Business wargaming is an experiential group exercise where an organization can pressure test an existing strategy. Business war games help you create new plans and ideas by role-playing the competitors’ strategy before making full-scale investments. Wargaming shakes things up, challenges norms, and takes a fresh look at the market through the lens of other key players.
It’s helpful to point out how much we already instinctively know about what wargaming is. Have you ever observed a youth team sports practice — from football and basketball to soccer and volleyball? If so, you’ve seen the utility of a scrimmage, when the team splits into two opposing sides to compete against each other.
Interestingly, we also refer to smaller-scale corporate war games as scrimmages — often designed to take under a day to execute and focused on one competitor or a specific business issue or scenario.
So to define business wargaming, consider what the average youth soccer scrimmage aims to accomplish. Team members who are usually on the same side are suddenly playing against each other as if they are the competitor — sharpening both their offensive and defensive skills in the process. The setup results in practical role-playing where players can test their skills. A scrimmage hones them even further for game day.
The term “war game” originates from actual warfare. For centuries, military strategists have used wargaming to prepare for unforeseen battle circumstances. Using game boards or other simulations, strategists play out the moves of enemy forces to counteract them better. This is a proven strategy. In the 1930s, Admiral Chester W. Nimitz predicted nearly all the World War II Pacific naval battles.
These strategies have been adapted to business war games, where upper-level managers refine their strategy and predict their competitors’ next moves. These business simulations can also be repeated with lower-level employees to get them on board with new strategies.
How Does Business Wargaming Work?
Professionally-led wargaming exercises from Proactive Worldwide typically involve a pre-game planning stage, the development of briefing books and finally, the wargaming workshop. With this comprehensive approach, we leave nothing to chance. The pre-game planning helps to define the who, what, when and where of the upcoming workshop. Once we map out the details of the war game objectives and leaders have decided who will take part, when and where the workshop will take place and what strategies to test, it’s time to develop a briefing book.
A briefing book, usually compiled of 20 pages or fewer, prepares participants for the workshop. The brevity of the book is intentional so people have time to read it in advance. It gives all participants a baseline of information so they understand the market landscape and the mindset, characteristics and culture of the company they will role-play.
Next, a full-scale wargaming exercise will commence with a home team and two or three competitor teams. In general, each team has five to eight cross-functional members. It’s essential to remember that not every competitor team needs to be an adversarial company. One of the other groups may also represent a regulatory body, a distributor or even a consumer group focused on customer experiences. A typical war game has several key groups:
- Company or home team: This team plays the role of the company looking to test strategic solutions. They may test the effects of a current strategic plan or try an alternate method to see how it might change. This team will comprise a cross-section of senior managers. As long as it is in the realm of possibility and the company’s budget, the team can do anything they wish. The team may form or dissolve alliances, merge with or acquire other companies or launch new products and services.
- Competitor teams: Each competing team will play one of the company’s competitors. Like the home team, these groups will involve senior leadership officers. These players will walk in the shoes of their competitors. They can adopt strategies and exploit their knowledge of the home company’s weaknesses.
- Market team: This team judges the attractiveness of the other team’s offerings. Team members may be from the company’s market research team, but may also include some outside experts. The players listen to the teams’ offers and award market shares based on hard data from each of the competing companies.
- Regulator or control team: This team runs the business simulation. It includes the game facilitator and a panel of industry experts, the home company’s CEO or other high-level executives. The team’s role is to keep the game on schedule, ask the tough questions and offer feedback to each of the teams. The team also uses the market team’s outcomes to calculate cash flow. They can introduce surprises such as natural disasters, government regulation or product recalls. In the event of an acquisition, they pose as a board of directors to see if they would accept the proposal.
War games use turn-based gameplay. At the start of a round, each team examines their current circumstances and makes a plan. They then take turns to present their proposal to the group. After each team’s turn, the whole group has the opportunity to challenge the team’s marketing strategy, sales or profits. Next, the market team awards a percentage of the market share. Finally, the control team opens a dialogue about how things worked.
In the next round, each team tries to counteract the moves made in the previous round. Each round can represent a month, a year or a custom timeline. Depending on the desired outcomes, this may be a one- or two-day event.
For a more detailed description of what wargaming is, which exercises are involved and what resources it requires, we invite you to listen to David Kalinowski, Proactive Worldwide’s President and wargaming authority, describe the process in the following podcasts:
- Episode 2: War Gaming — Discover what this strategic tool has to offer.
