Imagine a game where winning is not about being better than your opponent but rather about avoiding mistakes and letting your opponents defeat themselves. Sounds counterintuitive, right?
Well, according to Dr. Simon Ramo’s book “Extraordinary Tennis for the Ordinary Tennis Player,” this concept applies to sports like tennis and various domains in life.
Winners games vs. losers games
Dr. Ramo distinguishes between winner’s games and loser’s games. Professional tennis, for example, is a winning game because victory depends on the winner’s actions.
However, amateur tennis is considered a loser’s game since success is determined by the mistakes made by the loser.
I had a tennis partner who played this very well. I was not too fond of his style. He rarely played any winning shots but kept winning games against me. After every game I lost I felt it was ok as I lost because of my mistakes only!
Later, I realized he was playing the loser’s game. He knew winning meant playing safe and playing a boring game, whereas I was more focused on playing like Federer, taking every opportunity to hit a winning shot:-)
In chess, also, if you see, this way works by deliberating, focusing to avoid mistakes, and letting the opponent defeat himself.
Interestingly, this concept extends beyond sports into other areas such as investing, business, and politics – domains characterized by competition and uncertainty.
Investing: The fastest way to get rich is to go slow
When it comes to investing our hard-earned money or that of friends and family members, we find ourselves playing one of the most important loser games of all time.
Charlie Ellis, a legendary investor and author of The Loser’s Game, wrote:
“The basic rules of investing are simple: diversify, keep costs low, be patient, and don’t let your emotions get in the way.
But most investors don’t follow these rules. Instead, it is to chase performance, trade too much, pay high fees, and react to market swings.
Morgan Housel suggests that winning at this loser’s game involves having patience with long-term investments while avoiding unnecessary risks and sticking to your plan despite market fluctuations.
Some examples of winning at investing by losing less are:
Charlie Munger sums up best by saying,
It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.
Charlie Munger
– Jack Bogle, revolutionized the mutual fund industry by creating low-cost index funds that track the market averages, saving investors billions of dollars in fees and taxes.
Business: Monopoly beats perfect competition
Business is another domain where loser’s games are prevalent.
As Peter Thiel, a co-founder of PayPal and Palantir and author of Zero to One, writes:
“Most businesses lose. As a rule of thumb, half of all new businesses fail within five years.
He argues that most businesses fail because they compete in crowded markets where differentiation is hard and margins are low.
He calls these markets “perfect competition” and advises entrepreneurs to avoid them.
Instead, he suggests that entrepreneurs should aim for “monopoly” – creating something new and valuable that no one else can offer.
Monopoly is the condition of every successful business. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.
The odds of winning at business by taking fewer risks: It means
Start a business where already a market exists. For example, Amazon started an online bookstore, but Jeff Bezos was clear he wanted to be retail, as he said it is the most durable business.
Launch a product where there is already demand exists. Steve Jobs though innovative, restricted his innovation around existing products vs creating new categories of products.
He launched the iPod, and iPhone only after observing the market for many years and using products made by others and then ensuring demand exists and he didn’t have to invest in creating demand.
Politics
Politics is perhaps the most obvious loser’s game of all.
James Carville, a political strategist and commentator, wrote:
“Politics is not about who you’re for; it’s about who you’re against.”
The voters are easily swayed to vote against candidates they dislike rather than for candidates they like.
The result is all political campaigners prefer to focus on negative attacks and smear tactics rather than positive messages and policy proposals.
We can see in most elections the party comes to power because it has convinced voters the opponent is not worthy.
BJP under Vajpayee’s rule in 2004 tried the winner’s game. By promoting heavily how the BJP govt has performed better than previous governments and promoting heavily of India Shining campaign.
But Congress in 2004 played a losers game.
They were successful in convincing the public that the ruling power BJP policies were not meant for the poor and backward class as Congress was best for the poor class.
They focused on how the BJP ruling helped only the upper class. This worked in Congress’s favor and they won the 2004 elections.
Today we can see the Congress and its allies are busy highlighting why the BJP is bad for poor people and how they will not do things BJP has done by siding with businesses. Playing the same losers’ game.
But going extremely negative can also backfire. It is like in Tennis you play only defensively without hitting any winners.
Then even a decent player can beat such an opponent by getting just a few winning shots!
So when the opposition focuses only on the negative, the BJP in its part can win by highlighting, that there is more to be done but how bringing Congress will be worse for poor people.
Conclusion
The key takeaway from understanding winner’s games vs. loser’s games is that winning at these losers’ games requires avoiding mistakes and letting your opponents defeat themselves – whether it’s investing wisely by following simple rules, starting businesses in untapped areas, or offering unique solutions, or engaging in politics without solely focusing on negative tactics.
By adopting this mindset and strategy of losing less compared to those who are busy losing more, you gain an edge across various domains where competition arises.
So remember: sometimes winning means embracing the concept of losing less!
