Imagine a tribe with just one fig tree. If one member overeats, others go hungry. The same applies to hunting a single deer—if the chief overindulges, everyone else suffers. This illustrates a zero-sum game: one person’s gain means another’s loss. When someone benefits, it often comes at someone else’s expense.
In a zero-sum game, every winner comes at the expense of a loser. For one to gain, another must pay the price. This is the inevitable law of such a scenario.
Is every game truly zero-sum?
Let’s begin by revisiting a classic example.
First Story: The Intersection and the Gas Stations.
A businessman decided to open a gas station at a busy intersection, where the traffic flow was so heavy that customers lined up for service. Seeing the opportunity, another entrepreneur set up a competing gas station across the street, undercutting prices to attract customers. Soon after, a third competitor recognized the lucrative potential of the intersection and opened yet another gas station, offering even lower prices to draw in customers.
As competition increased, customers rushed to the station offering the lowest prices. This prompted a fourth gas station at the remaining corner, further slashing prices to capture the market. Ultimately, the owner of the first gas station, who hadn’t even recouped his initial investment, faced bankruptcy. The second owner was close to financial ruin. Meanwhile, the third gas station owner grew increasingly frustrated, causing conflicts with the other owners and hindering their ability to thrive. The owner of the cheapest gas station eventually faced legal troubles when authorities discovered he was diluting gasoline to lower prices and undermine the market.
Is Direct Competition in Business a Wise Strategy?
This exemplifies a zero-sum game: when one gas station thrives, another suffers.
Second story: The ecosystem of an intersection
Once upon a time, a traveller arrived at a quiet intersection and decided to open a gas station. The convenience of the location attracted vehicles, and business began to flourish. Another entrepreneur, noticing the influx of customers, opened an auto repair shop to cater to those fueling up. Soon, a third individual recognized the potential and established a restaurant nearby, while a fourth investor built a hotel at the opposite corner. Before long, the intersection transformed into a bustling hub of activities, where residents thrived, collaborated, and enjoyed a prosperous life together.
This is a zero-sum game: the benefits gained by one individual do not infringe upon the interests of others. Instead, they can directly or indirectly enhance the advantages of others.
So, which game are you playing?
In the absence of creativity and with a tendency to mimic one another, businesses inevitably find themselves in zero-sum competition. To create a non-zero-sum game, one must possess genuine intelligence rather than merely imitating others.
Alongside intelligence, a belief in the future is essential.
For instance, even if you aren’t the first to open a gas station, you could at least establish an auto repair shop, as mentioned in the second example. However, if a lack of capital hinders you, you might seek a loan from the gas station owner. If the owner is optimistic about the future, they will be willing to lend you money, knowing that your success will benefit them. In this way, you can continue providing financial support to others starting restaurants or hotels, filling the remaining gaps at the intersection while also earning some interest on the loans.
Conversely, if there is pessimism about the future, one might hesitate to borrow money to open an auto repair shop, and the gas station owner would be equally unwilling to lend. The lender fears losing their investment, while the potential borrower lacks confidence in future success and thus avoids taking on debt. As a result, everything remains stagnant, and no vibrant intersection emerges.
The choices made by individuals participating in a game can determine whether it is a zero-sum game or one where everyone can win or lose together.
Our instincts, shaped by hunting and gathering and the simplicity of agricultural economies, have profoundly influenced our thinking, often without our awareness. This has led us to blindly pursue paths that overlook the many opportunities for win-win scenarios. If we find ourselves engaged too frequently and for too long in zero-sum games, it can foster a narrow-minded and selfish mindset.