- Episode 3: Transforming Your Strategies With War Gaming — Hear how a single day can transform an entire organization.
- Episode 4: Time & Resource Requirements and Costs — Learn how to prepare for a successful wargaming exercise.
What Types of War Games Can You Play?
Your company’s goals with hosting a war game determine the kind of game you plan, how long it will take to play it and the types of audiences you’ll play it with. Your war game facilitator can help you determine what kind of simulation is best to meet your needs.
If you have a narrower problem to role-play, such as to raise prices by 3% or keep them constant, you may use a tactical wargaming solution. You may choose to run two separate games, one where you raise prices and one where you do not. Or, you may run a business simulation where you raise the prices and increase your marketing spend.
Tactical war games are best when you have a few small tactics to test out, and foresee several potential competitor counter actions.
Strategic games are more comprehensive. You can test-drive wider-reaching strategic questions, such as how to increase market share or which ad campaign to run. The possibilities for what you can pressure test with a strategic game are vast.
Strategic games can simulate years of strategic development, and react to competing strategies in real time.
How Is Wargaming Different From Other Strategic Planning Tactics?
Most strategic planning happens over an eight-hour meeting or several months of planning.
Some methods use a computerized model. In this case, you may input a set of moves for the computer model to respond to. Corporate wargaming simulates these moves in an open-ended setting, where real people face real problems and adapt as they go.
Traditional strategic planning helps you create strategy assuming current trends continue. When you take a disruptive approach, these trends may shift. A new product introduction will force competitors to respond, and the market or regulators will react in ways you won’t expect. Old-school scenario planning predicts the future based on informed speculation, which might still be biased.
How War Games Differ From Strategic Analysis
With traditional analysis, you form new plans by examining your environment and evaluating existing strategies.
The traditional analysis only predicts discontinuities. War games play them out. A war game’s control team imposes new rules when it makes logical sense. A competitor team might vertically integrate, which transforms the market. While this may not fully predict disruptions, it shows how likely they are and prepares your organization for any scenario in the process.
How War Games Differ From Scenario Planning
With scenario planning, you and your team develop a set of narratives that are likely outcomes of your current strategy. A well-organized scenario plan takes several months to form.
War games, in contrast, happen move by move. The tactics each team takes in one round determines the conditions for the next round. Business simulation adapts to change as it happens.
How War Games Differ From Market Research
Market research informs war games. The facilitator and briefing booklet incorporate real-world information from your company’s market research team into the simulation. Wargaming predicts the market better than market research alone because there is a group of real people playing the market. The home and competitor teams can ask questions to the market team and learn why they behaved how they did.
Who Is a Good Fit for Wargaming?
You may be wondering if business wargaming is a good fit for your company. A war game can prove most fruitful when:
- You are part of a competitive industry. Some of the industries that benefit most from war games include healthcare and life sciences, industrial and manufacturing, financial services, consumer retail and technology. These sectors find corporate wargaming useful for their competitive natures.
- Your industry’s market reaction is unpredictable due to fast-paced change. The ideal situation for a war game is one where there are two or three plausible outcomes for a decision. A war game can play out a scenario to find the most likely outcome, which may surprise your team.
- You want to examine a strategy or solution over time. You might predict how strategies will work today, and use business war games to get foresight into your industry’s shifting trends.
- When there are many qualitative variables at play, calculations cannot predict how competitors, customers and regulators will respond to your strategy.
Wargaming is a reliable option when you are unsure how your strategy will work, or if you have a problem with an unclear solution. It offers insight when you don’t know what might be going on. For example, if your company understands your biggest competitor but knows little about other competitors.
What Are the Benefits of Business Wargaming?
Wargaming puts your employees into the shoes of competitors and regulators and forces them to play to win. Business wargaming is an engaging, exciting and energetic experience. Unlike other exercises, wargaming is designed to provide helpful insights for actionable strategic decision-making. With a skilled facilitator, at the end of a workshop, you’ll take away several prioritized actions to help you win.
The competitive advantage of business wargaming is exponential. During a 1993 war game, Sterling Pharmaceutical predicted that a mock ad campaign highlighting support among doctors would generate a 5% market share. So, two weeks after the game, Sterling preempted a competitor’s new product launch with a similar campaign. This pushed back the competing launch by six months. Three years later, Sterling’s market share had increased by 10%, and the rival’s market share sat at 1%.
