How can I see through a competitor’s strategy?

Anticipating how a competitor may respond to your moves is vital to determine a strategic course of action. However, this linear process of looking forward and reasoning backward is limited to sequential moves with an opponent.  What happens if my move and my opponent’s move occur simultaneously?

A popular examplerockpaperscissorz  Geir Arne Brevik of a game requiring simultaneous moves is Rock-Paper-Scissors.  In this simple game, making a series of random moves is statistically the best way to go.  The business world is filled with instances of simultaneous moves too. A common example may be observed when contractors are competing for work in a sealed, low bid auction.  Since it is difficult for humans to be truly random, psychology and pattern recognition may be applied to Rock-Paper-Scissors over a series of quick plays.  Winning a bid for a unique contract is tough.  Contractors are limited to a single move, and data are limited.

Ever hear something like this: “I think our competitor is really hungry, so their number will probably be aggressive.  Should we cut our margin?” …but what if they think, that we’re thinking this, what will they think then?  …and on and on!  Can you see the beginnings of circular thinking?  Trying to see through a rival’s strategy can feel like an adventure down a mental rabbit hole! 

How do I get out of this endless loop of logic?    

Take a page out of a game theory play book.  Build a matrix to illustrate possible outcomes and/or payoffs.  Though drawing an actual table may be impractical, the basic take-away message is this: By systematically identifying the probability of potential outcomes, you may begin to see dominant strategies emerge. If constructed correctly, it will prove quite beneficial!

Drop me a note with questions or comments anytime.

It’s your move.  Make it a great one!

-LK

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