Here you will find materials in support of the Masterclass+ or Workshops offered by Patrick at Manchester and Smurfit Business Schools http://advancedmanagement.net . The resources include ppt slide pack, Word documents with embedded Hyperlinks to secondary readings and a Practical example to illustrate the computation of a Nash equilibrium. A template for the applied research during the Masterclass+ and Workshop is described in http://www.patrickmcnutt.com/elearning/the-first-entelechy-of-strategy-data-patterns/. The Template provides management with a new visualisation tool to assist and complement a reshaping of strategy. Bespoke advice on how best to compete in the market-as-a-game with an unbeatable strategy is also provided at Masterclass+.
Behavioural economist & strategy adviser
PROVIDING EXECUTIVE EDUCATION
Consultancy and support to clients
PROVIDING EXECUTIVE EDUCATION
Consultancy and support to clients
Archive for the ‘eLearning’ Category
E-book Download: Decoding Strategy
The chapters from the acclaimed Decoding Strategy are now available to
download as a free e-book. Patrick and McGraw Hill have come to an agreement
to end production of the book with an abridgement of property rights. If you
choose to download the chapters then I would appreciate if you could
consider a voluntary subscription to the Ann Sullivan Foundation. We thank
you in advance of your generosity. You can find details at the following
address http://www.annesullivan.ie/
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Kaelo v2.0
Welcome to Kaelo v2.0 software, an e-learning tool that should help to facilitate your application of many of the economic concepts addressed in the Managerial Economics module of the Manchester Worldwide MBA programme. It is an advance on Kaelo v1.0 – still available here. In particular, have a look at our approach to signalling and the link between signals inherent in business video clips and share performance. This is an interesting application of Kaelo; it has a direct application to everyday analysis of financial performance. A commercial version, Kaelo v3.0, will be constructed in 2008. The commercial application will focus on game dynamics, on signalling as a concept and on its application as a measuring tool for investment analysis. We are grateful to the many who have inspired our appoach so far and contributed to the ME Workshop presentations on the MBA programme. We would be delighted to hear your critical ideas on how best to take Kaelo v2.0 [educational applications] and Kaelo v3.0 [commercial application] forward as value -added tools of analysis in education and business respectively. If you are interested in this development, you can always contact me via this web page.
To view the latest version of Kaelo : Kaelo v2.0 will open in a new browser window.
To view the latest iPad version of Kaelo : Kaelo v2.1 (iPad Version) will open in a new browser window.
The First Entelechy of Strategy: Data Patterns
Data has intrinsic patterns and they are not easily observed. Finding the pattern reveals the strategy of a company. A data pattern is the first entelechy of strategy – the first actualisation of what a company is all about. In coaching and consultancy, the Covington-McNutt Template provides a guide to the construction of critical time lines, CTLs. A CTL reveals a pattern of action and reaction and identifies a competitor that is more likely to react first from the sum of competitors. The research is back to basics and simple, checking the micro-data for signals. The signals can be used as a diagnostic tool and assist management to shape strategy. Building on the behavioural T/3 framework in the book Decoding Strategy the objective in the 21st century is to uncover the hidden data patterns embedded in a company’s behaviour and in the behaviour of its rivals. They are all players in a game of moves, actual moves and potential moves.
Archive Slideshows
Management Behaviour & Twittering of Geese
An early version of a manuscript has been discovered amongst the archives, so here it is with a particular relevance today in defining the game boundaries of a management team, wherein products survive, markets evolve and firms grow. As players, management adapt to their environment and adopt new strategies just like a family of geese in a ‘game of geese’ against the stealth fox.
Applied Game Theory and Strategy
Using company data, compiled a minimax/maximin payoff matrix for
international client to assist management on a second brand strategy in the
EU.
Provided a strategic overview coupled with a detailed NPV statistical
analysis and risk-on profile on the likely impact of increased obesity rates
amongst age cohorts for medical group.
Prepared high level executive memo on the payoff scenarios on entry to heavy
axle freight market in the EU.
