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The irrational game

To the peace of this world.


I strongly oppose starting a war for any purpose. But history have taught us war is inevitable. As long as humans are not united, different parties will fight against each other to maximise their benefits without considering their benefits as a whole. People may think being a strategist is about finding ways to win. However quite the contrary, I believe strategy is more of an art of being invincible.


I read “The Art of War” by Sun Tzu again because of Russia’s recent invasion of Ukraine, trying to find some insights about why wars are still around us in 2022. The quotes are just as shocking and powerful as every time I read it: “The supreme art of war is to subdue the enemy without fighting.” Undoubtedly, Russia already lost the war.


I genuinely see "The Art of War" as the Bible of strategy. When we look into Sun Tzu's life, he didn't win significant battles or wars in records. Some people may say this book is the most important achievement of his life. For his defense, peace always outweighs war. It is tough to win a war without harming ourselves. Human lives are thrown away, money spent in weapons and supplies, reputation destroyed, etc.

Raymond Depardon丨The Fall of the Berlin Wall丨Sketched by Kun Lu


Healthy competition can motivate businesses to improve their services and products for customers' well-being. But why does vicious competition still have a play in the market? The Game Theory presents a theoretical framework for conceiving social situations among the competing players. The key to game theory is that one player's payoff is contingent on the strategy implemented by the other player.


The Prisoner's Dilemma is a well-known example of game theory. Consider the example of two criminals arrested for a crime. Prosecutors have no hard evidence to convict them. However, to gain a confession, officials remove the prisoners from their solitary cells and question each one in separate chambers. Neither prisoner has the means to communicate with each other. Officials present four deals, often displayed as a 2 x 2 box.


If they both confess, they will each receive a five-year prison sentence.

If Prisoner 1 confesses, but Prisoner 2 does not, Prisoner 1 will get three years and Prisoner 2 will get nine years.

If Prisoner 2 confesses, but Prisoner 1 does not, Prisoner 1 will get 10 years, and Prisoner 2 will get two years.

If neither confesses, each will serve two years in prison.


The most favorable strategy is to not confess. However, neither is aware of the other's strategy and without certainty that one will not confess, both will likely to confess and receive a five-year prison sentence. The Nash Equilibrium suggests that in a prisoner's dilemma, both players will make the move that is best for them individually but worse for them collectively.


The same concept can be applied in business. You may have heard of a “price war” between two major industry players. Some companies want to gain market share by cutting their price to lower them than their competitors. The counterattack from the competitors is also to reduce its price to secure its market share. The outcome is obvious. All parties lose profit in this price war. It is time to switch the attention from the competitors to the customers.


When I was working as a brand manager, we have had many competitor analyses such as price, product, distribution, etc. The idea of competitor analysis should be about gathering data and gaining knowledge about the industry, not mimicking them. When we try to copy the same thing on our business, it becomes a distraction. Each company is different from the others, and the model that works for our competitors does not mean it will also work in ours. Hence, a customer-centred strategy should be a priority for more sustainable development, which is the key to being invincible in the business world.


As human beings, we are not the rational kind of creatures. We prefer something great to good enough. Such eagerness drives us toward flourish and, unfortunately, war. It is heartbreaking, but it is who we are.



Kun



Book to read: "The Art of War" ------- Sun Tzu

"The Art of Strategy" ------- Avinash K. Dixit, Barry J. Nalebuff

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