“Bill, thank you. The world’s a better place,” This message, with a big smile from Steve Jobs to Bill Gates, takes us back to 1997 in the ‘climax moment’ when Bill Gates agreed to make a USD 150 million investment to save Apple from bankruptcy. The entire corporate world was stunned by Steve's quote in ‘Time Magazine’, and shocked at how these two big tech giant rivals came together, as we have often seen winning in business as a ‘zero-sum game,’ where one party's loss is another party's gain.
However, Gates, a visionary leader, stepped away from the conventional view that payoff maximisation is the only key to success. From a game-theoretic perspective, Gates' strategic move is not rational, as it fails to explain how cooperation can be achieved without eliminating the competitor due to its fundamental flaws that rational behaviour determines which course is ‘best’.
Gates, who knew the infinite power of cooperation: Analogy from Drama Theory
In the mid-1990s, Apple was struggling and facing potential bankruptcy. At the time, Apple's operating system was System 7, while Microsoft had Windows 95. Microsoft was dominating the tech market like a monopoly in PC operating systems. In 1997, Apple experienced losses of over USD 1 billion, and the company’s stock price dropped sharply to just USD 4 per share. At this critical moment, Gates invested USD 150 million in Apple as a non-voting investment with no intention of acquiring the company.
Additionally, Microsoft agreed to continue developing software such as Microsoft Office for the Mac platform for at least five years. This investment meant a lot for Gates. As a farsighted leader, he visualised this as an opportunity to create a new business together from a long-term perspective. Driven by strong positive emotions and intentions, Gates found the cooperation arena without any self-doubt. Similarly, Steve Jobs never felt Gates’ support as a possible future threat. Steve expressed, “Apple didn’t have to beat Microsoft…. To me, it was pretty essential to break that paradigm.” Here is the relevance of Drama Theory – it illustrates how possible cooperation can be achieved as each episode unfolds.
“The ‘Climax moment of 1997 between Steve Jobs and Bill Gates is a profound illustration of Drama Theory in real-world cases”.
“Real conflicts are more like Shakespeare than tennis”: Birth of Drama Theory
In the 1990s, a group of mathematicians –Nigel Howard and his colleagues Peter Bennett, Morris Bradley, and Jim Bryant– claimed that in real life, we don’t play the game; we deal with dilemmas. Their iconic publication, “Manifesto for a Theory of Drama and Irrational Choice” (Howard et al. 1992), formally proposed ‘Drama Theory,’ which deals with the rational-irrational tradeoff in decision-making processes involving crises, emotions, and self-realisation. As Howard mentioned, “The reason these emotions emerge—like anger and fear, or affection and goodwill—is that they have a drama-theoretic role. They shake the characters out of old ways of thinking, allowing them to see a new way forward."
Emotion manifests the expansion of options and choices and suppresses the perception of non-collaboration circuits. This phenomenal and unconventional approach to understanding conflict and cooperation through Drama Theory has had a profound impact on real-life consequences.
‘All the World’s a Stage’-- Drama Theory envisages cooperation can be achieved over conflict changing parties’ positions driven by positive emotion in a series of episodic transformations breaking all the set rules which have never been relevant - Dr. Suman R Sensarma
“All metaphors are false; all smiles are true”: Benefits of Cooperation
The commitment and promise with a real smile both tech giants become united and trustworthy for a better cause. This historical moment of truth exemplifies how Drama Theory can be applied to real-world situations for strategic alliances and viewing conflict and cooperation through a broader lens, defining ‘winning as collaboration.’
▪ This cooperation benefited both Apple and Microsoft in the long term, enabling them to compete with other tech giants. Microsoft’s collaboration helped Apple to position themselves as a stable firm in the market.
▪ Through this collaboration, Microsoft had the chance to settle its ongoing lawsuit at the time and gain the trust of the government.
▪ By collaborating with Apple, Microsoft proved they were not monopolising the market, helping them avoid regulatory scrutiny.
▪ Apple always had a strong technical legacy, and having Microsoft’s stake in Apple made this partnership very strategic.
Drama Theory amplifies that cooperation can be achieved through positive emotion, where parties do not always act rationally. Microsoft and Apple’s choice of collaboration over competition set forth a legendary example, demonstrating that in business, there is always room for mutual improvement beyond the myopic view of competition. Both competitors cooperatively can create a better world, as Naveen Jain said, “Cult leaders say loyalty lies with me, entrepreneurs say loyalty lies with the cause."
* Views expressed are author's personal
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