Dynamic Competitive Strategy

6 Session Dynamic Competitive Strategy

What’s it all about? • Game theory – theory of interdependent decision making • the logic of decision making in social interactions: • Two or more decision makers (players) • Choice of two or more strategies – the outcome of the interaction depends on the strategy choices of all the players • Players have well-defined preferences among the possible outcomes; numerical pay-offs can be assigned for all players and outcomes • Each player has partial control over the outcome

How does it do it? • Formal and logical properties of social interactions • Game is an imaginary idealization of a social interaction • Social interactions too complex – games with clear rules and defined basic elements • Players: individuals, corporations, animals, Nature • Decisions, moves and strategies • If outcome partly chance, then play with Nature • E.g. Poker – nature deals cards, then the game between other players begin

Interdependence theory • Interdependence structure – situations in which personal outcomes are partially or completely determined by the actions of one or more others • Mixed motive situations – those which are characterised by conflict between personal and collective goals • e.g. Prisoner's Dilemma, Battle of the Sexes, Cuban Missile crisis, Chicken • Broadly speaking any situation in which you are tempted to do something but knew it would be a great mistake if everybody did the same thing, is likely to be a prisoner’s dilemma. (Ridley, 1996)

Bonnie and Clyde arrested! • Bonnie and Clyde have been arrested for suspected bank robbery, but the police has little evidence • The police offered them immunity from prosecution for a confession • If both stay silent then both get a short sentence on a minor charge • If both confess then both receive a moderate sentence • If only one confesses then that criminal goes free and the remaining criminal gets a long sentence

The Story of Bonnie and Clyde(aka The Prisoner’s Dilemma) Bonnie Clyde

What’s the dilemma? Cooperate? Compete? • Conflict between acting in an individually rational manner and in a collectively rational manner • Acting in anindividual (non-cooperative or competitive) way: • never puts you in a worse position than the other person, irrespective of their behaviour • Acting in a collective (cooperative) way gives: • the best outcome for both individuals • but provides the worst outcome if you are the only one acting in this way

Definition of Nash Equilibrium The concept of Nash Equilibrium was first introduced by John F. Nash, one of the most renown Princeton mathematicians and one of the founding father of Game Theory who received the Nobel Prize in economics in 1994. Nash claims that “the strategy that would lead to the most beneficial outcome to both side that plays the game is the strategy that would bring the highest benefit not only to the party that uses the strategy, but is the one that would also benefit all the parties that participate in the competition.” Hence, to figure out the strategy of other competitors, we should make the best effort to assess the strategy of the competitor that would best response to our strategy. Once the competitor’s strategy is assessed, we should then implement a tactic that would induce the competitor to respond in a way that suits our plan. The outcome of this would finally lead to a competitive equilibrium where both sides will be temporarily satisfy and thereby stop the competition.

A scene form The Three Kingdoms Given that his army is at a major disadvantage, what should Kong-Beng do to prevent his town from being taken away by Suma-EE?

Scene from the Three Kingdoms Based on the concept of Non-Cooperative Game with Incomplete Information, what can we learn from Kong-Beng’s strategy? What did he do to 1) reduce Suma-EE’s confidence to attack? and 2) cause Suma-EE’s Army to churn away?

Does war has something to do with strategy? “When capable of attack, you must seem incapable; when ready to attack, you must seem unready. When your target is near, give the impression that it is far away; when your target is far away, give the impression that it is near. Offer the enemy a bait to lure him; maneuver the enemy into confusion and crush him. When he has secured his position, prepare against him; where he has superior strength, avoid encounters with him. Anger the enemy general, that he may become irritable. Pretend to be inferior, that he may grow arrogant. When the enemy troops rest easy, rob them of their rest. When the enemy forces are united, disunite them. Attack where the enemy is unprepared; act when he does not suspect it. This is the wisdom of warfare. You cannot be predictable”. Sun Wu, Art of War, Chapter 1, “Sun Zi” (14 Laws of Deception)

Classification of the 36 Stratagems • Advantageous Strategies (Strength is at the advantage & Opportunity can be utilized in a timely manner.) • Opportunistic Strategies (Opportunity is available, but strengths may not be advantageous.) • Offensive Strategies (Strength & Opportunity are in your control and need to be urgently utilized.)

