Through the looking glass
A seemingly impossible problem to solve
Time to pause here, to see what has been covered so far in the book and work out where it is going.
We started off in the introduction with the proposition that although the Internet seems to offer unlimited e-business opportunity, the reality is that success is not going to come easily. The twenty four assumptions, which are by no means a fully inclusive list, give an indication of the difficulties to be overcome.
It would have been easy to have started off this book with some real life examples to illustrate the problems and show how these problems can be overcome. However, a little thought will soon tell you that this is not a practical approach, because there are so many possible ways of creating e-businesses that taking any single choice will lock you into a niche speciality region that will produce unique problems that apply only in that area.
Not only that. By examining real life example we'd be confining ourselves to the known; and the known is crowded out with competition. Far better to be able to look beyond what is already happening on the Web today to be able get into a position to establish new initiatives. In this game it is going to be the leaders not the followers who will be most successful.
To the pragmatist and the more practical minds, the stuff about Game Theory, chance and probabilities may seem to be a lot of airy fairy nonsense. Who, but some daft academic, without any real life experience of the nitty gritty world of making a living, would think of business in these terms? Let's see.
In chapter one, there was a dialogue that claimed to contain the optimum system for playing roulette. As you read that claim, you might have assumed that by optimum it meant a winning system. You would have immediately been sceptical, because common sense would tell you that if there were a winning system, there wouldn't be any casinos left in business for you to be able to play the system.
This represented a paradox, an anomaly was detected that needed resolving. Understanding that the optimum system was not a winning system, but merely an optimum system in the sense that it lost less than any other system, made it believable. The paradox was resolved and the anomaly disappeared. Arcane and seemingly irrelevant theoretical modelling, often provides the means for resolving such paradoxes and dispelling anomalies.
Let's apply this thinking now. The inferenceof this book is that the author can create a successful e-business . For an author to make such a claim, surely stretches the reader's creduality to the limit. Isn't it everyone's dream to be able to say, "Oh, I think I'll start a successful e-business today". What sort of credibility could be given to anyone who made such a statement?
What if this person were asked what was the substance of the business they had in mind and they answered, "I don't know, but, it would have to be something that nobody is doing yet". Would this increase or decrease their credibility?
Now imagine somebody coming up to you and saying, "Think of an object or an idea. It can be tangible or intangible. It can be anything you like. Whatever it is, I've got a strategy where I'll be able to work out what that object you have in mind is". Would you think that possible? There would be millions of possibilities for a thought that was in your mind. What possible strategy could be used to single out that one particular object?
The person might then say, "I'll need your co-operation a little here, I want you to answer 'yes' or 'no' to twenty questions I'm going to ask you".
Immediately, it is seen how this one chance in millions of guessing the answer is changed into a a reasonable chance of success. This is evidenced by the well known game of "Twenty Questions. It is this very simple strategy that is at the heart of Game Theory.
Now take the proposition that I intend to create a successful e-commerce business by the time this book is published. At first this seems a fatuous statement to make, but, it is no more fatuous than the idea that somebody could guess exactly what you had in mind when you randomly thought about some object. The trick is to ask enough intelligent questions to be able to reduce the list of possibilities down to a single one, or at least a manageable few number of possibilities.
The seemingly irrelevant concern with the roulette system is an example of using an abstract model to generate such intelligent questions; using them to elininate some of the possible options available for creating an e-business.
There must always be a question as to whether it is better to play a zero sum strategy - where you win by taking away business from competitors without providing any increased value (as might be the case where a high powered advertising or sales pressure technique is used) - or, go for the more difficult non zero game strategy which involves creating real value in the form of increased efficiency.
Looking at the abstraction provided by the roulette system helps us make this decision. From the seemingly irrelevant computer simulation, it would seem that creating value is a more profitable way to proceed than trying to succeed using solely advertising or selling skills. Deciding this is the way to go, eliminates a large proportion of the massive number of possible options available (in a choice as to which type of business to go for).
Of course, this choice may be wrong. It might be wrong, for instance, to a speciality team of sales people who have not the technological understanding to be able to create superior value or increase efficiency. They might be far better off opting for the zero sum game, which would give them a different set of options to eliminate from their range of possibilities.
The question "Should I go for a game of winning from my competitors or creating a situation of increased efficiency?" can thus be given an answer. The question "Should I go for a business that risks a large sum or go for a business consisting of many small risks?", can also be answered. The strategy has begun - and so has a start been made in acquiring e-business acumen..