GOALS AND STRATEGIC SOLUTIONS
We define a strategic decision as one with interactive payoffs. Interactive decisions are the hallmark of strategy. They occur when an individualâ€™s payoff is the result of his actions and those of others. You never reach a goal alone. Your experience (that is your payoff) is a result of your actions and those of others.
Most managers would love to have dominant products in the market; but they cannot do it by themselves. They need the input of consumers and rivals.
It is these interactive payoffs that determine our reality. You never reach a strategic goal solely by yourself. You need others to take actions which when combined with yours results in your desired experience. So like it or not, you are attached to others in a strategic sense. You donâ€™t achieve strategic goals unless you induce cooperation from others.
Your goal in strategy is to induce others to take actions that when combined with yours, gets you where you want to go. This doesnâ€™t necessarily mean people always know where they want to go or that they have the required resources.
Arguably, this qualifies strategy making as a life skill. Your ability to make strategy defines your world. What you experience in your every day life depends on your strategic actions. Fortunately, we possess some inherent skills of strategy making; though, like our perceived sexual ones, we are not as skilled as we imagine. So, it is likely you will find some knowledge useful in helping you make strategy. Because strategy making is so integral to every day life, small improvements can generate huge rewards. The basics arenâ€™t that complex.
The general principles of making better decisions are situational invariant. War, love, sports, business, negotiations, it makes no difference. With practice, you will integrate them seamlessly into your thought process.
There are constants of strategic behavior, and they are contained in the Dao. Think of the difference between walking downhill relative to uphill. In the former you follow the Dao. In the latter you go against it. In walking downhill you use the law of gravity to create a favorable situation. Walking uphill is more costly and difficult. In the strategic realm, we create a favorable situation by using backward induction. We may still reach our goal without it, but the task is more costly and difficult.
In an effort to bring some order to the complexity of strategic decisions, mathematicians in the last century developed an organizing framework. This framework is now known as game theory. As we shall see, game theory helps us better understand strategy making. Its use will increase your ability to correctly anticipate the actions of others. This, in turn, will make you a better decision maker.