Classification of the 36 Stratagems • Confusion Strategies (Use when you are WEAKER than your adversary and need to more time to defend yourself.) • Deception Strategies (Use when you are THREATENED and need to misdirect your adversary’s attention/motives.) • Desperate Strategies (Use when you are WEAK, THREATENED, and have no way out.)

Advantageous Strategies • ปิดน้ำข้ามทะเล • ล้อมเว่ยช่วยจ้าว • ยืมดาบฆ่าคน • รอซ้ำยามเปลี้ย • ตีชิงตามไฟ • ส่งเสียงบูรพาฝ่าตีประจิม

Adversary Façade of Normalcy Hidden Attack You ปิดน้ำข้ามทะเล “The perception of perfect preparation leads to relaxed vigilance. Familiar sights lead to slackened suspicion. Therefore, secret machinations are better concealed in the open than in the dark, and extreme public exposure often contains extreme secrecy” Key elements • Your adversary is vigilant • You take action that appear normal • Your adversary fixes his attention on this façade of normalcy. He does not see your true attach or intention • You take your adversary

Adversary Your ally YOU ล้อมเว่ยช่วยจ้าว “It is wiser to launch an attack against the enemy force when they are dispersed than to fight them when they are concentrated, He who strikes first fails and he who strike later prevails” Key elements • You are in direct conflict with adversary • An ally of yours attacks your adversary • Your adversary disengages from its conflict with you to defend itself • Your adversary must now fight on two fronts. This multiplies your chances of success

Your Borrowed Knife Adversary YOU ยืมดาบฆ่าคน “Your enemy’s situation is clear but your ally’s stand is uncertain. At this time, induce your ally to attack your enemy in order to preserve your strength. In dialectic terms, another man’s loss is your gain” Key elements • You induce a third party to attack your enemy • You take no direct action

Adversary You: Waiting รอซ้ำยามเปลี้ย “To weaken the enemy, it is not necessary to attack him directly. Tire him by carrying out an active defense and in so doing his strength will be reduced and your side will gain the upper hand” Key elements • You predict that the battleground will shift • You set up a defendable position on the new battleground • You wait for your adversary • When your adversary arrives, you use your superior position to defeat him

Your Adversary’s Trouble Adversary YOU ตีชิงตามไฟ “When the enemy falls into severe crisis, exploit his adversity and attack by direct confrontation. This is the strong defeating the weak” Key elements • Trouble strikes • Your adversary freeze or retreats • You capitalize on your adversary’s inaction or retreat to build power

Adversary Your real attack Your false attack You ส่งเสียงบูรพาฝ่าตีประจิม “When the enemy command is in confusion, it will be unprepared for contingencies. The situation is like flood waters rising higher and higher; likely to burst the dam at any moment. When the enemy loses internal control, take the chance and destroy him” Key elements • You feign an attack • Your adversary respond to this false attack • In responding to this attack, your enemy is exposed to your true attack • You launch your true attack and defeat your adversary

Opportunistic Strategies • มีในไม่มี • ลอบตีเฉินชัง • ดูไฟชายฝั่ง • ซ่อนดาบในรอยยิ้ม • หลี่ตายแทนถาว • จูงแพะติดมือ

Adversary New Creation Hidden Attack You มีในไม่มี “Design a counterfeit front to put the enemy off guard. When the tricks works, the front is changed into something real so that the enemy will be thrown into a state of double confusion. In short, deceptive appearances often conceal forthcoming danger” Key elements • Your direct attach is in effective • You create a new player/entity • This player/entity catches your adversary off guard • You or the new player/entity take your adversary

Adversary Unorthodox Attack Obvious Attack You ลอบตีเฉินชัง “To pin down the enemy, expose part of your action deliberately, so that you can make a surprise attach somewhere else” Key elements • You focus your adversary, or let your adversary focus, on a direct orthodox attack • You launch an indirect unorthodox attack • You take the advantage

Adversary You Observing the Conflict & Refraining from Action ดูไฟชายฝั่ง “When a serious conflict breaks out within the enemy alliance, wait quietly for the chaos to build. Because once its internal conflict intensifies, the alliance will bring destruction upon itself. As for you, observe closely and make preparation for any advantage that may come from it” Key elements • Your adversary is engaged in internal conflict or in conflict with other allies • Your attach might unify your adversary (and her allies) • You refrain from acting

