The value of a business idea

The businessman in the dialogue in the previous chapter is shown as having six alternative options. He assumes that his chances of any one of them being successful is one chance in six. We have already seen how, in the uncertain world of the Internet, it would be impossible to differentiate between them, and he would have to treat them all equally until emerging events highlight a favourite.

The scenario still begs the question though, as to how the man arrives at the number of options as being six - this is supposedly based upon his past experience that only one in six of his business ideas become viable. Why one chance in six? Can you make that kind of assumption in the world of e-business where there is practically no previous experience or historical data to draw upon?

If we look at the list of initial assumptions in the introductio we see they include:

2) Nobody knows all the answers.

3) The environment of the Internet and the World Wide Web is beyond your or anyone else's ability to be able to understand it completely.

18) Whatever you are offering, there will be a plethora of similar alternatives in the market place already.

20) The solution you have to come up with is beyond yours, or anyone else's imagination.

22) Any final solution you come up with will have to be abandoned or radically altered within a very short period of time.

Game Theory is about applying rules to reduce or eliminate alternatives. If we are to take the above assumptions seriously, then they must be applied as rules to any business idea we come up with. Clearly, applying such rules to discount the uncertainties and unknowns in any great business idea we'd find we'd have to discount so heavily that the value will drop to a point where the success probability of the business idea is hardly any better than that of a random guess.

Such a pragmatic assessment will cause any carefully thought out business idea to be hardly worth the bother of trying to put it into operation. This is a startling conclusion and a radical paradigm shift from the conventional business approach used in the bricks and mortar world of the twentieth century.

The businessman in chapter 3 has whittled his options down to six possibles, but, if these options are e-business ideas and we apply the e-business assumptions to each of those ideas they will all be virtually worthless. This will totally negate the value of his approach because six worthless options will be equal a worthless total, whichever way you want to look at it.

Developing this thought further, it becomes obvious that any scheme based upon great business ideas will suffer the same fate. This is not dissimilar to the situation with roulette systems. The underlying probabilities determine the average outcome and this will not change however the bets are arranged.

This counter intuitive conclusion presents an enigma: a strategy to find a successful e-business cannot be based upon a business idea

This seems ridiculous, but, Game Theory is actually telling us something very subtle. It is telling us that if we start without a business idea in an unpredictable environment we will be at an advantage to those who do. Those with fixed ideas will be confined by them. Without a fixed idea you can look for opportunities over a very much larger range of possibilities.

This is the way the master Game strategist, Sherlock Holmes, might have looked at it. He worked on the assumption that if the probable is eliminated and you are left only with the improbable, then the solution must lay amongst the improbable. It is there we go now.