Power Grid – Lean Startup lessons in a board game

Some time ago I got together with friends for some alcohol, snacks and board games. One game caught my attention in a way that was quite unexpected. That game was Power Grid (also known as ‘Funkenschlag’ in the original German or ‘Hoogspanning’ in Dutch). It’s not that I was new to the game. Far from it actually, but this time around it kind of slotted into place with some Lean Startup ideas.

In Power Grid you are a power company trying to expand by buying power plants and fuels. You connect cities in order to provide them cities with power (thus earning money).

Now this sounds pretty standard, but there’s a catch of course. The winner of the game isn’t the person with the most money (it only acts as a tiebreaker); the winner is the player who after connecting a target amount of cities, provides most of them with power.

Lean Startup power

I always accepted that rule as a ‘quirk’ of sorts, but having dived into The Lean Startup by Eric Ries, it managed to take on another guise. Akin to when you are trying to validate your startup, in Power Grid you are trying to end up with the most customers that provide you with income. It’s not about the amount of (vanity) money you have. It’s not about the growth (though that certainly helps). It’s about having a company that can generate value turn by turn.

Framed as such, the game became subtly different and a very nice way of seeing some of the strategies behind The Lean Startup in action. Let me explain by taking a look at the mechanics that govern the game.

Order of play

Power Grid starts off differently compared to other board games, in that in takes into account the market itself. Whoever is the most successful, is first up in the order of play. Whoever is the least successful, ends up last. How is success measured? As you may suspect, it’s not measured by the amount of money players have. Instead, it’s the amount of connected cities that counts. If that generates a tie, the most valuable power plant acts as a tiebreaker.

In short, it evaluates your potential, not your actual assets per sé. The more potential you have, the more successful you are to the game. This is reevaluated every turn and thus gives you an overview of who’s actually getting ahead of themselves. Wait, themselves? Yes, as being the most successful is actually a bit of a double-edged sword in this game. After all, you may have some trouble in converting potential into actual value, which is where the bidding comes up.

Bidding for power plants

The first decision people get to make in a turn is to bid on power plants. You don’t construct them, you just select them from a market. This market is formed by placing down eight power plants in order from least valuable to most valuable.

Power Grid
Power Grid

Only the four least valuable power plants are available for auction. Whenever a power plant is won through an auction, an extra power plant is added to the market. Then market is reordered to once again present the four least valuable power plants up front.

Power plants start off as being cheap and inefficient. Each power plant needs fuel to generate electricity. While three units of coal might power two cities with your first gen power plant, getting an expensive future power plant could probably power six cities with the same amount of fuel.

In other words, you want the more expensive and efficient power plants. The catch is that the order of play forces the most successful player to bid first. If you pass on bidding you can’t get any other power plant, so the most successful player is forced to take his pick from the four power plants and auction it off starting with a bid himself. I like to view this as a “large company struggling with its own bureaucratic ways”; the more successful a company is, the slower it reacts to the market, even though it may have its sights set correctly.

It’s easy to see how this order will cause problems for the most successful player. It might get stuck with an inefficient power plant, while the other players might gain access to the new fancier ones. This auction continues until the very last player is up. As players can no longer bid when they have acquired a power plant, the last player actually gets to buy one of the four power plants at minimum cost. And remember, success isn’t dependent upon the amount of money you have, so being an underdog actually makes it quite lucrative to get access to a more efficient power plant. You can view the player in the underdog position as a startup of sorts, having faster access to new technologies as its lean enough to change course quickly.

Stocking up on resources

Once the bidding is over and everybody has a new power plant (or has passed up on one), you get to buy fuel needed to fire up your power plants. The more fuel available in the market, the cheaper it becomes. Stock up on fuel and it becomes more expensive as it will not replenish as fast as it can be used.

Coal and oil are the fuels most abundant as you start the game, while biofuel and uranium are rare. Thus having a nuclear power plant is going to be very expensive to start with and will only become cheaper later on.

Now the catch with buying fuel is obviously that the player buying first has the cheapest resources. And thus the game rips the most successful player a new one, by actually reversing the order of play while buying resources.

Yes, that underdog player that got cheap access to a more modern power plant, also gets access to cheaper resources (handily diving into the large vs. small comparison again). It’s also important that you keep an eye out for how many cities you want to provide with power. A power plant can stock twice the amount of fuel it burns. So if you need the previously mentioned three units of coal to power two cities, you’d be able to store a maximum of six units in your power plant (and thus power a maximum of four cities).

Why is that bit important? Because of the next phase: connecting cities.

Connecting cities to your Power Grid

If you still have some money left after buying a power plant and resources, you can spend money on connecting cities to your power grid. The first city you connect is free, but every other city will cost you a one-time fixed city fee plus the connection fee.

This connection fee is dependent upon where you are on the map (game board) and it is here that Power Grid offers up multiple game boards: the base set contains Germany and the US as game boards and it’s easy to verify that connecting a city on the US east coast is easy and cheap, while trying to traverse the great plains and the Rockies is going to cost you. In a way this ties into making the most of your location as a startup. Yes, connecting another city might actually become a heavy investment, but if that generates more stable income on the long term, it might actually be a viable choice.

