A Strategic Framework: Finite & Infinite Games in Agribusiness
Updated: Feb 2, 2020
Strategy is one of my favourite aspects of business. It’s methodical, takes in-depth understanding and a higher-level view of intentions and outcomes. On top of this strategy can get better with more advanced frameworks applied and plans for execution. Recently I read a book, although not directly related to strategy, that has interesting applications to strategic frameworks, resource allocation and how one approaches long term success. The book is “Finite and infinite Games” by James Carse. (Note: I haven’t read the book that is similar from Simon Sinek, but have read a couple of book summaries)
In his book, Carse writes “A finite game is a game that has fixed rules and boundaries, that is played for the purpose of winning and thereby ending the game“.
1) known players
2) fixed rules
3) an agreement that if some specific event happens, a group of players will be recognized as winners. We cannot play alone in the finite games, we must have an opponent to play against and usually teammates to play with.
A great example of these kinds of games is hockey. In hockey, every player agrees that at the end of the 3rd period of the game, the team that has the most number of goals is the winner.
On the other hand, “an infinite game has no fixed rules or boundaries. In an infinite game you play with the boundaries and the purpose is to continue the game”, which means infinite games are defined as:
1) known and unknown players
2) rules of the game are dynamic and might change over course of time
3) these types of games have no winners or losers; players might drop out because they run out of resources that end up being replaced with new players.
An example of infinite games was “Seven Sisters” which was a common term for the seven multinational oil companies of the “Consortium for Iran” cartel, which dominated the global petroleum industry inn the mid 1900's. At one time, the Seven Sisters controlled ~85% of the world’s petroleum reserves. While these companies were competitors, none of them wanted the other one to vanish, instead, they were protecting each other to continue the game of oil market domination.
Summary: In a finite game, there is a clearly defined end point and there are winners and losers. In an infinite game, all parties are working to keep the game in play. There are no winners or losers, but rather those that drop out of the game due to a lack of will or resources to continue playing.
Types of Players in the Games
In these games there are of course players:
Finite player vs. Finite player = stable system.
Infinite player vs. Infinite player = stable system
Finite player vs. Infinite player = problems. One player is playing to win and the other is playing to keep playing. Therefore, the finite player will always find themselves in a difficult situation.
So, what difference does it make whether someone is playing an infinite game or presenting as a finite player? In agribusiness, the rules are changeable, there is no true “winning the game of business”.
Even though it is often said that “our goal is to increase market share” or “we are number one”, it begs the questions: On what criteria? On what time frame? It’s all arbitrary. No companies agree that the end point is “market share” (or any other metric), every organization has their own KPI’s, most of the time unique from others.
So, when ag companies playing the infinite game are playing against those playing the finite game, finite game players find themselves in trouble making decisions. Infinite game players optimize for the long term. An example is succumbing to the short term and taking resources to manage a metric in market share among a specific product line that takes away from investment in the strategic infrastructure needed to be successful 5 or 6 years (and beyond) down the road (eg: digital infrastructure that I’ll talk about more later). This means a focus on the short-term products instead of the better option of long-term systems that will be the most powerful.
As mentioned above, the fact that we understand the nature of the games we play and the intentions of other players, is very much important to make decisions and defines an organizations strategy.
Playing the infinite and finite game is the difference between being obsessed with the journey and vision versus being obsessed with your competition. While infinite players act according to their vision, finite players act in favor of their short-term interests.
Before we get to the ag examples, think of this in terms of Apple, Amazon or Google. They are focused primarily on insuring the best possible product for the best possible customer experience, always. Consistent with their vision. They also are continually investing into the future of their organization for the long-term sustainability of the business and long-term benefit to their customers.
Some examples of playing a finite game:
You are driven by the need to “beat out” other competitor firms in the ag industry (eg: retail A vs. retail B)
· Focus on day-to-day short-term wins, rather than the “long game.”
· You aren’t sure or don’t have a clear sense of what game you are in.
· Your firm or individuals within the firm cannot articulate a higher purpose for the work that you do.
· Decisions are made by considering interests first, values second.
Finite players lose out in the long term, they struggle in the short term and they miss out on opportunities that arise consistent with a long-term vision or trend. There is always going to be some pressures to obtain short term wins, but it should be about creating the milestones and celebrating success that supports short term strength and long-term vision.
