If you have read my previous blog posts and academic papers, you will have noticed that my love of history is responsible for driving much of my thinking and hav impacted much of how I view the world. I have always believed in looking back before we can ever hope to look forward.
Throughout the second half of the 19th century the United States and the Soviet Union were embroiled a bitter contest. Proxy wars were a means to fight as a infinite player in a finite world. However, while the United Sates fought in Vietnam to win, The Vietnamese fought for their survival. The US lost the will, ran out of resources and a Quagmire emerged. With the fall of the Berlin Wall, The United States announced that they had won the Cold War, in doing so, they inadvertently made one of the biggest policy mistakes in their history! They announced that they had won the cold war. The trouble with this is that they acted like victors and spent the next 11-15 years imposing their ideals on the world. Due to this over reaching, other took up the game & new players emerged.
Game theory posits that their are two types of games. You either have a finite game where the players are known, the rules are set and their is an end goal or target or objective. The second, is an infinite game, the players aren’t always known, the rules change and their is no defined goal, the objective is to perpetuate the game. In game theory when two infinite players meet the system is stable. Similarly when a finite player meets a finite player the system is equally said to be stable. The problem occur when you pitch a finite player against an infinite adversary
During the cold war we were an an infinite game. The game existed and ran on 3 main assumptions or threats.
- Nuclear threat
- Economic Threat (Free trade Vs Closed economy)
- Ideological threat (Commission Vs Democracy)
If we look today, what has changed? The nuclear threat has been taken up by Pakistan & Iran. The Economic tension has been taken on by China and the ideological threat has been replaced by Islamic extremism. All three threats exists today!
The trouble is while all of these other players Know their game and know who their enemy is the United States is still trying to figure out it’s own priorities, and how they can win the game. The trouble is, they haven’t realized that the game is infinite, their will always be players, their will always be ideological classes and economic power plays. But yet, policy’s are becoming shorter and shorter and this has resulted in how the US presents itself, and more importantly decides how they are perceived by their friends around the world.
The easiest way to understand the game your in is to have a great equal and opposite opposing force. In the Cold War each side had a singular common enemy. So how do we succeed in a multi faceted world that we live in today?
The answer is that we follow our values, our core beliefs! If we don’t follow our values our allies and more importantly our friends no longer trust us. Trust is essential. Developing trust encourages risk taking, entrepreneurship. Trust allows us to go through the infinite contest. Its by following through on our values which enable trust . Let me represent this on a graph.
Where we we as business leaders need to roll back and stop is where the Blue line (our actions) breach the red line (our values) Business is an infinite game, however a lot of businesses are engaging in a finite battles in an infinite War. Operational demands put pressure to ensure we get to X target or make Y margin for Quarter end. Similar to the U.S and their policy making decisions, our actions or business practices are becoming shorter and shorter and like the US in Vietnam we are drawn further and further into the quagmire.
The simple way to ensure our policies don’t become short term is to run our decisions through “our company core values”.