Ep 232 | Are You Playing Zero-Sum Games?

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity for us to get better. Today we're going to get a little bit smarter around what we call zero-sum versus positive-sum. I mentioned this term zero-sum in yesterday's podcast, and I wanted to expand upon it a little bit to make sure that we all understand what zero-sum in fact means, how it relates to or compares to positive-sum, and how to leverage this knowledge to make better decisions, form better partnerships, just chart a proper course both in business and in life. A couple years ago, actually it's more than a couple years ago, I was in a conversation with a business partner and we were both kind of jockeying for, I guess, different leverage or positions within the partnership that we had. I mean, it was very, very, very good relationship, but we were kind of going back and forth on a particular topic. And I'll never forget, he said to me, he said, Brian, why do I have to lose in order for you to win. And, and, and that comment stuck with me and it stuck with me for a number of reasons, but it very much relates to today in that what he was asking me was, why does this have to be a zero-sum game? Now, zero-sum, what does that mean? Zero-sum refers to a situation in which one participant's gain or loss is balanced by the losses or gains of other participants. So in other words, the total amount of resources, the total amount of wealth, or the total amount of utility involved remains constant, and any gain by one person is offset by an equal loss by others. So in a zero-sum game or a zero, zero-sum scenario, The total sum of resources or value is actually fixed, and any advantage that one party gains comes at the expense of another. Now, this is in contrast to what we would call positive-sum situations where all participants, all partners can in fact benefit. This is what we would describe— positive-sum is what we describe as win-win. The overall outcome is not constrained by a fixed amount of resources. Now it's important to note that many real life situations, real world situations, are not strictly zero-sum or positive-sum. They can fall kind of on a spectrum between these two extremes. However, the concept of zero-sum is, is frequently discussed in business, in life, in economics, in game theory, in strategic analysis, to really describe what I would say to be competitive scenarios. So maybe the real question is, When is it right to be competitive versus where should we look to be more collaborative? Now, to be super clear, zero-sum is not a bad thing. Zero-sum situations are, are not inherently bad. It just depends on the context and the perspective. Let me give you an example. Okay. Uh, let's say that there are two companies that are bidding for a government contract. So here's the situation. The government agency is looking to give a contract to a specific company for a, a unique project, and there's two companies, let's say Company A and Company B, and they're competing for this, this contract. Now here's the zero-sum aspect. The total value of the contract is, is fixed. Let's say it's $1 million. So there's a limited budget that's set by the government for this project. Now, if Company A wins the contract, it gets the full value of the contract. And if Company B loses that contract, it loses— it in fact loses that value. Conversely, if, if B wins, then A loses. So the overall value within this context remains constant, which is what makes this a zero-sum situation. One winner and one loser. One company's success or gain directly corresponds to the loss of the other. So this isn't necessarily bad if we are competing for something that would be zero-sum. This is a competitive bidding scenario. Again, the resources are constrained, they're limited. Now, positive-sum would be a scenario where we can find, say, a strategic partnership or a collaboration where all, uh, parties involved benefit and create additional value. Let me give you an example, a real life example between Apple and IBM. In 2014, Apple and IBM, who were traditionally pretty big competitors, announced a strategic partnership to collaborate on, on a specific project. At that time, mobile devices like the iPhone, like the iPad, they were becoming pretty popular in the consumer market. But their adoption in the business sector, in the enterprise sector, faced a lot of different challenges. Now, Apple wanted access to IBM's expertise in enterprise solutions and business solutions, which included data analytics and included security. They wanted to enter this, you know, and penetrate this business and enterprise market, and they wanted to leverage IBM's already established relationships with these big corporations, with large corporations that Apple just didn't have. Now IBM, on the other hand, wanted its software and its services on Apple's mobile devices, which would expand their reach of, of their enterprise solutions. And it would create a new channel for selling IBM's applications through Apple's ecosystem. So the outcome here, these two companies partnered, it resulted in the development of industry-specific apps for the iOS, devices that tailor— I'm sorry, that, that Apple had. They created tailored products for enterprise. It took IBM's expertise in data analytics and cloud services and security and combine it with Apple's amazing hardware and this user-friendly interface that Apple had. So the result, this partnership created a positive sum outcome where both Apple and IBM benefited. In other words, it was very much a win-win. Apple got a stronger presence in the enterprise market. IBM got an extended presence in the mobile space. These two companies, competitors, they had different strengths, but they, they combined to create these synergies and deliver more value to customers, and both parties won. This is a great example of how strategic collaborations can lead to positive-sum outcomes. By taking each of the company's strengths to create these solutions. Now, when do you use, I guess, zero-sum versus positive-sum? Why does this even matter in, in life and business? Zero-sum— when resources are limited, when we're competing, when we risk a negative-sum, in order to— in other words, a lose-lose, then maybe zero-sum is is applicable. In other— just to restate, we are looking at zero-sum when I win and you lose. If the resources are very limited, it's competitive. Maybe it's just competition, straight up competition, or we risk a lose-lose. If I go back to that government contract, if neither of us had the resources or ability to fulfill, meaning that we both would lose the potential for that contract, we've got to evaluate a collaboration or a partnership to potentially win that contract together. So we avoid a lose-lose and create a win-win. That's why we have to look at, you know, these different scenarios. Now, positive sum. When we look for positive sum, when collaboration creates value, when a win-win creates more value and creates opportunity for both of us to benefit. We also look at positive sums in Just strategic partnerships, alliances where our combined efforts lead to, lead to outcomes that are more beneficial than each party would have had individually. And then lastly, when I think around positive sum, innovation and growth, like if you look at a lot of the innovation and growth today, positive sum thinking is crucial in creating that innovation and promoting that growth because parties working together can discover new opportunities. Makes sense. So I look at zero sum and I look at positive sum. There are times when I should— I have to get after winning. And as a result, you lose. And that's appropriate. There are certainly times though, when we approach things that don't necessarily need to be zero sum where there's a winner and a loser and can be positive sum. Which would be a win-win. So the focusing question for you today, when you look across your business world, where are you playing these zero-sum games? And in those scenarios, would it behoove you to potentially consider instead of a zero-sum approach, maybe a positive-sum approach where in collaborating and partnering with somebody versus competing with them, we can both reach our objective— objectives more efficiently, maybe even reach an even higher level through collaboration and partnership versus a I win, you lose strategy. Now, to bring it back to the original story, I mentioned the individual I was talking with. He said, why do I have to lose in order for you to win. And that hit me pretty hard because that was not necessarily my intention. And my takeaway was, man, sometimes we default to zero-sum and don't even realize it. And so after he said that, I'm like, that's a great point. Maybe I need to take a step back and evaluate, you know, the resources available, evaluate, you know, my approach to this and figure out how not just do I win, but how do we win together? And as a result, deepen our partnership. So look across what you have going on right now. Ask yourself, is it zero-sum and should it be positive-sum? And as a result, you win at a higher level. That's all I have for you today, the No Days Off podcast. Thank you so much for listening, and remember, every single day brings a new opportunity to get better. So let's get after it. [MUSIC] [MUSIC]