Chapter 1
Finite and Infinite Games
If there are at least two players, a game exists. And there are two kinds of games: finite games and infinite games.
Finite games are played by known players. They have fixed rules. And there is an agreed-upon objective that, when reached, ends the game. Football, for example, is a finite game. The players all wear uniforms and are easily identifiable. There is a set of rules, and referees are there to enforce those rules. All the players have agreed to play by those rules and they accept penalties when they break the rules. Everyone agrees that whichever team has scored more points by the end of the set time period will be declared the winner, the game will end and everyone will go home. In finite games, there is always a beginning, a middle and an end.
Infinite games, in contrast, are played by known and unknown players. There are no exact or agreed-upon rules. Though there may be conventions or laws that govern how the players conduct themselves, within those broad boundaries, the players can operate however they want. And if they choose to break with convention, they can. The manner in which each player chooses to play is entirely up to them. And they can change how they play the game at any time, for any reason.
Infinite games have infinite time horizons. And because there is no finish line, no practical end to the game, there is no such thing as "winning" an infinite game. In an infinite game, the primary objective is to keep playing, to perpetuate the game.
My understanding of these two types of games comes from the master himself, Professor James P. Carse, who penned a little treatise called Finite and Infinite Games: A Vision of Life as Play and Possibility in 1986. It was Carse's book that first got me thinking beyond winning and losing, beyond ties and stalemates. The more I looked at our world through Carse's lens of finite and infinite games, the more I started to see infinite games all around us, games with no finish lines and no winners. There is no such thing as coming in first in marriage or friendship, for example. Though school may be finite, there is no such thing as winning education. We can beat out other candidates for a job or promotion, but no one is ever crowned the winner of careers. Though nations may compete on a global scale with other nations for land, influence or economic advantage, there is no such thing as winning global politics. No matter how successful we are in life, when we die, none of us will be declared the winner of life. And there is certainly no such thing as winning business. All these things are journeys, not events.
However, if we listen to the language of so many of our leaders today, it's as if they don't know the game in which they are playing. They talk constantly about "winning." They obsess about "beating their competition." They announce to the world that they are "the best." They state that their vision is to "be number one." Except that in games without finish lines, all of these things are impossible.
When we lead with a finite mindset in an infinite game, it leads to all kinds of problems, the most common of which include the decline of trust, cooperation and innovation. Leading with an infinite mindset in an infinite game, in contrast, really does move us in a better direction. Groups that adopt an infinite mindset enjoy vastly higher levels of trust, cooperation and innovation and all the subsequent benefits. If we are all, at various times, players in infinite games, then it is in our interest to learn how to recognize the game we are in and what it takes to lead with an infinite mindset. It is equally important for us to learn to recognize the clues when finite thinking exists so that we can make adjustments before real damage is done.
The Infinite Game of Business
The game of business fits the very definition of an infinite game. We may not know all of the other players and new ones can join the game at any time. All the players determine their own strategies and tactics and there is no set of fixed rules to which everyone has agreed, other than the law (and even that can vary from country to country). Unlike a finite game, there is no predetermined beginning, middle or end to business. Although many of us agree to certain time frames for evaluating our own performance relative to that of other players-the financial year, for example-those time frames represent markers within the course of the game; none marks the end of the game itself. The game of business has no finish line.
Despite the fact that companies are playing in a game that cannot be won, too many business leaders keep playing as if they can. They continue to make claims that they are the "best" or that they are "number one." Such claims have become so commonplace that we rarely, if ever, stop to actually think about how ridiculous some of them are. Whenever I see a company claim that it is number one or the best, I always like to look at the fine print to see how they cherry-picked the metrics. For years, British Airways, for example, claimed in their advertising that they were "the world's favourite airline." Richard Branson's airline, Virgin Atlantic, filed a dispute with Britain's Advertising Standards Authority that such a claim could not be true based on recent passenger surveys. The ASA allowed the claim to stand, however, on the basis that British Airways carried more international passengers than any other airline. "Favourite," as they used the word, meant that their operation was expansive, not necessarily preferred.
To one company, being number one may be based on the number of customers they serve. To another, it could be about revenues, stock performance, the number of employees or the number of offices they have around the globe. The companies making the claims even get to decide the time frames in which they are making their calculations. Sometimes it's a quarter. Or eight months. Sometimes a year. Or five years. Or a dozen. But did everyone else in their industry agree to those same time frames for comparison? In finite games, there's a single, agreed-upon metric that separates the winner from the loser, things like goals scored, speed or strength. In infinite games, there are multiple metrics, which is why we can never declare a winner.
In a finite game, the game ends when its time is up and the players live on to play another day (unless it was a duel, of course). In an infinite game, it's the opposite. It is the game that lives on and it is the players whose time runs out. Because there is no such thing as winning or losing in an infinite game, the players simply drop out of the game when they run out of the will and resources to keep playing. In business we call this bankruptcy or sometimes merger or acquisition. Which means, to succeed in the Infinite Game of business, we have to stop thinking about who wins or who's the best and start thinking about how to build organizations that are strong enough and healthy enough to stay in the game for many generations to come. The benefits of which, ironically, often make companies stronger in the near term also.
