Friday, November 14, 2008

The real game theory

The first year Darden curriculum covers basic concepts of strategy, what it is and how to come up with one and how to leverage your strength and position yourself in a competitive environment. We also learnt a little bit about game theory in Decision analysis. Strategy doesn’t make much sense without execution and we got insight into operations and execution. I am a big fan of hands on learning and I put my learning to great use.

Through the 3rd and 4th quarter of last year and the beginning of the Second year my roommate and me spend a lot of time playing video games. This is probably one of the rare times in our lives where we can spend significant portion of time on what majority in the society consider “not so valuable activities”. Our favorite game is “Age of empires” which is essentially a strategy game where you build a civilization and armies to attempt to defeat and conquer your opponents. The game has multiple dimensions on which you must do well to succeed. You need to be faster, have better economic power, more equipped troop’s and better battle strategies than your competitor to win. We modified rules so as to make this a more strategic game that heavily favored the “defender”. The defender basically amasses huge defenses at a predetermined location that attacker must penetrate. Essentially to win as aggressor you needed a superior economic and military strategy and excellent execution.

My roommate also happens to be an excellent video game player which makes the task of winning extremely difficult for me. We were at a point when we both agreed that it was almost impossible to win this game as the “attacking” team. However, I decided to give it one last shot. At this point you might have guessed that I won the game otherwise I never would have written this post. Other than bragging about how I won and why I won, I wanted to compare this to everything I have learnt about strategy at Darden.

I took some time just before the game to reflect on a strategy. I recalled a case in the First year decision analysis about one party having additional information and thus a huge advantage. We had applied game theory principles and concluded that the best option for the other party was to randomize its strategy. I picked a nontraditional team with strengths such that it was not apparent how I would attack. This prevented my opponent investing in particular capabilities that could counter me as he could not zero in on those I would leverage. Secondly I thought about my core capabilities and how they were different from my competitor. I invested my resource in developing my core capabilities. In terms of the actual battle I need a sustained attack to penetrate opponent’s defense and given the limitations of my resources, I had to think about what I produce to enable sustained production of key defense troops. Another execution and operational element was assembly and deliver of key units to particular location. In past we have several times done this akin to a batch which I endeavored to change to a more continuous flow process. In our post game conversation my roommate conceded that he did not expect the attacks to last as long. As he saw the first attack and looking back at our experience he assumed that it could not be executed in a sustained way. End of the day a lot of different initiatives and actions were aligned towards a single goal which helped achieve the objective.

So, what does this mean? Maybe it proves business school students are geeks. It definitely conveys that we have plenty of free time and not much use for it. Other than all the entertainment value, at least for me to some extent it brought together different elements of strategy and execution. We do have some simulations for marketing and operations, maybe strategy games could be included as well.

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