Adversary Friendly Approach Hidden Attack You ซ่อนดาบในรอยยิ้ม “One way or another, make the enemies trust you and thereby slacken their vigilance. Meanwhile, plot secretly, making preparations for your future action to ensure its success” Key elements • A direct attack would generate resistance in your adversary • You choose an approach that is, or appears to be, friendly • Your adversary lets down defenses and welcomes this approach • You take your adversary with a second or hidden attack

Adversary You Sacrificing One Part YOU หลี่ตายแทนถาว “When loss is inevitable, sacrifice the part for the benefit of the whole” Key elements • You cannot win across all wars/fronts • You allow your adversary victory on one war/front • You thereby strengthen your ability to win another war/on another front • You defeat your adversary

YOU จูงแพะติดมือ “Exploit any minor lapse on the enemy side, and seize every advantage to your side. Any negligence of the enemy must be turned into a benefit for you” Key elements • Your adversary fails to act • You take advantage of this “deer in the headlights” moment to advance • By the time your adversary realizes his mistake, you have already taken the advantage

Offensive Strategies • ตีหญ้าให้งูตื่น • ยืมซากคืนชีพ • ล่อเสือออกจากถ้ำ • แสร้งปล่อยเพื่อจับ • โยนกระเบื้องล่อหยก • จับโจรเอาหัว

Adversary False Attack Adversary’s Actual Strength & Weakness YOU ตีหญ้าให้งูตื่น “Any suspicion about the enemy’s circumstances must be investigated. Before any military action, be sure to ascertain the enemy’s situation; repeated reconnaissance is an effective way to discover the hidden enemy” Key elements • You are unsure of your enemy’s strength or strategy • You launch a small-scale or indirect attach on your adversary • Your adversary reveals his strength or strategy by this response to you “false” attack • You plan your “real” attack with this new knowledge

Differentiate using the Abandoned You Abandoned Model, Idea, or Technology ยืมซากคืนชีพ “The powerful is beyond exploitation, but the weak needs help. Exploit and manipulate the weak for they need you more than you need them” Key elements • You adopt something forgotten/abandoned (a model, idea, technology) • Because your adversaries have abandoned it, only you use this thing • You convert this uniqueness into power

ล่อเสือออกจากถ้ำ “Unfavorable natural conditions to trap the enemy in a difficult position. Use deception to lure him out. In an offensive that involves great risk, lure the enemy to come out against you” Key elements • Your adversary is in a stronghold • You lure your adversary out of this stronghold • You either (1) attack on the open ground or (2) attack the stronghold Stronghold Adversary YOU

Adversary YOU แสร้งปล่อยเพื่อจับ “Press the enemy force too hard and they will strike back fiercely. Let them go and their morale will sink. Follow them closely, but do not push them too hard. Tire them and sap their morale. Then you will be able to capture them without shedding blood. In short, a careful delay in attack will help bring victory” Key elements • You “capture” your enemy • Though you are able, you do not kill your enemy

Adversary YOU โยนกระเบื้องล่อหยก “Use the bait to lure the enemy and take him in” Key elements • You give your adversary something on which you place relatively little value • In exchange, your adversary gives you something you value much more

You จับโจรเอาหัว “Capture the chief, and the enemy will collapse. His situation will be as desperate as s sea dragon fighting on land” Key elements • You face a persistent adversary • You identify your adversary’s leader or leaders • You aim your attack at this leader or these leaders • Your adversary’s leadership falls and brings down your adversary’s organization with it

Confusion Strategies • ถอนฟืนใต้กะทะ • กวนน้ำจับปลา • จักจั่นลอกคราบ • ปิดประตูจับโจร • คบไกลตีใกล้ • ยืมทางพรางกล

Opponent YOU ถอนฟืนใต้กะทะ “When confronted with a powerful enemy, do not fight them head-on but try to find their weakest spot to initiate their collapse. This is the weak overcoming strong” Key elements • Rather than engage your adversary head-on, you attack his source of power • This weakens your adversary or hinders his ability to attack • You defeat your weakened adversary

YOU กวนน้ำจับปลา “When the enemy falls into internal chaos, exploit his weakened position and lack of direction and win him over to your side. This is as natural as people going to bed at the end of the day” Key elements • You create confusion around your adversary • This blinds your adversary and so hinders his ability to understand your intentions or see your approach

Adversary Your Facade You Moving the Action where It cannot be seen จักจั่นลอกคราบ “Make your front array appear as if you are still holding your position as that the allied force will not suspect your intention and the enemy troops will not dare to attack rashly. The withdraw your main force secretly” Key elements • You establish a façade • Your adversary focuses on your façade, confusing it for the real action • You move the real action somewhere else

