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Game theory in business - lighten up!
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Monday, 9 April 2007
"Yale professor Barry Nalebuff brought game theory from the ivory tower to the executive suite — and to his own thriving company, Honest Tea.

"Barry Nalebuff is a rare breed: a working economist who also runs a business. He made his name in academic circles with two related ideas. The first was the application of game theory to business strategy. The second was “co-opetition”: a strategic way for managers to work with rivals, balancing the tension between growing a pie together and competing to get the biggest piece. The theme tying together his academic work is the determination to apply game theory to ignite innovation and tackle real business problems — a practice he has pursued in consulting stints with Columbia Forest Products, Eli Lilly and Company, Johnson & Johnson, and General Electric, among many other companies. He is one of the enviable handful of “creativity consultants” corporate leaders bring in to shake up calcified thinking, tease out innovative solutions, or game out the possible permutations of a deal in the offing...

"Nowhere has Nalebuff’s creative and practical approach to economics been more deeply integrated into a company than in his own. Both literally and figuratively, Honest Tea puts Nalebuff’s theories on display. For starters, the labels of its lightly sweetened drinks — the products that launched Honest Tea — spell out the rationale for the sugar content, including a chart illustrating the decreasing marginal utility of sweeteners. This little chart educates tea drinkers in the Nalebuff Approach, in which solutions lie in examining problems from new perspectives and calling on economic theory to bolster the response. In other words, how can you get great taste without a lot of calories? Not by eliminating sugar, but by skimping on it. A little sugar adds taste (marginal utility), whereas a lot of sugar adds only calories (declining marginal utility). "
Quoted from Strategy+Business. Worth a visit. You can see him ride a one-wheel bicycle (??). Well, what can you call it?

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posted by Dr Ron @ 10:48  
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