Now, from my prior post, it may appear that I don't find anything useful regarding strategy development on the web. That's not true. At least not totally true.
I think there are some corner's of the net that have very interesting work and links. Of course, context is required.
Before we dive into game theory and its relationship to strategy, let's make sure we are all operating in the same context.
Firstly, strategy assumes you are in conflict with another entity. This could be organized conflict, such as war or a direct competitive endeavor. It could be more general conflict such as fighting market trends. Regardless of the focus of the conflict, it is this opposing entity that you are developing stratagems against.
Secondly, strategy implies, that you are concerned about an overall plan, not a single tactic to achieve victory. "Shoot first" is not a strategy for winning a war or battle or even a gun fight. The plans and activities that ensure you will take the first effective shot in the fight would constitute a strategy.
Thirdly, you know what victory looks like. It is impossible to plan if you don't know what the overall aim or objective is. In the military, it might be the defeat of the opponent. But it might also be creating a state in which the opponent can no longer inflict material damage against your forces. Or it might be inflicting sufficient casualties on the enemy that they cannot entertain battle for the next generation. Knowing what the ultimate objective is, in detail, is critical.
So let's apply this thinking to a business.
Hypothetically, we are developing a strategy for a software company that is established in a relatively mature market; i.e the desktop application market. For illustration purposes, they are the number three provider of their class/type of software. They have 20% market-share. The leader in the category has 50% share. The second largest provider commands a 30% share.
So, what constitutes victory?
- Is it increasing market share above 25%?
- Is it attaining the number two position in the market place?
- Is it attaining the number one position in the market?
- Is it establishing a monopoly in the market?
Deciding what the desired outcome is, is the first step in developing a strategy. Unfortunately, for many companies, it is not so simple.