Also remember that the amount of cities connected is crucial to your success as a power company. The winner is the player who in the final round can power up the most cities.

Fire it up and earn some cash!

Once all your money has been spent (and really, you should have invested it all, rather than stockpiling it), you finally get a stab at earning it back. Use up your stocked fuel to generate electricity at your power plants and see how many of your connected cities you can provide with power.

It’s this amount of cities provided with power that dictates the amount of money you earn. Take note, if you generate enough energy for six cities but only have four connected cities, you’ll only earn money for four cities!

Efficiency is the name of the game here and as you can have up to three power plants available to you, you can fire up different power plants during different turns to provide the most precise amount of power.

Also interesting to note, is that the game kind of maxes out at 20 cities. Connecting the first ten will give you more and more money with each connected city. Beyond ten, you’ll start to notice diminishing returns, meaning the investment will be greater, but the amount of money you’ll earn for each city will be relatively less. Also some power plants provide you with ‘free power’ in the form of windmill parks. While a great addition, the problem is you can only use them once, while you can burn fuel cells multiple times in standard power plants. It makes for an interesting balance to discover your optimal power plant mix.

Power Grid
Power Grid

Clean up and start again

After money has been earned, additional fuel cells will be added to the fuel market, the most expensive power plant in the market will be exchanged for a new one and the order of play is reestablished based on the new situation. Thus begins a new turn.

Of course you’ll notice this more prevalent while playing the game, but you might be able to see the factors that weigh in to create a finely tuned balance that seems to have some overlap with the lessons in the lean startup.

There’s the first mover disadvantage: being the biggest and best usually means you’ll stay content and in this case simulates the effect of becoming ‘corporate’. You’ll act slower, have conservative access to power plants but generally speaking have the largest market.

If you’re in last place, you’ll probably be more akin to a ‘startup’ allowing you to gain access to newer power plant technologies and thus a cheaper and more abundant access to resources. Though the downturn is that these new technologies can be very expensive (less workforce, unproven, niche) and you most likely have access to a smaller customer base.

The thing is that players on both ends of the spectrum are fishing in the same pool. Thus the ‘corporate’ players have to somehow become nimble (and potentially lose the lead), while ‘startup’ have to be weary of not becoming too successful and bump into the corporate problems by moving up the order of play ladder.

Pivot time!

The fun thing about the game, is that the first round is a bit randomised as nobody has a power plant yet. That means that there’s some degree of luck telling you whether you are cast into the role of a corporate a startup, or somewhere in between.

As you then start out the first power plant you’ve chosen usually dictates your path. If you have a coal-based power plant, you may want to stick to it, to refrain from wasting excess resources. Some may diversify and some may even go for the more expensive solutions being less dependent upon the fluctuating prices for resources.

Whatever the case, after three to four rounds, it’ll become clear that certain players will have certain corners of the market covered: either by location (less expensive to connect cities), by resource (buying up large amounts of fuel) or by efficiency (needing very little fuel to get by).

This may put yourself in an awkward position and amazingly enough this seems to correspond with the ‘pivot’ mentioned in The Lean Startup. Yes, you may have enough power plants to power your cities, and you may have access to fuel, but you are simply stuck in expanding too slowly. You may even acknowledge or ‘feel’ this, but unless you take charge, you’ll bumble about and once you finally start making some progress the game will be over.

Power Grid’s main event is deducing when and how to pivot your power company. Will you change fuels? Will you expand to a different area? Will you invest in different power plants? What you need at such a moment is wholly dependent upon your own situation. But it’s a brilliant moment to experience if you’ve read into The Lean Startup. Suddenly it’s clear you may be ‘good enough’, but not successful enough to win the game.

So changing is your only option. Those that acknowledge the problem enter some kind of new stage of the game, those who don’t glaze away wondering how lucky the other players must be.

Lead or die

The great thing about the game then is not only the pivot, but also in how it acknowledges and rewards leadership. If you take the lead, but don’t know what to do with it, you’ll be punished through your own inadequacies.

If you find yourself growing into the leading position among the players you may find you have to switch gears. The experimentation is over and you need to make sure your plan is in position. If you still need to adjust, it’s going to be tough, as your leading position will give everybody a timing edge over you and can pretty much predict what you are going to do. It’s not impossible, but it’ll require a poker face, luck some scheming.

If you fall into the leading position through fast growth, you’re basically screwed. The chances are you just got lucky with a few cheap and effective power plants and managed to start in a low connection-cost zone. But if you cannot profit from that right away by building on top of that, the game will become very difficult.

New power line

Amazingly changing my perspective on the game like this, has doubled my appreciation for it. It was already a great game with interesting mechanics, but now the mechanics also seem to make sense and provide a nice framework to play within. Even though startup culture is probably not the primary aspect Friedemann Friese had in mind while designing the game.

If possible, try to get your hands on the game. Even if you don’t have anyone to play it with. There’s an expansion to the game called The Robots, that allows you to play against ‘automated players’ and lets you kick the tyres (though two players is advised). If you can get a group together: that’s even better.

Happy pivoting!