Exploiting Findings from Game Theory to Succeed in a Competitive Environment

Business is a high-stake game. Strategy is about ensuring that the firm plays the right game in the right way. To do so, the competitive advantages underlying the designed business model are defined based on answering Porter’s five strategy questions. The firm’s competitive advantages describe its unique positioning among all key players. In extension to traditional strategy schools embracing the competitive advantage approach, design thinking-based strategy development puts a strong focus on the role of the customer to competition. To ensure the sustainability over time of the competitive advantage, a game-theoretic analysis developing possible competitive strategy game plans, for reacting to external threats, is performed. A successful strategy identifies and attains a competitive equilibrium among all involved players, putting the firm center stage. As such an equilibrium is transient in nature, strategy adjustments are needed over time. The competitive layer of the strategy design process defines this equilibrium, through making the competitive advantage of the firm explicit and pro-actively, rather than reactively, anticipate potential changes in the competitive environment over time.