#39 Inspiration through play: how chess takes your strategic thinking to a new level

In this podcast episode, Jürgen tells the remarkable story of the most popular board game in the Western world: chess.

Why chess of all things?

If you google the word strategy or type it into an image database, you'll see that it's strongly associated with a chess piece. Why is that? It's worth taking a closer look and thinking it through.

What's missing in chess that matters in the real business world, and where are the parallels?

Although Jürgen isn't a chess player himself, he has studied the rules of the game and the theory behind it in detail.

Chess goes all the way back to around the 6th century. It comes from Persia and takes its name from the Persian word shah, which means ruler or king.

The rules were developed in the Middle Ages, and as the Islamic world spread around the Mediterranean, chess quickly became socially acceptable in countries like Spain in the 18th century. In the 19th century, cities like Paris and London became strongholds of chess. Coffee houses turned into chess houses, and you no longer had to bring the board with its 64 squares from home: it was always there. Today chess is known worldwide, with tournaments and world championships.

In the business world, the 64 squares represent the relevant market, or the relevant environment you operate in. It has boundaries. There are two players, and they're opponents. In economics, this is called a duopoly: two players big enough to determine the outcome, with common knowledge between them. That means the players' knowledge is infinitely nested (everyone knows that everyone knows that everyone knows… that everyone has the same information). How do you break that? Through strategy and tactics. There's a given set of pieces. The king plays the most important role. The goal of the game is to checkmate your opponent's king so that he has no move left.

This is where it differs from business. There, you don't want to destroy your opponent or bring them down. It's about being better than your opponent and winning more profitable customers. Still, the two-player situation is highly interesting because it's a purely strategic interaction: what you do has a direct effect on your opponent, and vice versa. You're always interdependent. Your own positions on the board depend on what the other player does, while the other player knows that's the case and you know it too. So in chess you try to position yourself in a way that lets you take your opponent out as quickly and cleanly as possible. Chess experts think many moves ahead.

The opening is based on experience and knowledge picked up from other games. Opening moves aren't always aimed at gaining an advantage for yourself. Sometimes you sacrifice a pawn, for example, to reach a better position later on. In business, that's comparable to exiting a business area in order to deploy resources elsewhere.

After the opening phase the game really begins, because the possibilities are almost infinite. Alongside strategy, tactics play a crucial role: strategy commits you, tactics can change things in the short term.

The middle game is where strategic and tactical thinking really count. In business, this is where you're exposed to competitors in the market, which means thinking through your next steps: investments, discontinuations and so on. In chess, that's the equivalent of promoting a piece: when a pawn reaches the back rank, it can be promoted to another piece.

In the endgame, when only a few pieces are left on the board, the next move can mean checkmate. Thinking through the scenarios helps: think the unthinkable! Learn to handle crisis situations, to sacrifice things and to make decisions and stick to them. That takes the right strategy so you don't lose your head. Strategic thinking and acting means taking action. If you set up your routines so that you practice this, it will be a major advantage in a crisis. The lessons chess offers in a strategy context are forward-looking. It's unlikely that the future will look like the present. That's why you can't always start with the same opening move. It depends heavily on psychology, on how your opponent is wired, not just on rational thinking.

So there are fascinating parallels between chess and corporate strategy. The pieces on the board represent your own organization. The king stands for a company's key decision-makers. Then there are the bishops, the middle management level, with different functions and different degrees of flexibility. The employees are the remaining pieces. What's interesting is that every piece has a different value. Competition is relative. How you deploy your own resources depends on what competitors are doing in the market. In chess, too, resources are relative to your opponent. And the board stays as it is. There are 64 squares, and unlike in business, you can't bring in additional options from outside. Playing chess helps you develop strategic thinking, especially when you're dealing with direct or potential competition. Chess trains you to anticipate and look ahead. One principle of game theory is to put yourself in the other person's position and understand the game through their eyes.

Yes, the strategy muscle can be trained! That's a message Christian and Jürgen want to spread. Strategy has to become routine, not on autopilot, but with constant reflection, because the environment keeps changing. If you enjoy playing, chess is a good way to train your strategy muscle. It also helps you keep a cool head when you've maneuvered yourself into a hopeless position.

Chess isn't only played against people, but also against chess simulators and computers. The first chess automaton appeared in the second half of the 18th century. It was mechanically built and could make moves on its own. It was created at the empress's court in Vienna, where a civil servant and automaton builder wanted to impress her. That's how the Mechanical Turk came about, and Napoleon is said to have played against it and lost.

Chess is training. The key insight: it prepares you to get creative, because you don't know how your opponent will think and play. Even if you've rehearsed your moves, things turn out differently. You have to respond, not with shock, but with agile solutions.

We hope we've encouraged you to play through strategic moves more often and to make strategy something you experience. In medieval Europe, chess was considered one of the seven knightly virtues. Maybe you'd like to acquire it and learn from the game.