think being placed on a bid list for a Request for Proposal is a momentous event. But it may be used as a price check by the issuer. Or it may even be promoted by the incumbent to get new ideas from smaller innovators. The dead metaphor of “game changer” should be replaced by “selective game player.” Or creating entirely new value dynamics that the economy does not even see there is a game to be played.
Quasi-competitors are lurking to know what you know, but they derive a benefit for the relationship. Cooperative or parasitic, these players are a reality. They think about strategic alliances, distribution, joint ventures or other arrangements. But if the stars align, they may take you out. You also may be playing the game the same way. The way to vet these arrangements is by establishing enforceable legal rights, whether in the form of a license or some other agreement. Loose relationships are legally and practically dangerous. Nothing bargained for via a stout negation languishes. Easy deals often may be perceived as worthless. Can you do a deal with these players to mutual benefit?
Customers are the obvious players. But how do they react to your presentation of services? Do they look at you as hourly workers or a commodity, when you really want to be seen as a valued “asset” to the company or trusted advisor? How you present to the marketplace defines who you are, it also follows predictable behavioral patterns. What does you brand say about you to your customers? Is it focused? Do you have the control over your trademarks to present in a way, at a place and at a time that your customers see as value? What is there reaction if one of those elements is off?
Suppliers or vendors make up your solution set. These are hardware suppliers, software, professional services or facilities. Outsourcers, virtual and cloud suppliers require a place in the game. How do you interact and manage them? What is their reaction likely to be? In twenty years of negotiating deals, the author believes an out of touch vendor is vilified beyond their due generally. They may plod along with great goods and services that meet or exceed expectations, but the relationship matters because if it is neglected this allows others to get in your game. So if “thine own self” is likely to let relationships languish, a contractual right, such as exclusivity or mandatory meetings may compel you to manage your shortcomings seriously.
Whether self-regulation, membership in a standards organization, participation in a certification program or with international, national, state and local regulators; these players can tip the balance. “Die Gossen Hammer’ in the United States is our tax code, that makes the Codes of Hammurabi seem genteel and affable. The IRS is a huge player in your business and leaving them out or your calculus is a problem.
In Your Sandbox
Knowing who is in your sandbox is essential, if you want to predict probabilities of outcomes you desire. Knowing yourself, the competition, your temporal allies, goods and services suppliers along with regulators is essential; if you are to compete and create value. Next, we will map probable outcomes to the players.
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