Adversary YOU ปิดประตูจับโจร “When dealing with a small and weak enemy, surround and destroy him. If you let him retreat, you will be at a disadvantage in pursuing him” Key elements • You encounter a moment when your opponent is weak, divided, or dispersed • You capitalize on this moment by surrounding your enemy, preventing escape, but avoid direct attack

Distant Enemy You Nearby Enemy คบไกลตีใกล้ “It is more advantageous to conquer nearby enemies, because of geographical reasons, than those far away. So ally yourself temporarily with your distant enemies in spite of political differences ” Key elements • You ally with a distant enemy • You attack a nearby enemy

Adversary You Your Ally ยืมทางพรางกล “When a small state, located between two big states, is being threatened by the enemy state, you should immediately send troops to rescue it, thereby expanding your sphere of influence. Mere talk cannot win trust of a state in a difficult position” Key elements • You share a common objective or enemy with another • You form an alliance to achieve this objective • You then take you ally

Deception Strategies • ลักขื่อเปลี่ยนเสา • ชี้ต้นหม่อนด่าต้นไหว • แสร้งทำบอแต่ไม่บ้า • ขึ้นบ้านชักบันได • ต้นไม้ผลิดอก • สลับแขกเป็นเจ้าบ้าน

Adversary Adversary Ally Adversary Ally YOU ลักขื่อเปลี่ยนเสา “Make the allies forces change their battle formation frequently so that their main strength will be taken away. When they collapse by themselves, go and swallow them up. This is like pulling back the wheels of a chariot to control its direction” Key elements • Your adversary’s advantage is built on key support structures • You attack these structures • By breaking his key support structures, your adversary’s integrity falters; then you take him

Apparent Adversary True Adversary YOU ชี้ต้นหม่อนด่าต้นไหว “When the powerful wants to rule over the weak, he will sound a warning. One’s uncompromising stand will often win loyalty, and one’s resolute action, respect” Key elements • You want to influence your adversary’s behavior • Rather than attack your adversary, you focus your attention on a different target • This action sends a covert message to your adversary which displays your power and communicates your intention • Your adversary, appreciating your power and intention, alters his behavior

Adversary Your hidden threat You แสร้งทำบอแต่ไม่บ้า “At time, it is better to pretend to be foolish and do nothing than to brag about yourself and act recklessly. Be composed and plot secretly, like thunder clouds hiding themselves during winter only to bolt out when the time is right” Key elements • Your adversary is powerful and/or you are weak • You appear mad or incapable in order to avoid being perceived as a threat • When your adversary puts down his guard, you take him

Opponent YOU ขึ้นบ้านชักบันได “Expose your weak points deliberately to entice the enemy to penetrate into your line, then surround him by cutting off his exit” Key elements • You entice your adversary to enter your control area • You cut off your adversary’s and your soldiers’ escape routes • This motivate your soldiers… • …and disadvantages your adversary

Larger Adversary ต้นไม้ผลิดอก “Use deceptive appearances to make your troop formation look more powerful than it is. When wild geese soar high above, the grandness of their formation is greatly enhanced by the display of their outstretched wings” Key elements • You are too weak to attack your adversary alone • You coordinate individual elements within your organization or in your environment • Coordinated, these parts become a much stronger whole • You are now strong enough to defeat your adversary

You Your Adversary สลับแขกเป็นเจ้าบ้าน “When there is a chance, enter into decision-making body of your ally and extend your influence skillfully step-by-step. Eventually, put it under your control” Key elements • Your adversary accepts you as unthreatening • You incrementally build power over your adversary • You take control

Desperate Strategies • กลสาวงาม • กลเปิดเมือง • กลไส้ศึก • กลทุกข์กาย • กลลูกโซ่ • หนีคือกลยุทธ์

Your Bait Adversary YOU กลสาวงาม “When faced with a formidable enemy, try to subdue their leader. When dealing with an able and resourceful commander, exploit his indulgence of sensual pleasure in order to weaken his fighting spirit. When the commander became inept, his soldiers will demoralize, and their combat power will be greatly weakened. This stratagem takes advantage of the enemy’s weakness for the sake of self-protection” Key elements • Your adversary has a weakness or need • You bait your adversary by feeding this weakness or need • This encourages your adversary to act in a way counter to his benefit • You take advantage of his misstep

Dynamic Competitive Strategy