Process Primer

Do You Have A Multi-Player Issue?

Identifying A Multi-Player Issue
In high level corporate strategy issues, complexity often arises from factors other than the estimated economic returns, capital availability, or the direction of the overall market. In many cases the complexity arises because we don’t have an understanding of the external players who can impact us and the actions they are likely to take. Until we understand these “multi-player” issues, how can we decide our own actions?

Multi-player issues are more common than most organizations recognize. For example, when an organization seeks to grow market share or enter a new market, the success of the venture depends not only on actions by the organization itself but also on the reactions of competitors, partners and suppliers.

Of course, not every decision an organization must make is a multi-player issue. Internal decisions such as departmental reorganization or deciding between two research paths based on their technical merits do not require game theory analysis because they are often internal debates with little uncertainty surrounding the reaction of competitors, governments, distributors or suppliers.

When determining whether you are facing a multi-player issue that would benefit from a game theoretic analysis using the Open Options Process, consider the various issues you or your organization face using the following criteria:

1) Most importantly, does the problem involve more than one group, company or organization?
Understanding that different distributors, different suppliers, regulators and multiple competitors all may have distinct preferences and will react differently than your organization is key to understanding multi-player issues. Are they allies or opponents to your organization? How about among themselves? What are the trade-offs or threats available to your organization or other players? How will other players likely react to your actions? Even if your organization executes all internal actions perfectly, can you achieve your envisioned goal or can other players stop you?

Interestingly, some issues that initially seem like two player issues (litigation, labor-management) are really more complex. For example, organizations can be divided into groups if those groups have different actions and preferences that will affect the final outcome. Some example divisions include senior management versus technical management, young union workers versus older union workers and divisional management versus corporate headquarters.

Generally, if you can name three or more stakeholders in the issue who can act strategically, have actions that matter to the other players and whose actions are not a foregone conclusion, you are facing a multi-player issue.

2) Is the problem driven mostly by the choices made by key players rather than uncontrollable external events?
If the decision primarily rests on the price of oil or a particular foreign exchange rate, a decision process with a focus on probability, such as Decision Analysis, is more suitable. However, unlike the price of oil which is controlled by the supply and demand of millions of market participants, most decisions made by companies are not best captured as probabilistic events. Instead of rolling the dice or leaving their fate to a random number generator, companies make strategic decisions based on what is important to them and the likely reactions of other players. It is this focus and the ability to explore the millions of possible what-if scenarios through proprietary software that sets Open Options apart.

3) Do different people in your organization have different views on what should be done?
As the Open Options Process provides a structured way to discuss the inputs to strategy rather than discussing the pros and cons of each particular strategy, it facilitates consensus between internal groups. Rather than involving egos by contrasting different favored strategies and their likelihood of success, Open Options only asks the team to agree on three basic inputs to strategy: who are the key players?, what can each key player do? and what does each key player want? Making the inputs to strategy (rather than the strategy itself) the focus of consensus creates buy-in by the decision team which makes implementation easier.

Understanding that your organization’s ability to accomplish its goals is dependent on the actions of others is an important step. It provokes thinking about the issue from different perspectives and often reveals that what may have appeared to be “irrational” behavior by another player was only irrational from your point of view and completely rational once the fears and desires of that player are understood. Of critical importance is the ability of the Open Options Process to move beyond what many traditional methods, such as Competitive Intelligence or Porter’s Five Forces, provide. Open Options not only delivers an analysis of the capabilities of other players but also the likelihood of those actions being taken and how to exploit the fears and desires of other players.

In short, not all decisions are multi-player issues and not every organization constantly faces multi-player issues. However, if you think about what your organization wants to accomplish and the alliance partners, competitors, suppliers, distributors or regulators that can interfere with you accomplishing your goal, you will likely uncover a variety of multi-player issues.

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