Infinite Games and Family Business

Infinite Game Theory

Do you operate your business with a “finite” or “infinite” game mindset.
Recently, Simon Sinek’s TED talks have re-popularised the concept of infinite game theory adding a new perspective to the work of Yurii Khomskii (2010) and James P. Carse (1986). Do you know what an infinite game is, or why you should care?
Well let’s start this blog by clarifying the principles of a finite game. A finite game has known players, fixed rules, an agreed-upon objective, a starting point and ending point and is played for the purpose of winning.

Finite Games

Finite game rules are the way most of us play the “business” game. At all levels of the business we focus on a pre-defined endpoint. Traditionally companies like the intensity of a finite game, because it’s easy to measure. KPIs, metrics, and targets, centring on what is measurable within the business. For example, we focus on end of month, end of quarter and end of financial year performance. In fact, we strongly encourage this with reward-based programs designed to modify and encourage employee’s behaviour to achieve objectives (KPI’s) before the defined endpoint. We acknowledge the stars and celebrate the win. Then we start a new game.

Infinite Game

An infinite game has known and unknown players, changeable rules and the objective is not winning but to keep the game in play. Through this lens the goal of business is continuity and opportunity. I am sure you have herd the analogy’s around winning the battle or winning the war. This is an often quoted in context of the Vietnam war, where the Americans won every battle (finite game) but lost the war (infinite game). “leaders who embrace an infinite mindset, in stark contrast, build stronger, more innovative, more inspiring organizations” (Sinek)

Infinite games and its context in Family Business

So why is this important in a business context?
It speaks very loudly to the culture of the business and the decision making of the leaders. Particularly, the core concept staying in the game. Infinite games focus on a culture of long-term thinking, the evolving business and family visons and continuity of the business over short term profit. Peter Drucker stated; “culture eats strategy for breakfast” The focus in not about beating the competition, nor is it about constantly breaking profit records.
It’s about sustainability and wealth generations of the business across multiple generations. When we apply this mindset to the family business environment it becomes about improving the business by disrupting yourself, having guidelines and not rules, having a custodian mentality and building a legacy for the NextGen.

These principles are and have been at the core of successful family businesses for a millennium. It’s about the philosophy of custodianship of the family business and the focus to keep the business in family ownership creating intergenerational opportunities and wealth. As an industry sector we use different rhetoric to game theorists; we talk about business continuity or perpetuity, succession, the next generation, as opposed to staying in the game.

Simon Sinek and Infinite games

Simon Sinek offers five must have principles businesses must follow to succeed in the infinite game. Naturally, he is not solely seeing infinite games through the lens of family business. What he suggests is;

  1. Just cause – Your just cause is what powers you to outlast your competitors. It propels you forward in the face of adversity and empowers you to persevere when you feel like giving up.
  2. Courageous leadership – prioritizing the just cause above everything else
  3. Vulnerable team – It means you’ve invested the time and energy to build a culture in your organization where people feel safe to be themselves
  4. Worthy adversary – Ultimately, we are competing against ourselves, and our success or failure should be measured against our just cause.
  5. Open playbook – Having an open playbook means leaders and organizations are willing to have flexible strategies and plans that change as needed to pursue their just cause. An open playbook also means you are transparent with your strategies, so all members of the team can literally be on the same page.

Just Cause

At the core of Simon Sinek’s work is the concept of the just cause. It is at the centre of leadership decisions, our view of competitors and strategy. He goes on to say a just cause needs five elements, it needs to;

  1. Stand for something
  2. Be inclusive
  3. The benefits need to go to others
  4. Be resilient
  5. Be idealistic

As discussed earlier, infinite games and the concept of a “just cause” are at the core of successful family business. Family business governance practices provide a great framework for identifying a “ just cause”. Elements such as;

  1. Family and business plans identify the values and purpose of the family and the business, leading to the identification of a “just cause”.
  2. Family and business meetings insure inclusivity
  3. Within the broader definition of the “family”, the creed of “what’s good for business is good for the family” ensures benefits go to others as well as the family.
  4. The creed of retained family ownership lends itself to building trust, business resilience, continuity  and the concept of idealism.

Kongo Gumi

One great example of this proven process is the Kongo Gumi the world’s oldest family business, established over 1400 yrs.’ ago in the year 578. The Kongo family moved to Japan from Korea to build the Buddhist Shitennoji Temple. Today, in their 40th Generation, and no endpoint in sight the business and family are still in the building game. They are regarded as leaders in industry while continuing to build Buddhist temples.
Today they continue to embody the principles of the infinite game. Over the centuries some players have been known and some unknown, the rules have changed but they have achieved the objective to keep the game in play. Delivering benefits to their family, employees, community and country.

If you’re unsure about how your business and family can aquire a infinite game mindset, seek the assistance of an independent family specialist like Woodhouse.

You can also check out our video on on other family business topics.

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