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Playing both sides

Playing Both Sides

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Definition & Summary: Profiting from or hedging by engaging with two opposing sides in a market or standards war, so that whichever side wins, you benefit. It's a bit of strategic arbitrage: you position yourself to win no matter the outcome.

Detailed Explanation: The origin could be war profiteering or companies supporting competing standards. Purpose: avoid committing to one uncertain path -- instead, ensure you have a stake in or influence over both sides. Key principle: maintain neutrality outwardly, but internally harness gains from each side's successes and failures. This might mean dual product lines (one for each standard), cross-licensing or investing in both competitors, or supply deals to all players. By playing both sides, you can even encourage the battle (as you win while they fight). It's a way to reduce risk and sometimes even to prolong a profitable conflict.

Real-World Examples:

  • Standards War: DVD vs. HD-DVD vs. Blu-ray (mid-2000s) -- Some tech companies hedged by supporting both HD-DVD and Blu-ray to ensure they'd have a foot in whichever became dominant (e.g., Samsung produced players for both at one point). More starkly, Warner Bros. initially released movies on both formats (playing both sides) before Blu-ray's victory. By doing so, they profited from both user bases.

  • Components Supplier: ARM Holdings provides chip designs used by many competing chipmakers (Apple, Samsung, Qualcomm all license ARM). In effect, ARM plays both sides in smartphone chips -- whether Apple's Bionic chip or Android phones' Snapdragon chips succeed, ARM gets royalties . It doesn't matter to ARM which brand wins; they benefit from all.

  • Hypothetical: A big corporation invests in two startup rivals tackling the same emerging market (maybe via its venture arm). It might even discreetly foster competition between them (to spur faster innovation). Whichever startup eventually leads, the corporation wins as an investor. If one starts to fail, they can shift more support to the other -- a hedge strategy. They may also ensure they have partnerships or supply deals with both, so whoever gets market share uses the corporation's services.

When to Use / When to Avoid:

  • Use when: Outcomes are highly uncertain or the market is split. If two (or more) major possibilities exist (tech standards, competing ecosystems), and backing only one is a gamble, playing both can secure your position. It's also used by strong intermediaries (suppliers, platforms) who can serve all players -- use if being neutral retains you more business. It's beneficial if the cost of supporting both sides is low relative to the cost of picking wrong.

  • Avoid when: Maintaining presence on both is too costly or dilutes your brand. Also, if one side demands exclusivity (you might be forced to choose anyway). Avoid if discovered duplicity would anger stakeholders on each side -- e.g., if both sides expect loyalty, you could end up distrusted by both. It can be hard to manage conflicting partnerships; if you can't keep strict separation, it might backfire.

Common Pitfalls:

  • Trust issues: Each side may be wary you're involved with the other. You risk not getting full information or commitment from either because they know you're also helping their rival.

  • Double resource requirement: Supporting two standards or two product lines means extra R&D, manufacturing complexity, or marketing messaging complexity ("Wait, you have a product for Blu-ray and HD-DVD, are they both good?"). This can strain resources.

  • Missed singular focus: By hedging, you might not invest as deeply in the winning approach as a competitor who went all-in, possibly leaving you behind in excellence on the winner once it's decided.

Related Strategies: Artificial Competition (in that playing both sides could involve you creating two competing fronts yourself), Ambush (not directly, but playing both sides could allow an ambush since you're inside both camps). Trading or arbitrage concepts: it's like hedging strategy in finance.

Further Reading & References:

  • Medium excerpt reference -- suggests "playing both sides" notion (though that context might be war/politics analogy, it aligns with benefiting from conflict) -- e.g., benefiting from conflict like arms dealers or supply chain dominants.

  • Historical biz: IBM in the 1980s sometimes is said to have "played both sides" in PC vs mainframe by having stakes in both markets -- though they eventually lost PC side.

  • It's not often explicit in literature as a formal strategy (because it can seem disloyal or cynical), but examples are plenty (companies supporting competing standards until one emerges -- e.g., many firms supported both Android and Windows Phone initially; also content providers releasing on competing streaming platforms to not miss audiences on either).