Dr. Barry Nalebuff

Announcer: Boeing presents another in a series of essays from contemporary opinion leaders. Today, Dr. Barry Nalebuff, game theorist and Professor of Economics and Management at Yale School of Management.

Dr. Barry Nalebuff: Business is War. The traditional language of business certainly sounds that way: you have to beat the competition, capture the market, fight price wars, beat up suppliers, and lock up customers-all so you can make a killing and then bury the competition.

That simplistic view of Business-is-war is terribly misguided. Shareholders don't reward you for lowering the profits of others. You have to listen to your customers, work with your suppliers, establish strategic partnerships-even with competitors.

Does that mean business is peace? That would be naive. We still see battles with competitors over market share, fights with suppliers over cost, and even conflicts with customers over price. So if business isn't war and it isn't peace, what is it?

It's marriage. It's war and peace.

Business is cooperation when it comes to creating a bigger pie and competition when it comes to dividing it up. You have to compete and cooperate at the same time. It's co-opetition.

I'm a game theorist so quite naturally I think of business as a game. But the game of business isn't like poker or chess, where your winning requires someone else to lose. If you cooperate to grow the pie, there's more to go around. And the gains are longer lasting. The game of business is also constantly changing. The players change, the rules change, boundaries change. This is where game theory finds its greatest opportunities: in changing the game.

Don't take the game you find, make the game you want. As you do that, find new ways to compete and cooperate.

And yes, co-opetition doesn't just apply to business-it works for politics, too.

Announcer: Boeing. Forever New Frontiers