Lessons for Business Management Strategy from 4x Games

4x is probably the genre of games that I enjoy the most. 4x stands for explore, expand, exploit, and exterminate. 4x games, known for their complexity and strategic depth, allow you to build and manage an empire. This article will discuss the lessons learned during gameplay that can carry over to managing your real world life and businesses.

The core of 4x games is optimizing your position under uncertain circumstances. That's also what we strive for in life, investing, and business. The world is complex and we often have to work with incomplete data, but we have to make the best choices possible in the immediate moment anyway. Business decisions have deadlines. Sometimes you have to make the hard choices even when you have insufficient information from the clients, customers, and employees. When you focus on getting one project done, you take on the opportunity costs of things that you aren't doing. In 4x games, you have to be constantly aware of these decisions.

In 4x games, you have to manage the allocation of your human resources to determine the production rate of your basic resources. Two of my favorite games are Civilization V and Endless Legend. In these two games, you grow cities that provide you with populations that you can assign to work different tiles to produce different resources. The populations are equivalent to your employees and the tiles are equivalent to projects that you assign your employees to. The resources are known as FIDSI (food, industry, dust, science, and influence) in Endless Legend and the equivalents are growth, production, gold, science, and culture in Civilization V. These also correspond to how you might want to allocate your time and energy in real life.

FIDSI in real life might be fitness, productivity, money, education, and social influence. Depending on your goals in life, you would have to change your allocation of time and energy to these resources, but there's always a baseline that you can't fall under or you will fall behind and lose the game. For example, if you don't produce enough food in the games, your cities start to lose population, and this leads to less ability to generate all of the FIDSIs. In the games, your opponents will end up ahead in resources and have a better chance to take over your empire. In real life, if your health falls behind, your productivity will also decrease, you will have to spend money on medicine, have less brain power to learn new things, and be unable to attend social events. Increasing your population in 4x games can be thought of as increasing your vitality in real life. If you are fitter, then you can push harder and have more time and energy for doing everything else.

I learned this term "convergent subproblems" from a friend. It perfectly describes the FIDSI resources. As I have demonstrated above, fitness is a convergent subproblem. Productivity is also a convergent subproblem. If you're more productive with work, then you have more time to work out and learn new things, you'd probably be better at earning money and gaining the respect of your peers. Money is also a convergent subproblem. If you have more money, you can buy the healthiest foods or even hire a trainer. You can hire more employees to increase productivity. You can buy books or hire tutors. And people often use wealth as a measurement of success (although there are problems with that). Education is also a convergent subproblem. Knowledge can help you with optimizing fitness, productivity, wealth, and influence. Influence is also a convergent subproblem. Marketing and sales are all about influence. Influence can also make it easier for you to connect with the right people who can help boost your fitness, productivity, and education.

It's obvious that all of these are important to everyone's lives, but what do 4x games teach you? It's difficult to find the right balance of allocation of resources for yourself. In 4x games, you practice managing these resources. Different resources are prioritized during different stages of the game; we prioritize different resources during different stages of our lives. For example, you might prioritize fitness and education as a kid, productivity and money as an adult, and fitness and influence in old age. Yet keep in mind this doesn't mean that you should completely neglect fitness and education as an adult, which sadly many people do.

In Civilization V, you start out prioritizing growth of your first few cities and production of early units and buildings. Then towards midgame, you want pay more attention to science to make sure that your enemies do not attack you with more technologically advanced units. During this whole time, you also want to make sure that you don't run into a gold deficit or lag behind in cultural policies that give you critical bonuses. Going to war is an opportunity cost involving many uncertainties. It can be advantageous to go to war if you're running out space to expand or if any particular enemy is winning too much. But it also means that you have to prioritize the production of military units and lag behind in everything else. If you're at war for too long, your empire can fall to ruins due to lack of food or gold, even if the enemy doesn't capture your cities.

In real life, you also have to pick your battles. Being in a conflict with someone else means that you aren't spending your time and energy on solving your other convergent subproblems. However, sometimes it is necessary to fight battles for honor, resources, or justice if you have a clear long term vision and is willing to delay gratification. Victory is sweet, but it always comes with an opportunity cost.

Ambitious people often focus on productivity or wealth, and forget to properly manage their balance of FIDSIs. The immediate gratification of social status or business success can lead to long run health or family problems if they are neglected. People call this "work-life balance", but really it's just managers failing to apply the basics of management in the non-professional aspects of their lives. In 4x games, often you can be winning in terms of the domination victory, but someone else will sneak in a science, diplomatic, or cultural victory. Neglecting to consider all the resources and variables due to myopic focus can have dire consequences.

Another lesson of 4x games is that your behavior is affected by your own unique strengths and weaknesses. In Endless Legend, the Cultist faction may only have one city. This drastically changes gameplay. Right off the bat, this eliminates your potential for an expansion victory. You can't take over the whole map when you only have one city. However, the Cultists are the only major faction that can convert minor factions to their side, so they are good at flanking enemies from the other side of the map and play to the advantages of unit diversity. Since they have only one city, you don't need to worry as much about managing trading or empire approval, which frees up your resources to pursue other goals. The Cultists probably won't win the expansion or economic victories, but this makes them stronger at pursuing other victory conditions.

In business, there will also be things that other businesses can do that are impossible or much more difficult for you. But that's okay, because that means you're more conscious of your opportunity costs. You can focus on your niche market once you covered your basic weaknesses. Understanding your niche market helps you understand your balance of allocation of FIDSI and clarifies your goals.

Management is all around us in every aspect of life. It's useful to notice how lessons from managing one aspect of life can be applied to other aspects.