One prime example of a finite business vs. an infinite business is Blockbuster and Netflix. Now, this is a common example in "disruption" examples, but I think it provides a compelling argument for being "infinite" vs. "finite". Blockbuster couldn't think beyond their four walled stores and were playing a very explicit game; one that included specific rules around the physical world. They were playing a game that was stuck in thinking that the world would never grow to include streaming (and internet didn't get faster), where physical assets were the pinnacle of business and where they didn't have a coherent vision for the future. Netflix on the other hand was playing a game that Blockbuster couldn't comprehend, and they weren't playing to "win"; they were playing to grow, they were playing to expand and they were playing to enhance the customer experience that they didn't even realize they wanted yet. Now, there are new streaming wars where we will see if Netflix can maintain this "infinite" approach.
Applying the Framework to Agribusiness
In agriculture we have many different players within the “game” and different games that we are playing. From appeasing consumers for farmers, to focusing on long term profitability as farmers, to the ag retails, product/equipment manufacturers trying to increase sales and beyond.
In order to think infinitely, it requires the ability to think about what will “never go out of style”? What are customers always going to value? What will make them want to purchase from you or through you? Those are the things to work towards, broken down to first principles. It’s not “service”, it’s not “value” – those are arbitrary. Are farmers always going to want a simple, friction-less buying experience? What will enable that? How do you build an organizational culture over the long term that embodies that focus?
Digital Tools in the Infinite Game
Ag today is seeing an evolution in how digital infrastructure influences everything from farmers, to farm service organizations like retails, insurance, and banks to enabling new business models within the industry. While technology is not a strategy, simply an enabler of strategy, it is important to consider. In order to be successful in the long term, agribusinesses need to take an infinite game mindset to their strategy and thinking. For example, it takes an investment in digital infrastructure in the short term to be able to reap the benefits in the long term. It’s the systems vs. products mindset that I think is so valuable in big picture strategy.
The term “disrupt yourself” is constantly thrown around, but it is something that needs analysis when playing the infinite game. Just as Disney had to “disrupt itself” forgoing billions of dollars in revenue to build out their Disney+ vision, this is the type of mindset businesses in ag will have to consider, looking beyond short term costs and relinquishing some revenue to be able to set themselves up for indefinite success. One example of this will be crop protection manufacturers. They know that there is a trend that is showing a decrease in pesticide use globally and instead of doubling down on pesticide R&D, they have reallocated their funding and investments in digital tools that focus on knowing “where, when and why” to apply less of a specific product - insuring intelligence to be able to inform a farmer. Additionally, shifting their funding to biological based products that takes away from cash flow and profits in the current years in an attempt to remain relevant and successful in the longer term.
How to Play an Infinite Game in Agribusiness
Focus on your mission and values and develop a strategy that is consistent with that.
Define your mission and values and act consistently with those. Define what will never go out of style, what will always be coveted by customers. The vision can’t be for simply profitability, it needs to be for how you envision farmers raising their crops in the next decade or for what the world of agriculture to look like in the next 30 years that makes life better off for farmers and consumers.
Foster a culture that employees, clients and vendors want to be a part of.
Times are changing and the values and cultures that individuals want to be apart of is a continued evolution. Identify what these values are and ensuring they are consistent with what your company vision and mission is will help to cultivate that.
Execute on your planning and keep on fine tuning.
Plan. Make a long term plan and continually iterate; set KPI’s, obsess over your customers and your vision and how to make those become a reality.
Understand change and work to adapt.
Change is constant. Keep current with what is happening in the industry and with customers and beyond your core area of the business (For ag, check out my weekly newsletter here: Upstream Ag Insights). Continually we will see areas of business coalesce because of technology and company integration - be aware of it. One of my favourite sayings is “Always be capturing”; if you are capturing more information about what’s going on around you, you’ll be in a good place to know how your vision is being executed on and what other areas of the business might be changing and shifting away from your focus and vision.
Embrace innovation and continue learning every day (curiosity).
Embrace complexity and all that comes with innovation and a rapidly changing business environment. Finite players ignore it or put their head in the sand; infinite game players are constantly aware and thinking about how new technology can be ancillary to their business and their vision. Constantly strive to build new framework and learn the underpinnings of everything you can.
The finite and infinite game framework is a great lens to consider strategy through, specifically for agribusinesses. A quote I want to end with is from James Clear regarding personal habits, which are the tactics utilized by us as individuals to optimize our lives:
“The costs of your good habits are in the present. The costs of your bad habits are in the future”
What bad habits are you deploying in business today chasing the finite game that will negatively impact your ability to compete in the long term?