Strategy.

The framework

1. 01

   Reduce the game to one rival and two options each.

   A matrix you can act on is small: the one competitor who will actually respond to your move, your two realistic options, and their two realistic replies — a two-by-two, drawn on paper, today, for the decision in front of you. The reduction is the analysis: choosing which rival matters and which options are real forces you to say out loud who you are actually playing against, and most teams discover they have never named them. If you genuinely face no player whose response changes your outcome, you don't need the matrix — but be slow to believe that, because it is also the assumption every bad price war began with.

2. 02

   Score every cell — from their side of the table, in their numbers.

   Fill in all four cells with what each side gains or loses — rough scores are fine; direction matters more than precision. The error that ruins most competitive planning happens here: scoring the rival's payoffs by what you would do in their position. Their reply is set by their cost base, their debt, their investors' patience and which customers they cannot afford to lose — not by yours. A response that would be irrational for you can be compulsory for them: a rival defending their flagship account will match a price you consider unmatchable, and will do it in a week. If you cannot fill in their side of a cell, that is not a modelling gap; it is a discovery gap, and it names exactly what to find out before you move.

3. 03

   Find where the game settles — before you start it.

   For each of your options, mark their best reply; where each side is best-replying to the other is where the game lands — Nash's equilibrium. This is the step that exposes the price war before it happens: you cut, they match, and the game settles in the cell where both of you earn less at the same share — a cell that is worse for everyone and stable, because whoever raises price alone loses share, which is why price wars are easy to start and brutal to leave. Judge your move by the cell the game settles in, not the cell you occupy for the first quarter — a move that looks brilliant until the reply arrives was never brilliant.

4. 04

   If you don't like where it settles, change the game — don't play it harder.

   Thomas Schelling, whose The Strategy of Conflict (1960) earned a Nobel Prize, showed that the strongest moves change the other player's payoffs rather than your own: a public price-match promise makes a rival's cut pointless before it is made; long-term contracts signed with key customers remove the cells a new entrant was counting on; visible commitment to a segment tells everyone that entering it will be expensive. And remember the game repeats — as Adam Brandenburger and Barry Nalebuff argued in Co-opetition (1996), this quarter's move teaches your rival what to expect from you next quarter, which means reputation is itself a payoff. Retaliate predictably, accommodate predictably; a player whose replies are certain rarely has to make them.