WAR AND PEACE Chapter One By Diana Gordon & Jimmy Miller

Business is War? Traditional way of thinking Traditional way of thinking Win-Lose Win-Lose Have to beat the competition Have to beat the competition Earn the most money Earn the most money Retain the most customers Retain the most customers War actually makes everyone involved lose War actually makes everyone involved lose “It is not enough to succeed. Others must fail.” “It is not enough to succeed. Others must fail.” - Gore Vidal

Business is Peace? Less famous idea Less famous idea Win-Win Win-Win When others succeed, you will too When others succeed, you will too Work together Work together “You don’t have to blow out the other fellow’s light to let your own shine.” “You don’t have to blow out the other fellow’s light to let your own shine.” - Bernard Baruch

Compromise: Co-petition Business encompasses both War and Peace Business encompasses both War and Peace Goal: Do well for yourself Goal: Do well for yourself Concurrent war and peace Concurrent war and peace Compete enough to retain market share but don’t take it all Compete enough to retain market share but don’t take it all Cooperate with out losing sight of your own needs and vision Cooperate with out losing sight of your own needs and vision “You have to compete and cooperate at the same time.” “You have to compete and cooperate at the same time.” - Ray Noorda

What is Game Theory? Analysis of a situation involving conflicting interests in business in terms of gains and losses among opposing players. Analysis of a situation involving conflicting interests in business in terms of gains and losses among opposing players. Focuses directly on finding the right strategies and making the right decisions. Focuses directly on finding the right strategies and making the right decisions.

Formulation of Game Theory 1944 – John von Neumann and Oskar Morgenstern published their book Theory of Games and Economic Behavior – John von Neumann and Oskar Morgenstern published their book Theory of Games and Economic Behavior. Now it is transforming the field of business strategy. Now it is transforming the field of business strategy. Real Value of game theory for business comes when it is applied to the interplay between competition and cooperation. Real Value of game theory for business comes when it is applied to the interplay between competition and cooperation.

What Game Theory Has to Offer Particularly effective when there are many interdependent factors and no decision can be made in isolation from a host of other decisions. Particularly effective when there are many interdependent factors and no decision can be made in isolation from a host of other decisions. It breaks down the game into its key components and helps you see what’s going on and what to do about it. It breaks down the game into its key components and helps you see what’s going on and what to do about it.

What Game Theory Has to Offer Valuable tool to share with others in your organization. Valuable tool to share with others in your organization. Common language for discussing alternatives Common language for discussing alternatives Helps build a consensus Helps build a consensus Approach you can expand and build on Approach you can expand and build on Dynamic: way of thinking that survives changing business environments Dynamic: way of thinking that survives changing business environments

Conclusion Can suggest options that otherwise might never have been considered. Can suggest options that otherwise might never have been considered. Makes it possible to see aspects of the situation that would otherwise have been ignored. Makes it possible to see aspects of the situation that would otherwise have been ignored. Chapter 3 introduces game theory and its five elements: Players, Added Values, Rules, Tactics, and Scope (PARTS). Chapter 3 introduces game theory and its five elements: Players, Added Values, Rules, Tactics, and Scope (PARTS).

Conclusion To change the game, you have to change one or more of the five elements (the PARTS). To change the game, you have to change one or more of the five elements (the PARTS). So…since all the elements in the game of business are constantly changing, you must need a business strategy that can adapt to changes. So…since all the elements in the game of business are constantly changing, you must need a business strategy that can adapt to changes.