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The Changing Game of Strategy

2012 May 13

In Oliver Stone’s classic movie Wall Street, the financier Gordon Gecko schooled his protégé in the aphorisms of Sun Tzu, the ancient Chinese military philosopher.
The point was clear.  Business is war, an ancient game with eternal truths and the essence of strategy is a methodical, time-tested approach.  Superior planning, matched with flawless execution, is the key to domination of the competitive environment.
It sounds good, but we’ve long known that strategic planning has serious limitations.  The notion of managers as generals, guiding action from high on the hill, is an outdated concept at best.  While that doesn’t always register with us grownups, the often-maligned Millennials know it intuitively and a lot of that has to do with the games they play.

The Game of Kings

Look through the marketing materials of any business consultancy and you’re bound to eventually find some reference to the ancient game of chess.  Whether it’s chess imagery such as a board or a collection of pieces, or the insertion of a term like “endgame” or “checkmate,” you can be sure it’s in there somewhere.

And why not?  Chess is the ultimate game of strategy.  All of the really smart James Bond villains played it.  Starting with the same pieces in the same position, you need to outwit your opponent, thinking several moves ahead.  Surely, there is no better metaphor for business strategy.

Except, of course, the fact that very few senior executives play it and, to the best of my knowledge, there never has been a demonstrated link between good chess strategy and good business strategy.  The imagery of a brooding chess player cum business strategist might be intriguing, but it’s inaccurate and, I think, misleading.

The one insight we can derive from chess is that Grand Masters excel at a skill called chunking.  They are able to recognize patterns of pieces and replay whole games in their head.  Their ability, however, disappears outside the realm of chess, which should give caution to successful executives operating outside their realm of experience.

Fear and Loathing in Las Vegas

John von Neumann was a mathematical genius of biblical proportions.  He could perform superhuman feats of calculation and memory (as a child he would entertain his parents guests by memorizing pages of the phonebook at a glance).  Surprisingly, he was also an exceedingly lousy poker player.

While he could track the cards and rate the odds better than anyone alive, he was unable to predict the most important variable – the other players.  That conundrum led him to create the field of game theory, which helped calculate the likelihood of other people’s actions and has found wide-ranging applications, including negotiations and marketing.

Not surprisingly, many great business minds are also avid card players.  Most famously, Bill Gates and Warren Buffett are enthusiastic bridge players.  In his book The Quants, author Scott Patterson notes that many top traders started out hustling poker.

McLuhan and the Gutenberg Galaxy

Marshall McLuhan was probably the first person to think seriously about the consequences of electronic media.  His basic idea was that the printing press changed not only the speed and distance at which ideas travelled, but how people thought.  In other words, “the medium is the message.”

Electronic media, then, would revolutionize not only how we depict life, but how we live it as well.  He wrote in 1964:

Today it is the instant speed of electric information that, for the first time, permits easy recognition of the patterns and the formal contours of change and development.  The entire world, past and present, now reveals itself to us like a growing plant in an enormously accelerated movie.

That goes not only for the media we watch, but also the games we play.  Although card games are still popular in dorm rooms, the big thing, of course, is video games, especially so-called massively multiplayer online games (MMO’s), which create virtual worlds complete with their own economies, cultures and quasi-governmental structures.

The Quest of Questing

If McLuhan is right and the medium truly is the message, then game strategies are embedded in the business strategies of those who play them.  So let’s take a look at World of Warcraft, the most popular MMO with over 10 million players.

You start out as an entry-level player with some raw talent that needs development.  You are given simple tasks and receive small rewards for completing them.  As you go further, the tasks become more difficult and you find that you need to collaborate effectively with other players in order to achieve your objectives.

Eventually, you realize that if you want to get ahead in the world, you need to join a guild, which gives you access to additional resources, opportunities for collaboration and expertise.  Sometimes, in order to develop, you need to take time off from your quest to develop your skills further.

You never actually win.  The objective is, through constantly adding to your skill set and social network, to amass the maximum amount of power and influence.  Sound familiar?

The Audacity of Youth

When Mark Zuckerberg recently showed up at an investor meeting with a hoody, one analyst commented that it was a “mark of immaturity” and he should show investors more respect because he’s asking for their money.

He went further to suggest that it would be a good idea for Facebook to get some adult supervision for Zuckerberg, moving him from CEO to a more product oriented position. Nonetheless, he issued a “buy” recommendation.

Henry Blodget said this in a reply on Business Insider.

Mark Zuckerberg doesn’t give a crap about you. He cares about his product, not you or your business or “returns.” He views you as a source of liquidity for his employees and existing investors. He’s only taking the company public because he has to.

In other words, the game has changed.  As Zuckerberg wrote in a letter to prospective shareholders “We don’t build services to make money; we make money to build better services.”  Translation: don’t bother him, he’s questing.  That’s the audacity of youth today. Increasingly, they expect us to play their game.

And the thing is, they’re probably right.  Strategy today isn’t methodical, but emergent; requiring collaboration in order to build the skills and resources to fulfill quests of purpose, meaning and, if the game is played very well, immortality.

– Greg

2 Responses leave one →
  1. May 13, 2012

    Love your line of thinking in this. However, much like HBR stuff, you give teasers and leave us salivating for more..I am so glad you are bringing Mc Luhan into serious discussions about understanding the media. Recently, I was flipping through the pages of a popular Social Media/Social Business consultant who has written a book titled “The End of Business as usual”. There is an entire chapter titled “Medium is not the message”. I was quite amazed by how people are (mis)interpreting Mcluhan’s message. (I will definitely check that chapter sometime to really see what he has to say..)

  2. May 13, 2012

    Yeah, it’s amazing that as much as people repeat McLuhan memes like “the media is is message” and “global village,” very few actually take the time to read him. Much of what he wrote could be inserted verbatim into many of today’s new media pundits who think they are telling us something new!

    Have a great week!

    – Greg

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