Chessic Business
July 22nd 2008 01:48
There is an overwhelming similarity of the chess battlefield and the business world.
The starting structure of the game is a beautifully composed structure of hierarchy of mobility. Here is the starting position:
Let’s examine the first and most important piece with its business counter part.
The King: The head honcho is the Board of Directors which is the shareholders. If your shareholders fall, then all is lost! In chess the checkmate is the arbiter of all, and in business that value of the stock and the cash flow it represents is too. The Board can do just about anything they choose and so the King can move any direction he wants, but only one square at a time. This is also true of the Board. They need other’s expertise to execute their plans. One King cannot checkmate another King without proper help, nor can one Board of Directors compete in the market without proper staff.
You can see the two King’s mobility and attack/defensive potential. They are unable to directly attack each other, due to the rule of not being able to enter into check. When in direct opposition they produce a three square buffer in front of each other that neither can enter.
Can white win this position?
Depends on who has to move first! This is an example of Zugzwang, specifically a mutual Zugzwang. Whoever moves first losses this position because neither have any good moves going first! One will have to yield to the other. If it is Black’s move then White will promote his pawn and win. If white moves first then Black can control the Queening Square and draw, and that is better than a loss for Black.
In business, that is like Black did not making a “profit”, but everyone got paid and they did not lose money.
The way the game is lost/won is when one side places the other side in a particular position. A position of the absence of freedom to move and there is a compulsion to move, but not simply because it is his turn to move but because of an attacking piece issuing check. If it is simply his turn to move and he has no legal moves but is not under attack then it is a draw. A draw is a tactic in itself. If you are in a losing position a draw is significantly better than a loss.
If in this situation it is Black’s move it is a draw. If it is White’s move he simply plays Rook to h7 checkmate. As you can see White’s Knight controls the h7 and g8 squares and White’s Rook the entire a file and 7th rank. By moving to h7 the Rook controls the h file, where the opposing King is located and the 7th rank. There is no escape for the Black King and he cannot capture the attacking Rook to end check because of the Knight’s support.
When a company’s stock price falls the company starts to lose mobility, in that it has less money to make things happen. Let’s face it, it takes money to make money. In chess it takes material to win. If a King is alone or only has a Knight or only has a Bishop he cannot win.
In chess looking after what both Kings are doing is called King Safety. In business we call it the Shareholder Wealth Maximization Model. The Shareholders are the ones who own the company, and therefore the company exists solely to benefit the Shareholders. This is the hard honest truth of it all. A company may have a strong pro-employee benefits philosophy but in the end it is to benefit the Shareholders, hence the Harvard Business School’s Service Profit Chain.
The basic idea is that if you spend money on your employees and essentially use the Golden Handcuff method and they will be happier and that will get passed along to the customer, the customer then will like your company more and spend more money with you, then with the extra cash flow you can expand more.
But remember the employee is not the beneficiary of the company. You can get fired at the drop of a hat via the At Will Employment Doctrine.
So too can the King sacrifice a pawn for better development! It is also common practice to trade off less active pieces for your opponents more active pieces.
There is another philosophy however the Stakeholder Capitalism Model. The idea is that for a company to be successful al the Stakeholders in the company need to benefit in some way.
Stakeholders are all those whom interact with the company, suppliers to the company, people in the community where the company is located, employees, and owners.
“The Pawns are the soul of the game.” Francois Andre Danican Philidor.
Some companies have said the same thing. The employee is the sole of the company. Yet there are opposing views.
“Modern Chess is too much concerned with things like pawn structure. Forget it, Checkmate ends the game.” Nigel Short.
Weather the King or the CEO values his pawns is dependent on the position he is in. Finally when all is said and done and the game is over I will leave you with one last quote about the King and pawn relationship.
“When the Chess game is over, the pawn and the King go back to the same box.” Irish saying.
The starting structure of the game is a beautifully composed structure of hierarchy of mobility. Here is the starting position:
Let’s examine the first and most important piece with its business counter part.
The King: The head honcho is the Board of Directors which is the shareholders. If your shareholders fall, then all is lost! In chess the checkmate is the arbiter of all, and in business that value of the stock and the cash flow it represents is too. The Board can do just about anything they choose and so the King can move any direction he wants, but only one square at a time. This is also true of the Board. They need other’s expertise to execute their plans. One King cannot checkmate another King without proper help, nor can one Board of Directors compete in the market without proper staff.
You can see the two King’s mobility and attack/defensive potential. They are unable to directly attack each other, due to the rule of not being able to enter into check. When in direct opposition they produce a three square buffer in front of each other that neither can enter.
Can white win this position?
Depends on who has to move first! This is an example of Zugzwang, specifically a mutual Zugzwang. Whoever moves first losses this position because neither have any good moves going first! One will have to yield to the other. If it is Black’s move then White will promote his pawn and win. If white moves first then Black can control the Queening Square and draw, and that is better than a loss for Black.
In business, that is like Black did not making a “profit”, but everyone got paid and they did not lose money.
The way the game is lost/won is when one side places the other side in a particular position. A position of the absence of freedom to move and there is a compulsion to move, but not simply because it is his turn to move but because of an attacking piece issuing check. If it is simply his turn to move and he has no legal moves but is not under attack then it is a draw. A draw is a tactic in itself. If you are in a losing position a draw is significantly better than a loss.
If in this situation it is Black’s move it is a draw. If it is White’s move he simply plays Rook to h7 checkmate. As you can see White’s Knight controls the h7 and g8 squares and White’s Rook the entire a file and 7th rank. By moving to h7 the Rook controls the h file, where the opposing King is located and the 7th rank. There is no escape for the Black King and he cannot capture the attacking Rook to end check because of the Knight’s support.
When a company’s stock price falls the company starts to lose mobility, in that it has less money to make things happen. Let’s face it, it takes money to make money. In chess it takes material to win. If a King is alone or only has a Knight or only has a Bishop he cannot win.
In chess looking after what both Kings are doing is called King Safety. In business we call it the Shareholder Wealth Maximization Model. The Shareholders are the ones who own the company, and therefore the company exists solely to benefit the Shareholders. This is the hard honest truth of it all. A company may have a strong pro-employee benefits philosophy but in the end it is to benefit the Shareholders, hence the Harvard Business School’s Service Profit Chain.
The basic idea is that if you spend money on your employees and essentially use the Golden Handcuff method and they will be happier and that will get passed along to the customer, the customer then will like your company more and spend more money with you, then with the extra cash flow you can expand more.
But remember the employee is not the beneficiary of the company. You can get fired at the drop of a hat via the At Will Employment Doctrine.
So too can the King sacrifice a pawn for better development! It is also common practice to trade off less active pieces for your opponents more active pieces.
There is another philosophy however the Stakeholder Capitalism Model. The idea is that for a company to be successful al the Stakeholders in the company need to benefit in some way.
Stakeholders are all those whom interact with the company, suppliers to the company, people in the community where the company is located, employees, and owners.
“The Pawns are the soul of the game.” Francois Andre Danican Philidor.
Some companies have said the same thing. The employee is the sole of the company. Yet there are opposing views.
“Modern Chess is too much concerned with things like pawn structure. Forget it, Checkmate ends the game.” Nigel Short.
Weather the King or the CEO values his pawns is dependent on the position he is in. Finally when all is said and done and the game is over I will leave you with one last quote about the King and pawn relationship.
“When the Chess game is over, the pawn and the King go back to the same box.” Irish saying.
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