Powergraph – a network-based approach to modelling and managing corporate strategic conflict and co-operation

Strategic relationships between companies are characterised by a combination of conflict and co-operation. Often the behaviour of partner/rival companies will appear arbitrary, almost irrational because of the necessary limitations on communication between the parties. Understanding, predicting and managing situations such as major project teamings or acquisition struggles is essential for the satisfactory governance of companies but existing conflict modelling has proven less than attractive to practitioners and their advisors. A network-based approach known as Powergraph is described in this study. It represents the corporate situation as a directed graph in which the nodes are the possible states of play. Connections between nodes are represented by logical expressions deriving from the capacities of the players individually or in coalition to bring about the transitions. By consideration of the ordinal preferences of the participants, trajectories of the situation can be described and these trajectories form the basis for management action and intelligence gathering. The method is illustrated by means of a real case study of three defence companies competing for two major contracts.