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How a game of chess relates to competitive strategy

June 9, 2013 - Strategy

Chess is a beautiful game. Why is it beautiful you ask? Is it because of the nicely hand-carved pieces you sometimes find? Or is it because of its origin, as some argue, dating back more than 5000 years ago?

I have been playing the game since primary school. A teacher there was an avid chess player and, as all teachers should have one virtue in common, he loved to teach. So on a Friday afternoon after school a whole bunch of kids gathered in a classroom to learn the basics of chess, the game of kings.

Back to the question: Why is chess a beautiful game? First of all, unlike other boardgames that we used to play with family and friends such as Risk, Monopoly and what not, there is no ‘luck’-factor. There are no dice, picking random cards from a deck or landing on certain boxes that may win you the game. Each player starts with exactly the same number of pieces in the same position and the only difference here is that the player with the white pieces gets to make the first move.

You win the game as soon as you have ‘locked-in’ the opposing player’s king.

Now you may think: “Oh well, well, well, this guy thinks he is a genius and can play chess like a grandmaster, explaining to us how it all works.” As a matter of fact, I am lousy at the game. I know the basics, a little bit of short-term tactics, but long-term strategy in chess is something that is beyond me. However, the game has always fascinated me and not until college (where in one of the classes game theory was taught), it struck me how much chess resembles today’s dynamics in industries  and the companies within them. However, besides the similarities there are a number of things that need to be changed in the game to resemble competitive strategy better.

Competitive landscape

Instead of the regular 8 by 8 squares board which is used in chess, an industry chessboard would resemble a dauntingly huge board of x number of competitors times 32 squares. This explicates the difficulty of firms to conduct proper, clear and effective competitive analysis. We, as mankind, are still able to defeat supercomputers in chess, but imagine when you have to play not one, but multiple opponents at the same time on the same board.

The players

In chess, each player has the same resources (same number and type of pieces). However, in industries, one firm may have a 100 times more resources than the next one. In chess terms, one player would have, let’s say, the regular 16 pieces, whereas another will have a 100.

Positioning

In the actual game, chess players start in the same position (all pieces are put in the back, neatly lined up). However, in real-life competition amongst firms, it’s like playing with a board that has already been played on for a couple of hours. Imagine, as a new entrant, how indescribably difficult it is to understand the competitive landscape multiplied by the sheer number of competitors who all have different resources and capabilities.

Core business

The king in chess, is the variable that can cause your loss. In a competitive landscape, the king may be viewed as your core business (the actual reason why you are still in the game).

Real-time versus turn-based

To add to all the complexity caused by number of players, resources and capabilities, positioning and different core business, chess is a turn-based game. This means that one player first makes a move, thereafter which another can make his or her move. In competitive strategy, all players are making moves at the same time, cutting corners, sneak-attacking, waging guerrilla warfare, cheating (not per se breaking the law, but for instance reinventing a business model) and one can go on for a long time thinking of tactics and strategies.

Okay, perhaps a game of chess is not the best metaphor to explain competitive strategy, however, with the alterations described above, one does get a hint of how immensely complex and mind-boggling an industry chess game would be, let alone how difficult it is to define an effective long-term strategy. Perhaps I should contact my old primary school teacher and challenge him to a simple, relaxing game of chess.

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