This blog post will serve as a basis for my future blog post on The Role of Social Media. I am long-winded so I’ve decided to write this blurb as a separate post.
Is business a game? Or are games serious business?
In many ways, the world of Business can be described as an insanely complex game. At its core, business competition can even be compared to deck-building games such as Dominion. Both “games” continually build its resources and assets to maximize some sort of “win condition” (in Business, usually in the form of profit). What’s neat about games in general is that they almost always involve a “battle of strategy” between two or more parties. And such a battle will always involve two main factors:
1) What is your strategy?
A strategy defines how you will play the game
In business, this means either minimizing cost through economies of scale and logistics, or maximizing sales price through differentiation. You can also focus on increasing sales quantity through mass advertisement(s), or catering to a niche market and ensuring that they go to you, and only you, for the rest of their consumer lives. All these strategies have one goal in mind: maximizing profit. If you’re not maximizing profit, you’re not “winning the game,” so to speak.
There are two levels of strategy in both businesses and card games: the macro-level and the micro-level (sometimes referred to as tactics).
In Business, a macro-level strategy might include product differentiation, for example. In the micro-level, you’ll have the different dimensions of differentiation which may either add “real value” (i.e. new features) or “perceived value” (i.e. emphasis of value on certain existing features).
A card game “deck” may try to achieve the goal of “decking out” an opponent by reducing the number of cards in their deck to 0 (a common “win” factor in many card games). The goal of “decking out” the opponent rather than winning through whatever battle mechanic your card game has in play is an example of macro-level strategy. Micro-level strategies would include the different tactics that would help in either avoiding battle or reducing cards in your opponent’s deck.
All players in any game, Business or otherwise, start with a certain amount of resources (money, brand, assets) and must abide by the rules of the game (laws). Other than that, a company’s strategy and tactics are fair game.
2) How efficient are you?
In competitive Starcraft, a player’s competency in the game is sometimes measured in actions per minute (APM). An explanation can be found in the classic video below:
The concept of efficiency basically asks the question “how good are you at executing ____? How much time does it take for you, compared to your competitors, to execute the same task?” This concept is important because if two firms operate with the same strategy (i.e. cost leadership), the firm with the most efficiency will almost always win.
Sticking to our example of card games, the concept of efficiency pretty much divides the gap between competitive and casual play (I could write a separate blog post on targeting these two markets differently based on this concept, but I digress). Casual gamers, for example, play the game “to have fun” and execute their strategy at some reasonable level. Once a player decides to become “competitive” at the game, s/he would try to streamline the deck’s efficiency by using more powerful draw cards, more cost-efficient cards, or by taking out slow/useless cards and replacing them with useful ones. This means that a “competitive” player will almost always beat a “casual” player. You can see the results of this in virtually every trading card game in the world. I can point you towards tournament reports for Yu-Gi-Oh! Magic, Pokemon, anything, you name it, and I can guarantee that the top deck lists will always include common cards between decks because these cards are efficient (and card game companies make the most money by selling these cards in rare ratios in booster packs!).
The takeaway point is that an efficient deck is an effective deck; an effective deck wins you the game. This is true in both card games and business. We can take a look at Wal-Mart, for example, and see that their strategy revolves around price leadership. They maintain competitive advantage because they are really, really efficient at what they do. By keeping costs as low as possible and maintaining economies of scale (amongst other factors), Wal-Mart can effectively beat out any new entrants that dare go head-to-head with the same price leadership strategy. Many companies are trying to differentiate their products as their strategy; a company who is very efficient at doing so will enjoy increased brand equity and reputation for their product-take Apple, for example.
Business as a Boat
So, I’m in Marketing. I’m not a business strategist. Where do people like me come in? Well, in a business, we can call Accounting, Logistics, HR, Sales, and most other departments as proponents of efficiency. Marketing is almost strictly involved in ensuring that the company’s strategy is effective within the market. If a company were a boat, Marketing would be the captain ensuring that the boat is carefully navigated during a storm, and always headed towards the right direction. Sales would operate the motors, and Logistics/HR would ensure that the engines and staff were always in tip top condition. A good marketer would scan the competition, scan the environment, and seize opportunities to propel the boat forward. If the decision was poorly made, the boat may crash, sink and fall. Therefore, marketers must be well-informed.
So, why did you write this post?
This post was originally going to be about social media and SEO. “Whoa! That seems to have nothing to do with this post at all!” you might say. But marketers need several tools to operate a business effectively: accurate up-to-date information, a keen eye for opportunities, and an understanding of threats and weaknesses. If a business is a boat, and Marketing the captain, then social media would be waves in the ocean.
I’ll explain my last point in another post.
Signing off,
Chris