What Is a Strategy?
BUILDING A MODEL OF A STRATEGIC SITUATION
2.4 What Is a Strategy? Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. —SUN TZU2
WHAT DO YOU THINK the preceding quote from Sun Tzu means? One interpreta- tion is that, to be victorious, you should develop a detailed plan prior to going to battle and then, once in battle, execute that plan. Rather than trying to fig- ure out a plan over the course of the battle, perform all of your thinking be- fore one arrow is flung or one cannon is fired.
The notion of a strategy is central to game theory, and its definition is ex- actly what Sun Tzu had in mind. A strategy is a fully specified decision rule for how to play a game. It is so detailed and well specified that it accounts for every contingency. It is not a sequence of actions, but rather a catalog of con- tingency plans: what to do, depending on the situation. As was well expressed by J. D. Williams in an early book on game theory, a strategy is “a plan so com- plete that it cannot be upset by enemy action or Nature; for everything that the enemy or Nature may choose to do, together with a set of possible actions for yourself, is just part of a description of the strategy.”3
As a conceptual device, we imagine a player choosing a strategy before the game begins. This strategy could, in principle, be written down as a set of in- structions and given to another person to play. In other words, having a strat- egy means doing all of the hard thinking (utilizing intelligence, judgment, cleverness, etc.) prior to playing the game. The actual play is nothing more than following the instructions provided by the strategy selected. Of course, this description of a strategy is an abstraction, since, in practice, surely judg- ment and acumen are applied in the midst of a strategic situation. However, you’ll need to accept this definition of strategy if you are to make headway into gaining insight into strategic situations. It is one of those basic postulates that is valuable in practice because of its purity in form.