The CEO Game

How would you decide what is better, more important or will get you to where you want faster? How can you make your decisions better and better for you?

When you want to reach a given goal, there is usually more than one way to achieve it. There can be more than one good way to act and they might all help you to get to where you want, but for certain there is always one way which is better than the rest.

Which way to go?

You have to decide not only which ways to take, but also how much effort should you invest in each step. How would you know how to decide what’s better or more effective? Well to do so you’ll have to rank your alternatives. To rank most effectively and reach the right decisions you will have to compare the options in front of you with the main goal.

The ranking is fairly simple, the more each action assists you in reaching the main goal the more it’s important. You will have to find a link between each step and the main goal otherwise this step is simply useless. The more you will be able to connect each step to the main goal the more you will know how to rank the steps.

A right implementation of this approach will assist you in prioritizing task and in the ability to effectively choose which task or project are worth more effort and which are simply don’t. Knowing how to prioritize task is the corner stone in the CEO’s job.

Ailon.

The CEO Game.

From a young age we are exposed to many myths about money and wealth. Those myths may come from our family, relatives or even friends. The myths we grow up with will have a tremendous effect on how we manage our financial wealth when we reach maturity.

Today I want to discuss few of those myths.

Understand the Myths.

Myth #1: Work hard and you’ll be rich

Many of us believe that having a high-level position in a company or a company of our own assures us that we are on right track for financial wealth. With so many cut-backs and financial recessions, anybody can find himself out of job at any given moment. Working hard doesn’t assure you that you’ll ever be rich.

Myth #2: Saving is good

From the first day that we got our first nickel, we were taught that saving enough money will mean that one day they will gain financial wealth. Can saving assure a financial wealth?

Although saving might assure that you’ll have some money one day, it is definitely not the way to reach a true financial wealth. You should learn how to invest your money in different routes to achieve better and faster rates.

Myth #3: Being in debt is bad

Another myth we grow up on is that being in debt is bad and we should avoid it in any cost. Well, the truth is that not all debt is bad. It depends on what you do with the money you borrow. If you invest the money you owe in ways to gain more money then you actually use the debt to cover itself and even return an income, which is not bad at all.

Myth #4: Investments are a dangerous business

Many people live under the false assumption that investing in the stock market is equal to gambling in the casino; this couldn’t be farther from the truth. Investments are not as dangerous as long as you how to manage your risks.  If you truly understand the investment that you’re about to make than the risk is far lower and you know more or less what to expect.

Ailon.

The CEO Game.

In the last few years, more and more leading companies have started realizing that not taking advantage of possible business collaborations between them will harm their goals of gaining a strategic advantage and achieving rapid growth fast. The key for quick and substantial growth is first and foremost the ability to share strategically with other organizations, including rivals.
What made this change happen?

Sharing Resources

The Global Economy- means that wares, ideas, people, cultures and services are moving freely across national borders. When you look closely at the factors that caused globalization to spread so rapidly in the last decades, you find that technology was the main factor. Technology has shortened distances, created large communication networks, allowed us to be exposed to different cultures and even improve our lifestyle. Dealing with this tremendous global space required collaboration between many business corporations around the globe, mainly to ease development and distribution efforts.

The Need For Knowledge – is growing rapidly and the knowledge to be gained is now more diverse, multidisciplinary, faster and complex. This need requires that we share with others in creating data sources that are needed in the business world. We need external feeds from different sources to enrich the organization’s knowledge, and without it the organization won’t survive in the modern business world.

The Demand for Immediacy- This is a critical factor in global economy. Everybody wants everything, faster, sooner, and quicker. In this age, when a technology can become dated faster than it was developed, it’s crucial for different organization to collaborate. A firm that insists on doing everything on its own will soon find out that it’s already too late and it missed the market. Companies that participate in these collaborations will always be faster in reaching the market, dealing with changes and empowering their synergy.

The complexity of Technology- This is the simple fact that, if we take a look at the products that we use today, we will find that most of them were not here in the same configuration only few years ago. Every product now has new features, new capabilities or is totally new. There is always a human hunger for newer and better technologies and that is why the complexity is always growing. So what is the easiest and fastest way to produce this new technology? You probably guessed it right: create business collaborations that allow the merging of different technologies and ideas to new and improved products.

Now one might ask what are the factors for a successful collaboration? The main factors are:
• Mutual interest in which each partner knows what he is getting from the collaboration.
• Organizational culture that embraces changes.
• Preliminary planning for setting the collaboration goals.

The same concept applies in the CEO game as well. It will prove to be very hard for one company to research new products, produce them, advertise them and sell them around the globe without the assistance of different companies in different ways.

Ailon.

The CEO Game.

Traditional microeconomics teaches us that we should make decisions on the margin. That is, we should ignore sunk costs. Sunk costs are costs we have already been incurred and cannot be recovered regardless of your next time. In order to optimize revenue, theory of the firm states that, in perfect competition, marginal revenue should be equal to marginal cost. That is, how much you earn for selling the last unit of a product should be how much it costs you to produce that product (in this perfect world, that would also be the price on every unit). This also applies for people and their utility. You should assess both costs and benefits on the margin, in the next time period, on the next purchase, without thinking of everything that came before.

Logic In, Emotions Out.

Most of us, of course, don’t do this. How many times have you sat through a movie you hated because you paid for the ticket already? How many times have you waited for the subway an extra 20 minutes instead of just walking because you have already waited for 20 minutes? And how many times you have eaten that last slice of pie even though you were really incredibly full because you already heated up the whole thing and you didn’t want to throw it away? Enough times, I am sure, that you are aware of the phenomenon of, at the end of the movie, wait, or pie, being incredibly bored, late, or nauseous, and wondering why you just did that.

The reason you just did whatever irrational behavior it was that I just described (or a host of others) is that, unfortunately, you’re human. And that, as always, is the lesson from behavioral economics. Humans aren’t irrational! So why treat them that way? Now we come back to our good friend prospect theory, which was mentioned in the first article I wrote about behavioral economics. In addition to valuable insights on reference points, prospect theory states that people are inherently loss averse. Not only that, but they did to weigh losses twice as heavily as gains — that is, a loss of $1 is twice as painful as a gain of $1. The combination of a non-neutral reference point and loss aversion is what leads to irrational behavior.

Once you have decided to see the movie, wait for the subway, or eat that piece of pie, your reference point account for your doing those things. That is your neutral position. Not achieving these goals is a loss. This sort of mental accounting, as it is called, commits you to decisions that are less than ideal.

A good businessman, either online in a serious game such as The CEO Game or in real life, doesn’t let a misplaced sense of regret and loss stop him from making proper economic decisions. Recognize when you’re including sunk costs in your decision-making and put an end to it. Live life on the edge, or margin. You’ll be happier, and wealthier, for it.

Tamar.

The CEO Game.