Everything I Know About Business I Learned From MONOPOLY: Successful Executives Reveal Strategic Lessons From the World's Greatest Board Game by Alan Axelrod - Page 3 of 3

Everything I Know About Business I Learned From MONOPOLY: Successful Executives Reveal Strategic Lessons From the World’s Greatest Board Game by Alan Axelrod

Free Parking

To ethical play and ruthlessness we now add cooperation. In business, it’s smart to cooperate when you can benefit. The balance between ruthlessness and cooperation is called capitalism. When you make a trade you are cooperating. You might find yourself cooperating with another player to thwart a wealthier player or to put a weak player out of the game. Such alliances are temporary as you will soon be turning against each other. It’s hard to go it alone in MONOPOLY and it’s just about impossible to do so in business.

This chapter’s title is a quote from former Brooklyn Dodger owner Branch Rickey. The feeling is that we make our own luck up to a point, but nothing we do can completely remove luck from the picture. A good plan, however, can shape your luck. Know what you want to accomplish and know your resources. You know the things that can happen on a trip around the board. Incomplete knowledge is preferable to ignorance.

The key idea here is that the way to wealth is to make well-researched investments. You need to invest time to identify promising opportunities to choose from so you can minimize risk. Parking your money in the bank is just parking it. Ideally, you would know the projected return on investment (ROI) for each group of properties. This is where The MONOPOLY Companion by Philip Orbanes comes in. He has determined that the smartest properties to own in order are Orange, Red, Yellow, and Light Purple. For details buy his book.

The dumbest property to own is no property at all. The properties with the lowest frequency of hits are the low rent Baltic and Mediterranean (Dark Purples). Their location gives them the lowest probability of anyone landing on them and they have the lowest payoff percentage. At the other end are the Greens, which are the most expensive group to own and improve. They also have a lower payoff percentage and percent chance of landing on them than the groups mentioned in the last chapter. My idea is to buy them anyway and use them as trade bait.

The colorless properties (utilities and railroads) aren’t glamorous as they can’t be further developed. They supply slow and steady income and can serve as trade bait. One utility can yield anywhere between $8 and $48 per visit and $20 to $100 per visit if you own them both. The railroads are a better source of income. Rent goes up if you own more than one, and there are three Chance cards that send people to a railroad where you pay double the rent so there is no reason not to buy them.

This is all about controlling your emotions. There is a human desire for ownership of luxury goods. They might be cool to own and show off, but they are not likely to be good deals. On the MONOPOLY board, we are talking about Boardwalk and Park Place. The chance of landing on them is second lowest in the game, and at $200 per house, they are expensive to develop. Their payoff percentage is also lower than the properties mentioned in chapter 22. The other vanity item in the game is a hotel. Recall that trading four houses for a hotel frees up houses for your opponents to purchase. Don’t do it.

From the beginning you need to keep track of your assets and those of your opponents. Also, try to keep track of the Chance and Community Chest cards. There are 16 of each and they are never shuffled. Outside of the game, you should know the lay of the land before you take a leap in business. Start by gobbling up real estate, make sure you have a winning attitude, and keep your energy up throughout the game.

Midgame starts when a player builds the first monopoly. This is when an economy based on plenty shifts to one based on scarcity. Like the game, no business exists in an unchanging environment. By keeping track of unmortgaged properties your opponents own you can approximate how much rent you might have to pay each lap around the board. Always buy properties when no other player owns one in the group, when you already own other property in the group, and when you can block another player from completing a monopoly.

The endgame starts when no more potential monopolies are left on the board. You might think this is time to fly on automatic, but that would be a mistake. Focus on the player who’s on the ropes for potential deals. Avoid being charitable. Each player out is a step toward winning. Trade for properties near Free Parking as they are the ones landed on most often. Build your most costly monopolies up to three houses before building on lesser ones. Build on low rent properties if you can to create a housing shortage. You should have at least $300 in cash when the midgame arrives and more as you approach the end game. Real businesses know the importance of liquid assets.

Greed and monopoly go against the morality that most of us have been raised to respect. We still rail at cable TV and software monopolies. In the real world, driving everyone else out of business may mean that you have no one left to do business with. Winning is staying in business and if you get rich so much the better. MONOPOLY is just a game, but it happens to model business very well so enjoy your next game and learn what you can.

Alan is a prolific author of history, business, and management books. As of October 2018, he had written more than 150 books. He received his doctorate in English from the University of Iowa in 1979, specializing in the literature and culture of colonial America and the early republic of the United States. He has taught at Lake Forest College and Furman University, worked as a publishing executive, and has been a consultant to historical museums, cultural institutions, television’s Civil War Journal, the WB Network, and the Discovery Channel. He resides in Atlanta, Georgia.