A Tale of Two Players
Some years ago, I spoke at an education summit for Microsoft. A few months later, I spoke at an education summit for Apple. At the Microsoft event, the majority of the presenters devoted a good portion of their presentations to talking about how they were going to beat Apple. At the Apple event, 100 percent of the presenters spent 100 percent of their time talking about how Apple was trying to help teachers teach and help students learn. One group seemed obsessed with beating their competition. The other group seemed obsessed with advancing a cause.
After my talk at Microsoft, they gave me a gift-the new Zune (when it was still a thing). This was Microsoft's answer to Apple's iPod, the dominant player in the MP3-player market at the time. Not to be outdone, Microsoft introduced the Zune to try to steal market share from their archrival. Though he knew it wouldn't be easy, in 2006, then CEO of Microsoft Steve Ballmer was confident that Microsoft could eventually "beat" Apple. And if the quality of the product was the only factor, Ballmer was right to be optimistic. The version Microsoft gave me-the Zune HD-was, I have to admit, quite exceptional. It was elegantly designed. The user interface was simple, intuitive and user-friendly. I really, really liked it. (In the interest of full disclosure, I gave it away to a friend for the simple reason that unlike my iPod, which was compatible with Microsoft Windows, the Zune was not compatible with iTunes. So as much as I wanted to use it, I couldn't.)
After my talk at the Apple event, I shared a taxi back to the hotel with a senior Apple executive, employee number 54 to be exact, meaning he'd been at the company since the early days and was completely immersed in Apple's culture and belief set. Sitting there with him, a captive audience, I couldn't help myself. I had to stir the pot a little. So I turned to him and said, "You know . . . I spoke at Microsoft and they gave me their new Zune, and I have to tell you, it is SO MUCH BETTER than your iPod touch." The executive looked at me, smiled, and replied, "I have no doubt." And that was it. The conversation was over.
The Apple exec was unfazed by the fact that Microsoft had a better product. Perhaps he was just displaying the arrogance of a dominant market leader. Perhaps he was putting on an act (a very good one). Or perhaps there was something else at play. Although I didn't know it at the time, his response was consistent with that of a leader with an infinite mindset.
The Benefits of an Infinite Mindset
In the Infinite Game, the true value of an organization cannot be measured by the success it has achieved based on a set of arbitrary metrics over arbitrary time frames. The true value of an organization is measured by the desire others have to contribute to that organization's ability to keep succeeding, not just during the time they are there, but well beyond their own tenure. While a finite-minded leader works to get something from their employees, customers and shareholders in order to meet arbitrary metrics, the infinite-minded leader works to ensure that their employees, customers and shareholders remain inspired to continue contributing with their effort, their wallets and their investments. Players with an infinite mindset want to leave their organizations in better shape than they found them. Lego invented a toy that has stood the test of time not because it was lucky, but because nearly everyone who works there wants to do things to ensure that the company will survive them. Their drive is not to beat the quarter, their drive is to "continue to create innovative play experiences and reach more children every year."
According to Carse, a finite-minded leader plays to end the game-to win. And if they want to be the winner, then there has to be a loser. They play for themselves and want to defeat the other players. They make every plan and every move with winning in mind. They almost always believe they must act that way, even though, in fact, they don't have to at all. There is no rule that says they have to act that way. It is their mindset that directs them.
Carse's infinite player plays to keep playing. In business, that means building an organization that can survive its leaders. Carse also expects the infinite player to play for the good of the game. In business, that means seeing beyond the bottom line. Where a finite-minded player makes products they think they can sell to people, the infinite-minded player makes products that people want to buy. The former is primarily focused on how the sale of those products benefits the company; the latter is primarily focused on how the products benefit those who buy them.
Finite-minded players tend to follow standards that help them achieve their personal goals with less regard to the effects of the ripples that may cause. To ask, "What's best for me" is finite thinking. To ask, "What's best for us" is infinite thinking. A company built for the Infinite Game doesn't think of itself alone. It considers the impact of its decisions on its people, its community, the economy, the country and the world. It does these things for the good of the game. George Eastman, the founder of Kodak, was devoted to his vision of making photography easy and accessible to everyone. He also recognized that advancing his vision was intimately tied to the well-being of his people and the community in which they lived. In 1912, Kodak was the first company to pay employees a dividend based on company performance and several years later issued what we now know as stock options. They also provided their employees with a generous benefits package, gave paid time off for sick leave (it was a new idea then) and subsidized tuitions for employees who took classes at local colleges. (All things that have been adopted by many other companies. In other words, it was not only good for Kodak, it was good for the game of business.) In addition to the tens of thousands of jobs Kodak provided, Eastman built a hospital, founded a music school, and gave generously to institutions of higher learning, including the Mechanics Institute of Rochester (which was later renamed Rochester Institute of Technology) and the University of Rochester.
Because they are playing with an end point in mind, Carse tells us, finite-minded players do not like surprises and fear any kind of disruption. Things they cannot predict or cannot control could upset their plans and increase their chances of losing. The infinite-minded player, in contrast, expects surprises, even revels in them, and is prepared to be transformed by them. They embrace the freedom of play and are open to any possibility that keeps them in the game. Instead of looking for ways to react to what has already happened, they look for ways to do something new. An infinite perspective frees us from fixating on what other companies are doing, which allows us to focus on a larger vision. Instead of reacting to how new technology will challenge our business model, for example, those with infinite mindsets are better able to foresee the applications of new technology.