Memo to Ms Ahrendts
MEMO
Re: Apple Inc: Play not to lose: Minimax strategy
Dear Ms Ahrendts
Congratulations on your recent appointment. We have been commenting on Apple for a number of years in this Blog, and from the perspective of game theory. You should challenge everything about the data – market share figures, consumer loyalty and the source of the competitive threat. Apple does need to refocus, to reshape its strategy in order to compete in an evolving game that exhibits both convergent technologies and rapidly changing set of consumer preferences. Are you a brand? Are you a design company or an innovator? Analysts look at Apple in terms of profit margins and a company trading on earnings estimates and revision of the estimates. With new product launches across the i-suite of products, coupled with an underlying iOS ecosystem, they look forward to new product launches, and endless queues by early adopters and loyal fans at different cities across the world. But from our perspective, observing Apple as a player in a game, we would adjudge that you are not winning the game.
Confused consumers
First of all, your product offerings are in danger of becoming nodoids: in other words, they come to represent nothing more than a roll-out across a common platform of a suite of not dissimilar products absent any innovation. Consumers are either underwhelmed or disappointed. Once they ask the nodoid question: ‘is an iPhone an iPad or is the iPad an iPhone?’ the game dynamic switches from a game of playing to win to a game of playing not to lose. This is happening. Secondly, the analysts expect the i-Watch – so what? Analysts continue to debate the next big thing. So what? Could it be IPTV or cloud solutions? So what? You know that you are not in search, you know that you are not in digital mobile advertising, you are a late entrant into cloud services, you failed to acquire Twitter, SIRI failed, Newton failed in the 1990s and in 2013 you allow us to believe that you are not a player in IPTV.
We have argued this before #tuncnunc discussing a range of game solutions to consider: launch a nano iPhone or engage in a telecom alliance with 4G LTE providers such as China Mobile. The 5C launch is about maximising profit margins; a nano offensive play, however, would ignite a $99 ‘sweet price’ competition for full functionality smartphone devices. Forward guidance on the stock estimate above $500 may adjust for these events in 2014-15 but these events may now be too late from a game perspective to play to win the long game. In other words, no longer is it about how Apple is performing in 2013, it should be about Apple’s likely performance in 2023.
Second mover advantage: SMA & Minimax
So an alternative for you to consider in your new role is to secure the second mover advantage [SMA] by playing not to lose. First, recognise that your market shares are increasing at a decreasing rate. Correct that trend. The iPhone 5 delay, for example, created a zero-sum switch to rivals, notably Samsung, in the UK and possibly across the EU. Your smartphone market share is under threat in Asia as the convergent smartphone and tablet game evolves to become Apple’s game to lose. Start thinking like your competitors – reason like this: ‘I think-you think-I-think’: Apple thinks that Samsung expects it to defend the iPhone, so Samsung will attack the iPad. But Samsung believes that Apple will reason this way, and so assuming that Apple will defend the iPad, Samsung will attack the iPhone. But Samsung also knows that Apple will reason this way.
This line of reasoning suggests that some kind of a decision tree ‘what-if’ analysis will reveal which strategy is Apple’s optimal choice. But it is more complex than that – we argue in our new book Decoding Strategy that how either player does in the game depends on what each believes the other is likely to do. Apple has to choose to play a minimax strategy, that is, a strategy that minimizes the maximum amount Samsung can expect to get in the evolving smartphone and tablet game, and thus maximize the amount Apple can expect to win. It is for you to patch a minimax strategy into your strategic vision for 2014 and beyond. To quote T.S.Eliot: ‘What we call the beginning is often the end, and to make an end is to make a beginning, the end is what we start from’. With best wishes in t+1…..
Spin-0 for Apple in a French defence: from iPod to iNext or acquire a telco?