Business wargaming helps align an organization’s leadership and aid in strategic — and in some cases tactical — decision-making. After a war game workshop, leaders can better evaluate their alternative strategies and recognize hidden opportunities to seize and real threats to blunt.
Some of the top merits of business war games include that they:
- Encourage team building: Your whole team will see your plan in action. Skeptics can see the benefits of proposed plans and are more willing to jump on board with new ideas. Strategists will uncover the flaws in their proposals. Since everyone sees the scenarios play out first hand, they know what will drive success and can commit to enacting their plan together.
- Increase your chances of success: In an unknown market with competing variables, a business simulation can prepare your team to face obstacles and prove success.
- Unify your plan: Many strategic plans look at individual tactics. You can evaluate them on their own, but a war game connects them to an overarching strategy. A strategy is holistic, with all pieces of the puzzle vital to the success of the whole. Seeing these plans in action emphasizes a unified approach.
- Bring diverse ideas together: The cross-functional makeup of each team synthesizes perspectives to create better strategies. Strategic planners convene alongside sales managers, financial officers and marketing leaders. Their ideas come together to build stronger solutions.
- Work with real facts: In business wargaming, variables such as the cost of building a new factory or the size of a competitor’s sales team are real numbers. These stats confront players with practical constraints. You will have a cost-benefit analysis you can actually use after the event.
- Challenge conventional wisdom: Often, your company will enter a business war game with a prediction. This could be, “X strategy will increase sales by 5%,” or “Partnering with Y company is the best option to enter a new geographic market.” But, many times, the simulation proves the prediction wrong. Your team will question their assumptions and feel more confident in making changes to strategic direction.
- Explore ideas in a no-risk setting: You can see the impact of your current strategy in a controlled setting. Learn how changing strategies impacts your market share without worrying about the cost.
- Promote strategic thinking: Business wargaming gives you a chance to test out strategies, and it also gives your team hands-on training in strategic thinking. Your team will think strategically more often. Managers may learn to see how their day-to-day operations impact the company’s strategy, making both more effective.
- Teach managers to track competitors: Many companies report seeing their leadership pay more attention to competing companies after playing a war game. Whether see through their rival’s eyes or try to outsmart competitors during gameplay, they will start keeping closer tabs. They may be more likely to ask themselves, “How would our competitors react to this?”
- Improve collaboration between departments: Cross-functional teams can see how their individual roles merge to enact strategy. Players may identify areas of weakness between departments. For example, product developers may learn that the sales team is lacking valuable product knowledge.
- Enhance communication with customers: After playing alongside the market team, participants learn how customers read their messaging. They may see that they should emphasize benefits that are less well-known to consumers or set a goal to clarify their marketing messages.
How to Leverage Insights From a Business Wargaming Exercise
Many are moving away from a strictly data-based strategic analysis, and wargaming offers high-end qualitative analytics. Here is how you can leverage these powerful insights:
- Identify strategic strengths and weaknesses: The most important thing you can glean from a wargaming exercise is the strength of your current strategy. Does it actually hold up against competing approaches? More often than not, a war game will reveal a weakness. Use this information to hone your strategy.
- Predict customer behavior: The thorough market research informing the market team leads to a complete picture of the consumer landscape. A war game projects buying patterns when you change pricing, offerings and marketing initiatives.
- Harness new opportunities: A war game might reveal an underestimated competitor, the advantage of vertical integration or an under-served market. You can find and take advantage of new prospects before your competitors.
- Map out competitor’s strengths and weaknesses: Your employees will get inside the heads of your business rivals like never before. You’ll reveal threats to neutralize and shortcomings you can leverage against them.
Game Your Strategy With Proactive Worldwide
Proactive Worldwide offers full-scale business wargaming consulting services. Our business war game practice is lead by a sought-after wargaming authority, and the president of Proactive Worldwide, David Kalinowski. Under his leadership, we build custom games to play out your strategic objectives and solve complicated problems. We create an accurate competitive landscape alongside your research team — and even cover some of your blind spots. To create an experience that clicks with your team, we study your company culture and tailor the game to you.
To learn more about the enterprise-wide benefits of wargaming for your business, contact us today.
Updated on January 22, 2020. Originally published on April 24, 2019.