Art of Growth Strategy

The essence of a game of strategy is the interdependence on the decisions of those involved. These interactions arise in two ways. The first is sequential where alternating moves are made keeping in mind how the current actions will affect the future actions of the others. Second kind of interaction is simultaneous, where all involved play their move at the same time, impacting each other.

The concept is no different for a corporate strategy or growth strategy where one needs to clearly identify whether the progress is in for sequential interaction or simultaneous interaction. Key element in sequential move games played by those involved is that each involved should figure out the other future responses and use them in calculating his own best current move. This idea is so important that it is worth codifying into a basic rule of strategic behaviour.

A sequence of decisions with the need to look forward and reason backward can arise even for a solitary decision maker not involved in a game of strategy with others. This need not be the end of the choice and each road might in turn have further branches making the decision chart correspondingly complex.

While in case of simultaneous interaction, the players have to focus on their actions and impact of their actions on the objectives being worked upon keeping in mind various impact and scenarios arising from the actions of others involved.

There are normally two peoples of negotiators – one proposers (those who take the lead and propose the way forward and reasons behind the same) and second responders, who respond to the proposal on table. Proposers have the onus of developing a win – win negotiation strategy with backward reasoning and futuristic approach. While in most cases, proposers can’t rule out the selfish interest in the proposal, the same should be moderated to benefit the responder.  However, generosity driven by altruism or by a concern for fairness also should be overdone, it should have reciprocating value for the proposer as well.

Why do responders reject an offer even when they know that the alternative is to get even less? The reason cannot be to establish a reputation for being a tough negotiator that may bear fruits in future plays. Even if a reputational motive is implicitly present, it must take a deeper form: a general rule for action that the responder follows without doing any explicit thinking or calculation in each instance. It must be an instinctive action or an emotion driven response.

The pragmatic solution is a combination of forward looking analysis and value judgement. While forward looking analysis is looking ahead and reasoning backward focussed, value judgement focuses on being able to judge the value of a position from the number and interconnections of the pieces. To really look forward and reason backward, you have to predict what others involved will actually do, not what you would have done in their shoes. The problem is when you try to put yourself in the other players’ shoes, it is hard if not impossible to leave your own shoes behind. You know too much about what you are planning to do in your next move and it is hard to erase that knowledge when you are looking at the game from other player’s perspective.

Begin by seeing if either side has a dominant strategy – one that outperforms all of that side’s other strategies, irrespective of the rival’s choice. If you have a dominant strategy, use it. But, if your rival has a dominant strategy, then be sure that that strategy will be used and be prepared with your fitting response or alternate.

If neither side has a dominant strategy, see if either has a dominated strategy – one that is uniformly worse for the side using it. If so, work on eliminating dominated strategies from consideration. Go on doing so successively! If during the process any dominant strategies emerge in the smaller games, they should be chosen. If this procedure ends in a unique solution, you have found the prescription of actions and the outcome. Even in case, the outcome is not unique, the situation becomes more manageable and simplified without the presence of dominant or dominated strategy.

Another way of viewing the situation is to look for an equilibrium, a pair of strategies in which action of everyone involved is the best response to the others’. If there is a unique equilibrium of this kind, there are good arguments why all players should choose it. If there are many such equilibria, one needs a commonly understood rule or convention for making their choice. In absence of such an equilibrium, each rival gets a free hand in exploiting others involved through a systematic behaviour.

Author: The above article forms the view of the author, Priya Swaminathan of SriSattva Team and not Indian Startups Blog. In case of any difference in opinion, please address your queries to SriSattva Team at ssga@srisattvagroup.in. Do feel free to write back to us with your comments and feedback.

About SriSattva Group  

Started in 2009, our strategic growth consulting firm has worked with hundreds of management to put them on the growth path towards a successful entrepreneurial journey. The firm built both its client list & team list with personal involvement, has partnered with their ups, downs and assisted them towards a successful journey ahead. Ms Aparna RamMohan leads SriSattva Group as the Managing Director of the Group and Mr K RamMohan heads the Legal, Risk and Compliance division of the firm. Visit our website www.srisattvagroup.in to know more.