Playing a Game with a Powerful Buyer

How do you deal with buyers with a big makret power? This is a very, very common situation, and the standard answers have been well known to strategists: change plalyers.

How Book Publishers Can Beat Amazon

As PARTS framework indicates, changing even one player will change the game.

The case in this article seems no different from other industries where companies such as Intel, Microsoft, and Wal-Mart are dominating a part of the industry value chain.

Challenges of Cooperation

Steve Jobs rips tech giants, even Apple partners

As the article clearly shows, cooperating with business partners (actually any partners in life and business) is inherently difficult. Today's partner often turns out to be tomorrow's competitors. That's inevitable. The real question is how to manage cooperation despite the possibility of competition and conflicts in the future.

Amazon Offers a New Way to Shop -- on an iPad

This is a great example of co-opetition:
http://nyti.ms/9bF8eN

If you focus too much on the aspect of competition for other companies, you may miss many profitable opportunities. In the modern business games, no one is a total competitor or friend: anyone can be simultaneously a friend and foe. The real skill is to manage such multiple roles of a single player. This is the message from the book, "Coopetition."

Strategic Management of Personal Life

There's no reason why we cannot use our wisdom on strategic management of firms and businesses to reflect on our own life and career. There is an interesting, thoughtful article on life and strategy: 

How Will You Measure Your Life?
by Clayton M. Christensen

I have no capacity to answer this philosophical question: what is a (good) life? But, I can point to two unavoidable aspects of life.

First, when there are limited resources and too many people, there will be tough competition, resulting in many "losers" and even "deaths." Life becomes a survival game, and it will be harder to see humanism, love, and friendship in such situations. Only the "fittest" will survive, although defining the fittest seems not very easy. One positive thing is that you can do something about this: you are able to choose certain career paths or location with enough resources (growing industy or city), and thus less competition. Of course, the reward for such career or location may not be as big as what you may get from more competitive "games." But, that's the trade-off that you have to make.

Second, we have to live with our own capabilities. In the capitalist economy, you have to offer your service to someone else, and in return you will get paid. The more "valuable" capabilities you may possess, the better. In the short run, it's very hard to develop and change your skills and capabilities. Once the extent to which you can change your skill set is limited, your choice of career will be pretty much all set. If your capabilities happen to be (1) valuable, (2) rare, (3) non-substitutable, and (4) inimitable, you will enjoy a decent life and career. If not, the chances are you will be stuck in a very competitive job, where you are basically substitutable.

However, the most important step will be to figure out the goal of your life. What do you want to achieve and pursue in your life? The diffculties in life come from the gap between what you want to do and what you can do using "valuable" skills. If one's goal is to make money and that person happens to be good at finance, he or she is a lucky one that probably has a lucrative job at the Wall Street. Most of us are not that fortunate. We have to earn income by doing what we can do best and spend that income to pursue our true goals. If that's the case, you have to figure out how to maximize your income that can be used to pursue your own happiness. This is where you can apply your knowledge of strategy into your career (and life) management: try to identify an attractive game where your own skills are really appreciated.

No one said this would be easy.

Revisiting Porter's "What Is Strategy?"

Porter, M. E. 1996. "What is strategy?" Harvard Business Review 74:61-78.

For strategy folks, this article is almost a classic. What can I say about such a well-cited paper? Well, not much. I had a chance to revisit this paper and came to appreciate his thoughtful insights once again.

One thing stands out among many insightful points from Porter: rather than simply focusing on the development of valuable resources or capabilities to create competitive advantage, firms should first think about why they need those particular resources in their strategy and how they plan to organize those resources along the carefully chose firm activities. Back to organizing! This is a simple, maybe obvious to many, but powerful insight.

Strategy is not just about picking "right" target customers or identifying and developing as many resources as possible, but about organizing different activities in a unique way to make customers happy in a different way. That's how you maximize your own added value to the game.

Will Apple’s Culture Hurt the iPhone? - NYTimes.com

This is a very tough question that deserves some careful thinking and lively discussions. So, the key question here is whether Apple should pursue more open systems to avoid the mistakes that Apple made in the PC industry back in 90's. There are many industry experts who draw analogy between the current smart phone market and the PC industry. But, is it right analogy? Those two markets show some similarities, for sure. Steve Jobs seems to have a different thought as in the second article: "Mr. Jobs said Apple is in a strong position in the smartphone and tablet markets and criticized the fragmentation in the smartphone business by various manufacturers based on Google Inc.'s Android software."

Link to the article: Will Apple’s Culture Hurt the iPhone?

Related article on WSJ: Apple Profit Muscles Past IBM

Another interesting point is that IBM does not think that the smart phone market is not a right game for them or actually anyone out there: "Mr. Palmisano has dismissed some of the consumer products that have driven Apple's performance—in particular, mobile devices. In a recent interview, Mr. Palmisano said he didn't wish that IBM had developed the iPad because he believes it is hard to preserve the profitability of such competitive businesses." Not every company shares the same perception about the attractiveness of the market, especially when the market is new with lots of uncertainties on consumer preference, technologies, supporting infrastructure, etc. Mr. Palmisano's comment certainly has points. But, the smartphone market is not just about hardware products, but more about the software platform, just like the operating system for PCs. One dominant platform can take it all, and, once the winning platform is "chosen," the market will be very well protected from competition, becoming a very attractive market. We'll see.

(Revised: 10/19/2010)

Book: Coopetition

Brandenburger, Adam and Barry Nalebuff. 1996. Co-opetition. New York: Doubleday.

There are many good books on business strategy on my bookshelves. But, if I have to pick only one book, I'd like to pick Coopetition by Brandenburger and Nalebuff. The book reads very easily due to its casual style and many simple, interesting examples. But, it has some very original, deep insights about how and why firms behave in a certain way.

No, you cannot learn game theory through this book. Rather, the main messages in the book are based on game-theoretic insights.