And why it is important for your company’s success
Lasting success is the result of good strategic decisions. And these are based on effective strategic thinking. One who knows that better than almost anyone else is the German native US-investor Peter Thiel. The billionaire is one of the founders of the online payment provider Paypal and started his own investment firm Clarium in 2002.
One of his most far-sighted investment decisions, Peter Thiel took in 2004: As the first outside investor, he made a $500,000 angel investment in a young Internet start-up getting a 10.2% stake in the company and joining its board. The name of the company: Facebook. In 2007, Thiel helped the social network giant to make it through its fourth round of funding just before the onset of the global financial crisis, which he saw coming in time. The reward of his strategic decisions: He cashed in 1.6 billion US dollars when selling part of his Facebook shares in 2012.
Already in his youth, Thiel has trained his strategic thinking skills in a playful way – through chess. He even made it to the national level being among the highest ranked US-rated chess masters under-21 years. During this time Thiel realized: “While playing chess in Junior High School, I learned that a bad plan is still a better plan than no plan at all, so always have a plan.”
Thiel's successes show impressively how consistent strategic thinking and acting can lead to superior results. And that chess is a pretty good training ground for strategic thinking and decision making. By the way, Peter Thiel is not the only successful manager with great affinity to chess. Other chess enthusiastic business leaders are, for example, Microsoft founder Bill Gates and Facebook CEO Mark Zuckerberg.
This raises the obvious question whether chess holds some transferable insights into strategic thinking which may help business executives in making more successful decisions. After more than ten years of exploring this question, my answer is: Yes, chess does provide various insights that can be highly beneficial to managers.
The royal game is a complex dynamic system. Even though businesses and markets are significantly more complex and follow different rules, they are also complex dynamic systems. From system dynamics research we know that complex dynamic systems share some general behavior patterns. Accordingly, principles that lead to success in one system can, in principle, also be useful in another system. When searching for such principles, I was particularly interested to find out what chess masters do better than other players and how their success principles can be translated into the business world. I identified seven success principles that managers can apply to systematically improve the quality of their strategic and operational decisions. And the good news for all non-chess players: To understand and apply these success principles, you need neither chess knowledge nor the IQ of a genius. All you need is the willingness to acquire the success principles through reflective practice.
In the following, I will give you an overview of the seven success principles of chess masters and how executives can benefit from them. For optimal outcome, it is necessary to implement all seven principles consistently. I explain how to do this in my book "The Seven Success Principles of Chess Masters: Strategic Thinking and Deciding for Executives" (German language).
1. Overcoming obstacles with willpower
Willpower is the basis for success – in chess as in the business world. Executives can learn from chess masters how to develop willpower systematically preventing them from making poor decisions in critical situations due to flagging willpower.
2. Using effective thinking patterns
The success of chess masters is based on effective thinking patterns. They are estimated to have as many as 300,000 position patterns stored in their long-term memory, which they can refer to when looking for a good move. They have built this pattern database over the course of many years by reflective practice. And they maintain and enhance this application knowledge through continuous reflective practice. For managers, this provides useful insights as to how to develop more effective ways of thinking and decision taking.
3. Assessing each situation with trained judgement
Chess masters have a very reliable judgment. It allows them to assess any given position on the chessboard accurately and find strong moves. Their judgment is based on the position and game history patterns in their long-term memory as well as on using superior thinking techniques in approaching the respective position. This allows them to reduce common errors of human reasoning and their consequences to a minimum. Executives can learn from the approaches and thinking techniques of chess masters how to avoid typical errors of reasoning and assess situations or activities more objectively.
4. Managing risks with caution
Chess masters are very effective risk managers. They identify and prepare for risks early on. Thanks to effective thinking techniques, chess masters are able to anticipate risks and turn them into opportunities. Executives can learn a lot from the way chess masters approach risks helping them to improve their own risk management.
5. Developing new solutions through creative imagination
Creative imagination enables chess masters to find solutions for unfamiliar situations. They combine convergent and divergent thinking. Thanks to their well-trained mental eye, chess masters can also play blindfold, which means they do not see the positions of the pieces or touch them. Executives can learn from chess masters how to systematically develop and use their imagination.
6. Shaping future possibilities through foresight
Foresight is a key ability for shaping the future. Chess masters have this ability. It is based on the exact calculation of the consequences of courses of action. Managers can benefit from thinking techniques which enable chess masters to anticipate several moves.
7. Listening to your intuition when taking difficult decisions
Chess masters have a better than average intuition. It is based on the enormous knowledge of position patterns and heuristics that they have acquired over the years through reflective training and intensive tournament practice. Thanks to their intuition, chess masters can spot promising moves in seconds. The way how chess masters develop and use their intuition can help executives to use their own intuition more confidently and effectively.
The successful career of star investor and chess player Peter Thiel shows what is possible with consistent strategic thinking and acting. Managers can learn from chess masters a lot about issues such as thinking patterns, risk management, and the anticipation of future developments. Companies that are consistently applying the seven success principles of chess masters can increase their competitiveness in a sustainable fashion.