Implications of the roulette results

The roulette simulation infers two clear guidelines. Firstly, the starting place for deciding which niche speciality to choose is that of making sure that the niche speciality will provide some real benefit to someone. It must effectively create wealth by increasing efficiency somewhere. If your niche speciality cannot do this then you put yourself in a zero sum game situation, which the roulette simulation so neatly pin-points.

Secondly, the implications of the roulette wheel simulations are that the many little deals scenario is a more profitable strategy than the big deal. But, how does this translate into an e-business strategy?

To me, it hints at a preference for using a tit-for-tat strategy. This is the classic Games Theory strategy where relationships and partnerships for business associations are approached gradually and cautiously to allow a mutual understanding of trust to build up.

The general idea is that on an initial encounter with somebody you show them trust, do them a favour or give them something of value. They can either say "Thank you very much" and not return the favour, or, they can return a favour back. On subsequent encounters, you copy the response of the other person at the previous encounter: if they returned a favour, you respond with another. In this way, what may start as a risky relationship with a stranger, can be developed gradually until the element of trust and the reciprocal favours can be highly beneficial to both parties.

Such an association between the results of a roulette game and a strategy to build up a relationship may seem highly dubious and tenuous. But, at a more abstract level, they are both concerned with making increasing commitments in a risky situation and increasing that commitment until it pays off. In a zero sum game, or a game where there are more losers than winners, this is not a good strategy, but, in games where wealth is being created (the zero wins for the players) it can turn out to be the optimum strategy to provide the best chance of success.

Such a conclusion may not be of any consequence to a business strategist used to the stability of an Industrial Age scenario where risks are largely eliminated (by using references, track records and experience of similar situations - all of which are of questionable value in the rapidly changing environment of the Internet). But, in the uncertain and unpredictable conditions of an e-business environment, this is a very important observation to make. Credibility and the difficulties associated with establishing relationships of trust over the Internet are major barriers to creating a successful e-business.

The inference is that in situations where there are substantial elements of risk, many small dealings are likely to be more profitable than large deals: suggesting that breaking up large risks into a collection of smaller risks might be an essential part of any e-commerce strategy.

This is in sharp contrast to the zero sum player's best strategy. Those who do not add value by increasing the efficiency of a business activity might find greater advantage in playing for the big deals.

Stepping outside of this artificial environment of the simulated roulette game, it is not hard to see how this accords with everyday experiences in the real world. The cowboy Web site builders who provide plenty of glitz but no real value for their clients' businesses always go for the big deal, whereas the real value providers prefer to work with many different clients and build up stability through providing satisfaction through a larger number of smaller deals.