Published: July 15, 2019
Everyone has faced a difficult decision in their lives where they wished they could see the potential outcomes beforehand. In business, those types of make-or-break choices happen every single day. Decision-makers want to know what’s going to happen if they introduce this new product, acquire that business or enter a brand-new market. While the future is never certain, the good news is there is a proven way to take a peek.
You may have heard of war games for the military, where officers simulate the battlefield to predict outcomes. Business war gaming strategy takes that concept and brings it to the boardroom.
The Power of Foresight in Developing Strategy
Foresight is one of the most crucial skills to develop in the business world — strategists can use that foresight to detect and observe current activity, project potential outcomes and develop or alter strategies to combat or coincide with those outcomes. While this is one of the most powerful tools in a company’s arsenal, it’s a difficult one to develop and use in the real world.
Most often, companies develop foresight using strategic scenario planning. In these exercises, managers get together in large meetings to discuss current opportunities and run through scenarios. As a group, strategists use the information they receive to develop projections and plans based on current market conditions. However, strategists’ cognitive barriers limit this strategizing, namely the following.
- Mental filters: People see what they want to see. Instead of seeing the world for what it is, individuals tend to alter information to fit their existing worldview. If data doesn’t fit into their perception of how things are, they either ignore or change it.
- Overconfidence: People are often too confident in their beliefs, thinking the current view they hold is correct.
- Confirmation bias: If new evidence enters the data set, people will find information that confirms their beliefs more quickly than they will information that opposes them.
- Preference toward certainty: Ambiguity is a state of being people try to avoid, especially in business. As a result, people express certainty where there is none.
- Groupthink: It’s more comfortable to belong to the majority, and it’s easier to believe the majority see the world the same way you do. As a result, people tend to give into others’ opinions and go along with what other people say rather than investigate independently.
Because scenario planning involves the whole group working in tandem, it’s easy for them to hit these cognitive barriers. These can prevent strategists from working with complexity and uncertainty, so they’re less able to see new possibilities and develop stronger foresight.
So how can businesses develop powerful foresight for strategic planning? The answer lies in business war gaming.
What Is Business War Gaming?
Business war gaming, also called strategic simulation, is a type of group exercise where participants role-play in a simulation of a dynamic business environment. It’s similar to a scrimmage match in sports — the whole team splits into two groups who compete against each other to test and hone their skills in preparation for an actual match. Business war gaming operates similarly, toward a related goal.
With business war gaming, an organization splits their team of participants in two or more groups, with one group representing their organization and the other group or groups representing the competition (or possibly one team representing a customer team, regulatory team or some other market influencer). Typically, these teams work against each other for several rounds, with each round having a specific time limit. In each of those rounds, the groups utilize research provided in advance via “briefing books” and make the best decisions for their team to succeed taking into considering he character, culture, and strategy of the company they represent..
Not only does this simulation game allow businesses to test their current strategies, but it also allows them to develop and adjust new strategies based on what happened in the war game. Competition helps stimulate creative thinking, and working with the market from the perspective of a competitor can help the team as a whole recognize new, hidden opportunities to seize or threats to blunt. With human-based simulation, executives can experience future events and develop foresight, which can help them make decisions on critical strategies.
Where Does War Gaming Come From?
As the name suggests, war gaming originates from military exercises where generals and officers would compete against each other to help prepare for the unpredictable battlefield. Historical records of this simulation planning date back as early as ancient Greece, but militaries around the world have used it. These first simulation war games led to the development of war-game-based board games, which first appeared about 5,000 years ago in China. The first one, called Wei-Hai, which means “encirclement,” was the brainchild of military general and philosopher Sun Tzu, author of “The Art of War.” Later, Go emerged in central Asia around 2200 BCE, and Chaturanga, the ancestor of modern chess, came about circa 500 CE.
Since the 19th century, war gaming has become increasingly popular — with the expansion of global armies and the rapid advancement of technology following industrialization, battlefields are more complex and deadly than ever, making thorough planning critical. While Prussia popularized war gaming during the Franco-Prussian war of 1870, the U.S. took the idea and ran with it, using it as an essential planning tool to this day. It caught on so quickly in America that people soon began to apply the concept outside the military.
The American Management Association first introduced business war games in 1957 with “The AMA Top Management Decision Simulation.” This game required teams of three to five, representing company decision-makers, to produce something and sell it in a simulated market. The simulation ran through about five to 10 years of company operations and used mathematical models to evaluate team performances. While effective, the idea of strategic simulation didn’t gain widespread popularity until the mid-1980s — since then, it has blossomed into a highly useful tool for business strategy development.
