The KWSM Celebrations Committee held a company-wide Rock Paper Scissors tournament, and I lost to my teammate Epiphany Hunter in the championship match. The experience reminded me that Rock Paper Scissors is a simple game, but it can teach us a lot about business strategy. I learned this lesson from sitting in on a lecture given by John Moore, a marketing executive who led Starbucks and Whole Foods brands to the global name that they are. He shared how to win at business by using the principles of Rock Paper Scissors game theory. First, let’s review how to play the game.
Business Strategy Principles
The rules to Rock Paper Scissors are simple: to beat your opponent, you need to throw out a better hand or it ends in a draw. Rock beats Scissors; Scissors beats Paper; Paper beats Rock.
You can deploy the right strategy to win when knowing what kind of business you are, who your competition is, and what their strategy is.
Rock Beats Scissors Business Strategy
To generalize this in the business world, Rocks are like juggernauts. They’re big, they have a lot of resources, and they’re very good at what they do. The defining characteristic of a Rock business is having momentum. Like real rocks, these businesses carry a lot of weight and pick up the pace when they have the momentum behind them. When a Rock business competes, they gain market share by throwing its weight with its resources to crush scissor companies or buy them out altogether.
As they become more successful, Rock businesses often develop more brands and less focus. Scissor businesses can’t compete head-to-head against Rock businesses due to the limitations of their resources.
Paper Beats Rock Business Strategy
To beat a Rock, your business needs to be more like Paper by attacking horizontally to be where your competitor isn’t in the market. Size matters in this strategy. With their extensive reach, Paper businesses expand into other markets with more brands. These enterprise businesses have a better chance at success because they can smother Rock companies with their size and resources. For example, Paper businesses can use their deep pockets and networks to undercut the prices of Rock businesses.
So is it best to be a Paper business? This may be the case for some large corporations, like WalMart or General Electric, but it’s not always true in all industries – especially those where innovation thrives on new ideas rather than relying heavily upon already established brands that would barely need any updating if anything changed. Paper businesses are often too slow at responding to opportunities if it means lower profits overall or major operational changes resulting from financial or organizational limitations and corporate bureaucracy.
Scissors Beats Paper Business Strategy
When your Paper competitor has gone wide in their distribution and appears to be seemingly everywhere, the best way to cut market share from them is to take the Scissors approach. A company deploying a Scissors strategy mimics its namesake by often having only one brand and distinguishing itself through its extremely sharp focus.
If you’re up against a Paper company, it’s time to get creative: quickly adapt to the environment by delivering a better customer experience and more customized offerings than what’s already offered in mass distribution channels.
Scissor businesses, like most small businesses, need to be incredibly efficient and smart with their resources. They can’t outspend a Paper company, but they can outsmart them. Unfortunately, it’s resources that may be the limiting factor for scissor businesses.
Encountering a Draw in Business Strategy
At times, both players will throw out the same hand, resulting in a draw. In business, this is common when two companies are evenly matched. In these cases, the best course of action is to be more observant of your competitor’s actions. They may give you the opening you need (e.g. overspending or making a mistake that you can capitalize on) to deploy your winning strategy and take the lead.
How to Use Rock Paper Scissors in Your Business Strategy
Every business needs to be aware of where it stands in relation to the competition. This applies whether you’re trying to exploit your company’s strengths, minimize its weaknesses, or simply stay ahead of the curve. By understanding where you are in the Rock Paper Scissors competition cycle, you can better plan your next move. For example, if you’re in a period of change where it’s not possible to make major changes to your brand, you may need to reposition it instead. Or, if the business environment is fairly predictable and employees are confident in what they’re doing, you might be able to renew your strategy. In any case, it’s important to know where you stand so you can make the best decisions for your business.
Developing a Winning Business Strategy
By understanding the Rock Paper Scissors competition cycle, you can better position your company for success. Use it to your advantage and stay one step ahead of the competition by knowing what kind of business you’re up against and adjusting your strategy accordingly.
While it’s important to have a general sense of what strategy you should use to beat your competitor, the real key to success is being able to quickly adapt and change tactics as the situation warrants. In business, as in Rock Paper Scissors, there is no one-size-fits-all solution. The best way to win is to understand your opponent and be prepared to change your strategy on the fly.
Of course, Rock Paper Scissors is an oversimplification of business strategy. As fluid as any marketplace is, you’ll often deploy multiple strategies at the same time to gain new customers, keep existing customers, and adapt to an evolving landscape with new competitors entering the space. There are also other factors, such as the overall economy and how you define success, that can impact your business strategy. But if you can understand and deploy the principles of Rock Paper Scissors, you’ll be well on your way to developing a winning strategy for your business.
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