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Gaming Porter: Applying Game Theory to Strategic Competition Analysis

by

John J. McKeown


Introduction:

Civil Affairs (CA) practitioners understand the concept of a continuum of competition. It spans the spectrum from the abstract to the tangible and encompasses varied aspects of stabilization like public health, economics, and governance. Conceptualizing this continuum and framing a method of analysis to facilitate strategic understanding is vital in a period of intense near-peer competition.


In an article in the Harvard Business Review, Professor Michael Porter presented five forces of strategic competition which can be generally applied across the continuum of industries to maximize profit (Porter, 2008). Since original publication in 1979, his concept of these strategic competition variables has been expanded and adapted to domains other than business competition and remains prominent in undergraduate and graduate programs in finance.


Empowered by this, we can adapt this model for the optimization of the profit of CA activities - influence. We can recast the five forces in terms of the operational reality for CA. As one considers the five forces in this context, we can apply Porter’s strategic vision. Once framed, our analysis will need a construct within which we can dialogue and explore through iterative processes. Game theory provides a structure for triadic logic to examine relationships, scenario development, and assessment. It has been demonstrated to maximize intrinsic motivation and self-efficacy; important factors in meaningful learning (Annetta, et al., 2011). It is a focus on learning that is the key in choosing a game model.


Porter’s Five Forces:

Michael Porter identifies critical and generally applicable factors in strategic competition: supplier power, customer power, threat of new competitors, substitutes, and the existing competition. Analyzing these forces guide strategy with respect to when to enter or exit a market (competition space) and where to dedicate resources. Moreover, study of the relationships between the forces provides the content for strategy; moves and counter moves. CA practitioners can translate these forces from their original business identities into those encountered in their operational space. In translation, competitive businesses become competitive influencers, profit becomes influence, products become deliverables (to represent the myriad aspects of the CA domain), and so on. Suppliers provide building blocks, the things that are required to create (or do) something else. Supplier concerns include diversification of sources, costs, and channels of delivery. Vulnerabilities in these areas may disrupt operations. Customer power may be manifest in the tactic of playing one competitor against another to achieve the most favorable terms. The threat of new competitors will increase the investment requirements to maintain a given level of influence. Substitutes may displace us from our influential position if we fail to differentiate our deliverable. The existing competition space will offer understating of relationships, sensitivity of variables, and cost/benefit considerations which can provide the data for future scenario development. If the five forces are benign, then it will be possible for many competitors to be influential. If they are acute, only a few will be (Porter, 2008).


Porter continues with some strategy observations. First, an incumbent competitor has inherent advantage. They may already have influence and thus increases the level of influence necessary for a new entrant to counter them. In addition, an incumbent may have control over the channels of resources creating an inequity in their access. Customers may exhibit “network effects” where different groups benefit from a deliverable, making it more valuable. Another important observation is in the utility of developing complimentary deliverables. If a competing influencer delivers an industry associated with a public works project another may deliver an education and training system. Porter (2008) referred to “dimensions of rivalry” observing that it might be advantageous to compete with a different force than one already controlled by another, thus expanding the competition space (p.9). When influencers try to meet the same needs at the same time, a zero-sum competition results. Influence attained is limited to the amount lost by another competitor.


These are the tactics and concepts to be repurposed by CA practitioners informed by their knowledge. For example, if my competition space includes a national perception of colonial era exploitation, consumer power may be very important due to sensitivity to predatory business practices. Or, an incumbent influencer advantage may be enhanced by corrupted government policy that fails to allow for new entrants to the competition space. Game participant knowledge of history, culture, and governance provide the relative weights to each of the five forces in the construction of the simulated competition space.


Game Structure for Analysis:

Gamification is the process of adding game like elements (i.e., problem solving, competition, recognition) to a task so as to encourage participation and facilitate learning (Merriam-Webster. n.d.). This is particularly well suited for CA issues as it provides a model for exploring relationships that involve purpose in a competitive problem space. In our context, these are the dynamics of actions of human agency intended to improve the human condition. This is opposed to rigid computer models, binary logic, and assumptions of causality.


Critical to understanding and replicating this competition space is capturing intentions. The relationships are observable and can be best analyzed through articulation among simulated competitors. Thus, a key component is the interaction of the game participants. Game structure allows for this expression as CA players employ their knowledge of the content of their skill set (i.e., civil administration, agriculture, education) to their understanding of purpose in both, say, an incumbent and a new entrant role. This is well beyond the binary world of strict if-then statements. This is suggested by Charles Sanders Peirce (as cited by Ketner, 1990) in his concept of diagrammatic inquiry; that relations (to include intention and purpose) can be understood, expressed, and modeled. Its analysis is accomplished by dialogue, not mathematics. Diagramming and mapping are prominent in this approach rather than statistical association or probability of outcomes. Our analytical purpose is to enhance CA community knowledge, a collective phenomenon (Sawyer, 2014). Knowledge building discourse is the creative means to that end. Roschelle (1992) frames knowledge building in terms of three factors: construction, co-construction, and constructive conflict. CA game players carefully consider input of each other (construction). CA game players compliment existing information with their own (co-construction). CA game players address disagreements through negotiation (constructive conflict). This interaction is a form of mutually shared cognition which broadens the community understanding.


Scholarship regarding games for learning also offer research on assessment techniques. This is an important consideration in evaluating and improving any learning approach. To date, a standard after-action review is the most prevalent. This may include participant surveys and discussion.


Adapting these concepts from other domains allow CA practitioners to apply known systems of relationships to specific problems. This is the platform for simulated competition to facilitate deep learning of the relationships between Porter’s five forces in our operational world.


John McKeown is prior service Civil Affairs with many years of experience in public sector finance. John has earned a B.S., M.S., C.A.S. and completed coursework in learning science at the PhD level. He is currently an adjunct professor of finance and economics at the University of Maryland Global Campus.


References

Porter, Michael E. "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008): 78–93.


Annetta, Leonard & Bronack, Stephen. (2011). Serious Educational Game Assessment: Practical Methods and Models for Educational Games, Simulations and Virtual Worlds. 10.1007/978-94-6091-329-7.


Merriam-Webster. (n.d.). Gamification. In Merriam-Webster.com dictionary. Retrieved March 30, 2021, from https://www.merriam-webster.com/dictionary/gamification.


Ketner, K.L. (1990). Elements of Logic, Lubbock, Texas, TX:Texas Tech University Press.


Sawyer, R. (Ed.). (2014). The Cambridge Handbook of the Learning Sciences (2nd ed., Cambridge Handbooks in Psychology). Cambridge: Cambridge University Press. doi:10.1017/CBO9781139519526.


Roschelle, Jeremy. (1992). Learning by Collaborating: Convergent Conceptual Change. The Journal of the Learning Sciences. 2.






3 comments

3 Comments


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In my opinion this article content not only explores the significance of intelligent decision-making in highly competitive environments but also highlights the practical applications of game theory in strategic analysis. As someone who values the strategic intricacies in both gaming and business, this article provides invaluable insights into how these two seemingly distinct worlds intersect. It offers a fresh perspective and serves as an enlightening resource, emphasizing the synergy between gaming strategies and real-world competition analysis.

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