Have you ever noticed that you rarely see a gas station by itself? Instead multiple gas stations seem to be clustered close to each other. Wouldn’t it be better if they were more spread out?
Presh Talwalkar noticed this phenomenon and used game theory to explain why it’s a rational decision for the gas stations, even if it’s not the optimal choice for consumers. It’s worth reading his entire post to understand the nuances of the shortcomings of the explanation, the theory of location competition, and where to place a hot dog stand on the beach. However, for those short on time, here’s my simplified explanation:
If a gas station (or any retailer) was a monopoly, they could locate wherever they wanted and force consumers to come to them. However, the threat of competition forces stores to try to determine a location that captures maximum market share. In other words, they want to be in central location for their target audience, minimizing the distance consumers have to travel. Of course, all competing retailers are simultaneously making the same decision which means the resulting stores end up clustered together.
Read full blog post here.
I'm fascinated by the concept of aligning execution and strategy; in other words – making sure what we actually do matches what we say we will do. It might sound obvious but finding ways to close the gap between the two makes a great subject for a blog and I’ve been writing about it for years. Even as CMO of SAP, I do my best to literally “manage by walking around” but since SAP is a global company it might be more aptly called manage by flying around. While I occasionally write about marketing topics, most of my entries deal with general people and business issues. Please share your ideas and experiences in the comments. 
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