Friday, September 17, 2010

Business and Driving

Earlier, I had posted about how we make strategic decisions when we chose a route to reach a destination. A cheap(er) imitation from Thinking Strategically, a brilliant book on Game Theory by Avinash K. Dixit and Barry J. Nalebuff.

A look at my car would reveal to anyone that I have been rather impatient in my driving. The reasons could also be that I have not honed my skills. But many a times, it would just not be my fault. The road is full of morons. So, about a couple of months back, I decided not to get too competitive on the road. I realized that my goal is not to be first, it is to reach the destination safely without causing any harm to self, my co-riders and anyone else on the road. I also decided to stick to reasonable speed limit. I observed that in city it doesn't matter how hard you press the accelerator, you will certainly pull the brakes on red signals every few meters. Most importantly, you just don't gain time.

But coming back, there's certainly a lot of commonalities between driving and businesses.

  1. Availability of resources is limited: While in business it could be raw material, people, partners...the most important limitations in driving is the road. Whether you drive an inexpensive hatchback or an expensive limo, there is only that much tarr-ed surface. Demand is so high that any additional supply is usurped, quickly.

  2. Highly regulated: If the Company's Act is the bedrock for organizations and establishments, the most essential barrier to entry on the roads is the license. And just like businesses, you get a different license based on the market you want to drive it - two wheeler, four wheeler, heavy vehicles...
  3. Competition: Companies can be categorized based on their size. Similarly, one's presence on the road is measured by the vehicle driven. While larger presence has an impact, there is enough room in the markets and road to allow everyone to exist. But then everyone is fighting for a space and to reach faster. While drivers may not have the same common goal like companies in reaching out to same target audience, the common element is the direction. In that sense, racing and businesses are more similar.
  4. Strategy: Both driver and an organization has a fixed strategy, but make suitable changes based on the situation.  

So next time you drive, think you are conducting a business. A serious one. And if you are one of those who need to deal with road rage, here is a wonderful read. Helps!

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