How Game Theory Can Be Applied to the Software Business

A few weeks ago, I read a book on game theory, and it's applications to business. The book is called co-opetition and was very interesting:

amazon link

Now, some of the rules dance around my head whenever I analyze a business situation.

In particular, the authors stress not to divide the world into the black and white, me against them situation. Rather, they point out that finding a complementary company could lead to benefits that neither one could have alone.

Quoting from the book, the rules are like:

A player is your complementor if customers value your product more when they have the other player's product, then when they have your product alone.

and

A player is your complementor if customers value your product less when they have the other players product, than when they have your product alone.

It's a very interesting way of looking at things, since it brings to light opportunities that might not have been obvious before.

For instance, applying this to a program like Adobe's Photoshop, direct competitors would be other graphics programs that provide similar editing features. However, another competitor might be water colors and paper. Artists that spend their time with traditional tools will not have the energy to later use photoshop. Their passion is expressed, without the need for software at all!

On the otherhand, a complementor would be something that makes it easier for people to share the digital images that an aritist has created.... like the Internet! In addition, makers of special effects plugins for Photoshop will inspire artists and tickle their creativity. This will lead to more time in front of the product, and more sales