How War Gaming Works
A typical war game takes place over one to three days and will usually begin with a pre-game preparation stage. For example, professionally led war gaming exercises from Proactive Worldwide start with a planning stage where the game leaders determine who is participating, scenarios to play out, briefing book development, and where it will take place. We’ll also work with your leaders to determine what the objectives of the game should be and what strategies to test.
Having completed the initial planning stage, the event itself has all participants split into groups and receive briefing books on the company they’ll be representing, the capabilities and philosophies of that company, their role on the team and the fundamental information they need to know about the market landscape. The essential groups participating in the workshop include the following.
- The home team: This team represents the company running the war game, operating with the same values and resources their company commands.
- The competition: This group may consist of one or more teams, each representing a different company in the market. These may be existing, traditional competitors and/or emerging ones, but their goal is to succeed in the market, and they may choose to work with or against the home team, depending on the characteristics of their company.
- The market: This team represents the market and the consumers, and usually consists of sales, marketing, and product development professionals. This team assesses the decisions of the home team and competition and determines the reaction of the customers and the market as a whole.
- The team facilitators: In some ways, the facilitators act as the control team, and there is usually one facilitator per team. They can also introduce significant changes in the market, like policy changes or technological developments, changing the market environment to add real-life dynamics, and often pose challenging questions to the teams that those participants are not asking themselves.
Once everyone has received a briefing books (usually a few days before the event) and are assigned to a team, the game begins. The actual design of each game can vary as well as the exercises used, depending on the game’s objectives. War games will typically start in the present day, and each round represents the passage of time, usually a few years. Each round typically consists of the following steps.
- Strategy formulation: The home team and competitor teams use the information to better understand the competitive mindset of the company they represent. They focus on assess their drivers, strategy, assumptions, and capabilities. The teams work independently and do not communicate with one another during the exercise — instead, they make decisions on what the think a company’s future strategy may be based on the information they have. Once they’ve developed an understanding of their company, each team will present it to the other teams. This then leads to addition forecasting of potential moves and countermoves of particular future scenarios.
- Market reaction: After the home team and competitors present their plans, the next step is for each team, including the customer / market team to ask questions, challenge the strategies conveyed, and discuss how consumers and others will respond to the decisions, and how those reactions will affect the market and each team’s share or growth potential of the market.
- Reaction and feedback: The facilitators take the strategies of the home and competitor teams to drive discussion with the participants around who wins and loses in the future market scenarios outlined. There will be discussion and debate on how the choices made will affect the world at large, and if any new dynamics, like technological advances or changes in government policy, will emerge and how they will impact the market.
During another round of exercises and discussion, the players gain a better understanding of their company and the competition, as well as how to react to the ever-changing market. The simulation allows them to experiment with new ideas and strategies and see how their choices could affect the world in the future. To wrap up the event, participants all put on the had of the home team to assess the key learnings, prioritize actions, and walk away with a new sense of foresight, and executives can use the data and ideas from the game to inform their strategies.
The Benefits of War Gaming
Using business war gaming for strategic planning is an exciting and engaging way to get ahead of the competition. Unlike any other exercise, strategic simulations can provide insights and opportunities you couldn’t find anywhere else. Just a few of the benefits of business war gaming include the following.
- Align leadership: War gaming helps your business leaders, from functional leaders to unit leaders, develop aligned strategies and priorities based on demonstrable data. By involving them in the simulation, leaders can see the market as a whole and gain a new sense of investment in the company’s vision. They can then take the information learned from the war games to create a complementary plan of attack, ensuring better company-wide implementation that can address the competitive landscape more effectively.
- Improve success: By simulating the competition and playing out their potential future actions, businesses can better predict what their challengers are going to do and develop more robust strategies in response. These well-planned strategies are more likely to be successful.
- Evaluate strategies: War games can run through any number of plans and variations, assessing them thoroughly so your business can be more confident in its decisions. This type of preparation also helps develop alternative plans of attack in the event of an unforeseen change of circumstance, reducing the risk involved.
- Recognize opportunities: By viewing the market from multiple angles, participants are more likely to find hidden or unnoticed opportunities to exploit.
- Enhance teamwork: War games bring cross-functional people together for the exercise, allowing professionals from all departments to collaborate and communicate. Doing so can help people see problems from new perspectives and gain a better sense of the company’s direction and mission as a whole.