In our previous Blog entries, on the smartphone and tablet market, we referred to the market as a game, G. In G a new phenomenon has occurred, created by a convergence of technology coupled with rational consumers asking: is the iPhone5 = a mini iPad or is the new iPad mini = iPhone6? This line of questioning, we believe, translates the Apple products into a scalar (spin-0) with no strategic direction. A scalar product, if you recall from physics, only needs a numerical value, and is not attached to a direction. Where is Apple going? Earlier this year, IDC Research reported that Apple’s share of the global market for tablets fell sharply in 2012 from 65% to 50%.
Strategists therefore need to ask the entropy question: do gains necessarily accrue to Samsung, Amazon and Asus or are rational consumers simply waiting or delaying buying Apple devices? To find an answer, we posit that Apple products and non-Apple products may share common features and functionalities but they do not overlap, thus creating lines of adjacent vertices in an evolving market share game. Furthermore, Apple may have the greatest App store in the game but as it continues to rotate through iPod, iPhone and iPad to iNext, spherical competitors from anywhere at any time to will enter the game and win. Rational consumers delaying a purchase and the convergence in rival technologies facilitate competition, and by Q4 2011 Google powered devices began to close in on Apple’s dominance. More recently, Microsoft’s Surface, the Google-Samsung Nexus 10 running on the latest Jelly Bean software, the Amazon Kindle Fire HD and the Asus-Google Nexus 7 have emerged as formidable competitors in the game.
What if the XBox music internet service has the potential to impact on iTunes? Investors are not clueless about the technology convergence nor are they aloof to the need for an optimal strategic response from Apple. With a cash balance that is equivalent to a quarter of its CAPM, investors will want more investment. They may ask: why not acquire a telco? The iPhone5 can indeed promise 4G technology, albeit not everyone, who has an iPhone 5, nor anyone anywhere in the world, who is thinking about buying an iPhone 5, will be able to avail of 4G. There is no point really in offering rational consumers a new fountain pen without the ink! As rival competitors continue to enter the game G, the family of competitors grows and new features and functionalities create entropy and adjacent vertices that will limit Apple’s progress unless they join the family. For example, today in November 2012, Apple is not a key player in social media, digital mobile advertising, OLED Smart-TV, nor is it dominant in cloud computing, NFC and mobile e-wallet payments. They could be in time, many investors hope that they will – sometimes this is not how it works.
Apple can fail: who remembers the Newton in the 1990s? Or the more recent befuddled roll-out its mapping service? The more we observe G the more convinced we are than it mirrors a game of chess. But is it a game of French defence where it will be challenging for Apple (White) to hold on to the centre as opponent’s attack its Queen (iOS) quickly and swiftly, faster than any counterattack from Apple. Maybe Apple should stop defending its pawn line of iPod-iPhone-iPad? Acquire a telco. In chess language, Black is out to attack the pawn line. What is Apple’s optimal sequence of moves? Is the ecosystem a sub-game of Alekhine defence by Google (Black) or Android alliance (Black), allowing its King’s Knight (Android) to be positioned across the board so as to weaken White’s centre pawns? We will take up these issues in next Blog entry – our continued recommendation for Apple is to play not to lose rather than play to win.
Greek crisis is a sub-game
Europe is in the long game of a United States of Europe and the Greek crisis is one sub-game in the time continuum, but the sub-game to watch in order to define a Nash Equilibrium is a Euro currency crisis…such a crisis has not happended although the Euro at May 2012 is devaluing against Sterling and US dollar. I had made a similar point in an interview on Bloomberg London last May 2012 [available on my webpage]. A Euro currency crisis will dictate the elements of a final solution [whether Greece departs from the Eurozone]…a devaluing Euro now plays to Germany’s strengthens as an exporter……so we need to look at the Euro as a currency, its stability, its continued credibility as an international currency; if it continues to devalue and risks the United States of Europe then we could observe IMF and G20 exchange intervention [check the Yen crisis in 2011] so it is the Euro currency signals to observe as a critical pattern in order to find an equilibrium and thus comment on the present…For the moment the Euro currency is stable in a devaluing mode, the Greek crisis is a sub-game, of secondary importance to the primacy of the Euro and United States of Europe.