Game Theory and understanding options available
Game theory provides a strong framework for strategic options in a dual player game.
Options available both to self and the other player(s). E.g. When you are in a war.
What would the enemy do?
If they do that, how can I respond?
Will the outcomes be different if I moved first. (This one was super critical in the Cold War nuclear build-up era.)
It is said that Game Theory played a critical role in understanding how the Cold War era was headed towards a mutually assured destruction. Simplistically put, it allowed the political and military leaders to understand the options and their consequences very clearly.
Finding No-Regrets plan/options
In today’s highly volatile and dynamic business world, it is easy to feel intimidated and overwhelmed by the possibilities and hence the resulting choice of options.
Leaders feel comfortable finding no-regret options, that help their company keep moving ahead without compounding the risk.
But what are no-regret plans and how do we find one?
An interesting story from the World War II may help … Something I came across on Amazon Prime the other day
World War II, Iceland and Hitler’s plan to bomb America
Prior to Pearl Harbour when the war in Europe was picking up, Hitler had clearly called out his intention not to engage with America – the clear super power.
The Americans did not believe him. They just didn’t trust what Germany said or would do next.
Hitler meanwhile was building special long distance bombers that could fly across the ocean and bombard multiple targets.
The Germans faced one issue, the planes would need to refuel. Somewhere.
The US Intelligence had no clue about Hitler’s Long Distance Bombers Project.
While the US intelligence failed to get wind of the German plans, their strategic planners identified this as a possibility that Germany may explore.
Moreover, they understood that the viability of such a plan would critically depend on the option of refuelling being available.
And Iceland seemed like the perfect place to do that.
Hence, US occupied Iceland in July 1941. Rather took over the defence of Iceland from Britain.
A classic no-regrets example.
US didn’t know if Germany would attack mainland US.
But if such an option was denied to the Germans by controlling the air and water routes via Iceland, it sure must have seemed like a smart thing to do.
A no-regrets move.
My 2 cents watching this documentary was
- Put yourself in your opponent’s shoes and map out the possible options they have
- Identify options that can be “easily” denied to your competitor
- If you don’t know whether the option is a high-viability one (for the opponent) find low-cost ways to deny it e.g. patents, licences etc.
Don’t miss how War Games helped the Royal Navy figure out how German UBoats were so successful in hunting convoys. Another example of thinking like your opponent and figuring out what options/methods they may deploy.