This weeks guest article, Strategy Cyborgs and Ten Gigasims, is by the world-renowned business war game authority and creator of Cyborg Strategy™ Mark Chussil. Mark is running a series of free webinars, the next of which is on 27th May.
Strategy Cyborgs and Ten Gigasims
My Top Pricer Tournament™ has hit a milestone: It has enough entries from people around the world to run over ten billion strategy simulations. Ten gigasims. (Update: 11 gigasims.) You can learn a lot from ten gigasims. I sure have.
Over 1900 people have entered the Top Pricer Tournament. (You can, too. See below.) They made pricing decisions for generic businesses competing in the generic Ailing, Mature, and Fast Growth industries.
The Tournament simulates all the unique combinations of strategies — each blend is a scenario, a possible future, a single sim — to see which strategies work best.
Each strategy gets tested in the same 1.9 million combinations of competitor strategies (1.9 megasims) for its industry. That number grows as more entries arrive. It's "what if?" on the best steroids ever.
Ten stats from ten gigasims
- Only one person chose 46 % of the strategies selected. Two or more people chose 54%. 52 people chose one approach.
- Then, roughly 90% of the possible strategies in the Tournament have not been chosen by any human (yet).
- And the majority of the strategies which were chosen by a single person performed below average.
- But, the best-performing strategies were chosen by only one person. It makes sense: if you want to outperform your competitors, you must do something your competitors are not doing.
- Finally, half of the entrants reported that they spent 10-20 minutes making their strategic decisions. A quarter spent less than 10 minutes and a quarter spent more than 20 minutes.
- The entrants who thought other entrants would pick strategies "not at all like mine" were wrong.
- Also, extroverts and introverts were equally effective in getting their goals.
- And, entrants chose widely different strategies to achieve the same goals.
- Entrants had widely different performance even when they tried to achieve the same goals. In the Mature industry, the profit/sales ratio ranged from 6.2% to 25.3% among entrants who cared only about profitability. Those ratios are the worst and best averages across the same 1.9 megasims.
- Finally, it takes about 24 hours to calculate ten gigasims.
Strategy Cyborgs: Six questions you might ask
Ten gigasims. That's nice. It's more than nine gigasims. But what's the big deal?
Well, the big deal is that the Tournament shows it's possible to test strategy ideas thoroughly and quantitatively. Those 1.9 what-if megasims for each strategy let us separate those that sometimes get lucky from those that are smart decisions. And then there are the surprises.
Surprises? Aren't the good strategies obvious? It sounds simple, with generic competitors and price as the only lever.
Everyone who enters the Tournament thinks their strategies will work. We know that because no one says, "I've got a good strategy and I've got a bad strategy, I think I'll use the bad strategy." But performance in the Tournament has varied widely (see #9 in "ten stats", above).
We humans might think the Tournament is simple because few of us think so broadly about competitive strategy. This HBR digital article, one of six I've written that cite the Tournament, tells the story of my personal comeuppance in the Tournament. It fundamentally changed the way I think, teach, and consult.
Is it artificial intelligence?
So, I'm working on that. For now, the Tournament contains cyborg intelligence, the collaboration of humans and computers. Humans have the ideas; computers do the arithmetic. (Contact top pricer for information about my cyborg war game webinars and technology.)
Is there a "solution"-
To the Top Pricer Tournament or to real-life strategy?
If you mean "is there a strategy that will get me the results I want?", I think the answer may be no. Companies may set unrealistic performance goals, which can lead to big trouble if they don't know the goals are unrealistic. Moreover, competitors don't hold still, especially if the results you want cause them not to get the results they want. One of the benefits of gigasims is that you can explore what's reasonable to expect.
If you mean "is there a strategy that is so good I would not gain by switching to any other strategy?", I think the answer is yes… but even if there is such a strategy, it wouldn't guarantee that you will like the results. See the prisoner's dilemma.
It's fascinating stuff. Stay tuned.
Do the results apply to my business?
If you hold a monopoly or dominate your industry so thoroughly that competitors are irrelevant, no, otherwise, the thinking and concepts in the Tournament almost certainly apply.
It's worth noting, too, that the same principles would apply if we had the Top Product Features Tournament or the Top Marketing Spender Tournament rather than the Top Pricer Tournament. The numbers would be different, but the problem and analysis would not.
Can I enter the Tournament?
Yes! You can join the executives, managers, consultants, students, and professors from six continents who have entered the Top Pricer Tournament. It's free for individuals and some groups. All entries are confidential. You don't have to be a pricing expert; you have to know what a price is.
And you will receive a confidential report that shows how your strategies performed. Contact me to enter.
Mark conducts business war games world-wide, create Cyborg Strategy™ simulators, and teach/publish on strategic thinking. Mark is running a series of free webinars, the next of which is on 27th May.
Frames, Games, and Inspiration - the description
Inspiration is the offspring of serendipity (something goes boing! in our heads) and judgment ("good idea!"). Just remember: Every bad strategy started life as someone's inspirational good idea.
Creativity is free, fast, fun, enlightening, and empowering. Its goal is not consensus, although that can be a bonus. And its goal is not even awareness, although that is necessary. And It's goal is insight.
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