January 26, 2007

Globe and Mail on game theory

Really interesting article in the Report on Business magazine that came with today's Globe and Mail newspaper.

It's 16,777,236: That's the number of outcomes that are possible when eight competitors each consider three strategic options. Waterloo's wizards of game theory reduce the number to 1 by Grant Robertson. It's about a Waterloo, Ontario company, Open Options, that uses game theory to advise business clients on decision making strategies.

Ten-year-old Open Options is one of a handful of companies in the world that devote all of their energy to using game theory to solve corporate problems. The firm counts five of the Top 10 companies on the Fortune 500 as customers, including IBM, Chevron and Ford, not to mention others further down the list, such as Xerox, Caterpillar and Boeing. (Most clients prefer to stay anonymous.)

The company's roots date to the late 1960s, when Fraser, newly graduated from high school, was contemplating what to do with his life. Much of what was being taught in university didn't appeal. "I was a hippie—a proud one," Fraser says. "Part of that ethic was to abandon conventional society, look for your own interests and build your life on your own terms. So I did that."

There followed five years of travel and sundry work like tobacco picking. What Fraser really wanted was to study strategic thinking from a philosphical point of view. After all, "the heart of life is how to make good decisions," he says. But the avenues for that line of study were limited. At the time, most business schools weren't pushing the boundaries on creative problem-solving. So Fraser avoided academia until the day he noticed that an obscure course was being taught in the University of Waterloo's engineering department. Game theory? Fraser wanted in. And since his father ran the department, strings were pulled to make up for a few high school grades that would have otherwise kept him from being admitted.

Cool stuff, an interesting case study in how math really does apply to real life; there's also pretty explanations of what game theory is and some thoughts from some of its detractors as well. And, of course, John Nash gets name-checked a couple of times.

No comments: