Most applications of game theory are controlled from in-house or deployed against a competitive landscape. The Value Game is deployed external to the corporation and in a cooperative landscape where rewards are given to those who organize people around a “highly leveraged product” in valuable ways.
There are 5 elements to The Value Game.
The first is what we call a highly leveraged product such as a conference, experience, convenience, ZipCars, or reunion – we’ll see that almost any product can be leveraged.
The next element is a secondary product vendor such as a hotel, restaurant, transportation, clothing, or equipment supplier – we’ll also see how almost any product can be deployed in the secondary role.
The third element is a consumer who seeks to minimize financial cost and maximize social value.
The fourth element is a 3rd party entrepreneur who is able to organized people in social networks and leverage primary and secondary assets in unique combinations.
The fifth Element is a true value calculator called the Social Value Index (SVI). The SVI is the scorekeeper that calculates the actual value of the leveraged product after all of the discounts and social value factors are counted.
The game starts when everyone joins the same social network underwritten by a mobile electronic debit card platform. The highly leveraged product in the middle acts like a ball in play whose value is dependent on the interaction of the other elements. Secondary vendors will deploy incentives into the field. Third party entrepreneurs will organize people around the incentives and take social profits. The Social Value Index will keep score.
Example 1: A ZipCar costs about 8 dollars per hour; this business model does not encourage social activity; it encourages fast shopping. Suppose that a person pays for the ZipCar on their debit card. Local restaurants will be made aware of the purchase and then deploy coupons against the ZipCar to the buyer’s debit card. Next, a 3rd party entrepreneurs may improve the SVI by organizing a ZipCar swap so that the person does not have to leave in the same ZipCar that they arrived in and can spend more time shopping. Another entrepreneur may organize events for families and friends that increase the passengers in each ZipCar, or by capturing any inventory from the community such as movie tickets or family experiences to deploy against the ZipCar. After the event, the SVI updates the net cost of the ZipCar from 8 dollars per hour to, say, 1.42 per hour. This is 80% savings on the ZipCar and 33% savings on a day out with the family over using their own car.
In effect, the leveraged product buys itself in a convertible social currency.
Example 2: Suppose that a popular aerobics instructor has 40 students. The local health food store may authorize her to give away 1000 coupons for 5% discount on store products. In return, the aerobics instructor gets 5% of total purchased. The health food store already spends 10% of revenue on advertising. It is in the instructor’s best interest to give the coupons to people who are likely to spend the most at the store. After all, if 1000 people spend 100 dollars each, she stands to gain 5000 dollars. The health food store stands to gain loyal customers without advertising. The aerobics instructor may maximize her profits by joining with a health food chef to teach classes in healthy cooking. Or, she may join with a caterer, wedding planner, or hotel to supply an entire event for which she will receive social and financial value. She may give them to colleagues who also become authorized to give away coupons – and she negotiates for a percentage of their output as well. She will become knowledgeable about the products at the store and talk about them with her friends. She may even sell the face value of the coupons for cash since it is likely that a high bidder would also be a large customer for the health food store. The Social Value Index favors this store, this aerobics instructor, and this social network – higher than competitors. SVI registers with Search Engines and bargain hunters seek the Aerobics Instructor for deeper information and services.
Millions of applications will arise limited only by the imagination of communities – not Wall Street