Imagine this. You and one other suspect have been arrested for a crime. You are taken to separate interrogation rooms where the cops give you two options: you can either confess that you and your accomplice committed the crime or you can stay silent and not confess.
Here’s the catch:
If you confess, and your partner does not confess, you will go free.
If you do not confess, but your partner does, then you will be convicted of the maximum sentence.
If you both confess, you will both receive mild sentences.
If neither of you confess, you will both be free within hours.
What do you do?
What is described above is a famous Game Theory called The Prisoner’s Dilemma. Why bring this up? Because it illustrates an idea that Mark Papermaster, the CTO and EVP of AMD, laid out to describe how he thinks about getting ahead in the industry. Want to learn more? All the details are on this episode of Business X factors.
Main Takeaways:
- Hire People with Passion: It may be tempting to only recruit people for academic prowess and experience — they seem like less of a risk. But hiring for passion could open up a talent pool of people who live and breathe the business. People who are passionate and positive about the company and their job are more invested in improving the overall performance of the business. They work to encourage the company and each other to succeed and are prepared to go the extra mile in times of trouble, which makes them a wise investment.
- Rules for Coopetition: A mix of competition and cooperation between companies can be a way to save cost and avoid duplication of effort. Sharing may mean putting your special sauce at risk, but the combination of ingredients can create value for both sides. To structure a coopetition agreement, make sure that scope and control is established. Work out who is in charge and how things are going to be unwound if the arrangement no longer makes sense. Cooperation and partnership agreements that are limited and don’t raise control issues are the simplest. In other cases, costs can be shared by parties, but not proprietary knowledge.
- Transformational change = High Risk: Businesses that are forced to or want to transform are often required to take significant risks. These high-risk projects are often highly visible and have sweeping impacts inside and outside the organization. To manage risk, undertake risk analysis to identify threats and assess the likelihood of them being realized and once you’ve worked out what they are, you can start by looking at ways to manage them effectively. This could include avoidance, sharing the risk or accepting risk while carrying out steps to reduce its impact. This could be done by rolling out high-risk activity on a small scale in a controlled way.
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