- Predict efficiently: War game simulations can cover several years of strategy over a few days, making it a highly time-efficient way of testing strategic initiatives and theories. Instead of spending years evaluating your strategies in the real world, your business can evaluate them in a safe, closed environment in days, saving time and money.
Whether on the battlefield or in the boardroom, war gaming is a proven way to develop effective strategies. With skilled war game facilitators and a perfect setup, your business will finish a war game workshop with several ideas and strategies you can use to win.
How Companies Can Use War Gaming for Business Strategy
If your business is new to the idea of using business war gaming for strategy, you’re not alone. It’s a strategic tool that few companies use as they should, but by all accounts should be an essential part of any business’ strategic arsenal. Just like a carpenter would jeopardize their business by choosing not to use a tape measure, corporations are missing out on an incredible opportunity by not using war gaming in their strategic planning. Here are just a few ways businesses can use war gaming for business strategy development.
- Assess strategies: War games can simulate how your current or proposed strategies could fare in the market, and how certain adjustments could improve your company’s performance. Participants playing the role of your competitors can also provide feedback, identifying any weak points that posed easy targets.
- Investigate opportunities: In a war game, participants are looking at the same market from wildly different perspectives — while some are operating as stand-ins for your own company, others may be playing as competitors or as consumers. With so many different viewpoints, it’s much easier to identify potential areas of growth or opportunities in the market that may not have been apparent before. War gaming doesn’t merely allow you to identify these opportunities, however — you can also simulate how competitors may use these opportunities and what the potential outcomes could be.
- Identify shortcomings: In addition to strengthening your strategy, war gaming can bolster your company as a whole. Simulation allows you to take a hard look at your established internal practices and strategies and identify how they might interfere with communication and collaboration internally and externally.
War gaming is a proven tool, and under the guidance of an expert competitive intelligence company like Proactive Worldwide, you can benefit from the key advantages of business war gaming. At the end of the exercise, your business will be far more knowledgeable about your strategies, capabilities and preparedness so you can be confident in your ability to out-compete your competitors.
What Industries Can Use War Gaming?
Industries of all types can use war gaming as a useful tool for developing business strategies. Using your specific industry landscape, your business can use war gaming to improve strategist training and test current and new approaches. A few of the industries that can use war gaming in their business strategy include the following.
- Pharmaceuticals and health care: Competition is the heart of the health care and pharmaceutical industry in the modern era. War gaming can help companies in these industries uncover actionable insights that can help them stay ahead of the curve.
- Financial services: Technology and productivity are two significant drivers and disruptions in the financial sector, and war gaming provides a solution that can help develop new strategies for handling these challenges.
- Consumer goods: Consumer preferences are always changing, so foresight is an essential tool. War gaming can help develop your company’s foresight, helping evaluate strategies and predict market changes that can boost your success.
- Manufacturing and industrial: Assess your strategies and principles from a new perspective with war gaming. If you’re looking for a way to edge ahead of the competition, war gaming exercises led by specialists with experience in the industrial and manufacturing sectors is an excellent way to strategize.
- Technology: Technology is always changing, and it’s vital to stay at the forefront of development to remain relevant. War gaming can help develop your strategy with business war gaming, anticipating anything from your competitors’ next moves to the newest regulations.
At Proactive Worldwide, we’ve helped businesses within these industries and others develop their competitive intelligence through war gaming exercises. For over two decades, we’ve helped decision-makers and strategists use war gaming for business strategy, enabling them to recognize opportunities and assess policies in a way they’d never considered before.
World Class War Gaming Services From Proactive Worldwide
Proactive Worldwide’s interactive Business War Games combine our decades of experience in competitive intelligence with our expansive industry knowledge to provide you with the best strategic simulation experience. Our workshops involve thorough pre-game planning, briefing book development, a one- or two-day workshop and a debrief session where we help identify actionable insights for your company. We’ll help you use business war gaming for strategic planning, helping you test existing or new strategies while improving your understanding and insight into the market and your competitors.
Proactive Worldwide President David Kalinowski leads PWW’s Business War Game practice and has seen time and time again how this strategic tool can have an enormous ROI for corporations looking for an effective pressure test for their strategies. Since our inception in 1995, Proactive Worldwide has grown our capabilities to deliver the benefits of business war gaming to as many industries as possible, from consumer products to the pharmaceutical industry. Thanks to our commitment to our clients and quality service, we’ve provided tailor-made solutions to hundreds of businesses and plan to continue expanding our capabilities and honing our processes to deliver the best results possible.
If you’re interested in using business war gaming for strategic planning in your business, you can get started today. Fill out our contact form for more information.