Deeper Into Business War Gaming and How It Transforms Strategies.
Episode 3: Transforming your strategies with War Gaming
A deeper dive into war gaming and how years of trying to transform an organization’s strategies can happen in a single day.
STAGING A WAR GAME YOURSELF
Organizations can stage their own war games, but they must build that capability first in order to eliminate the risk of first-try failures. One lackluster game can sour a company’s belief in the power of the exercise.
A big challenge is designating enough time and staff resources to successfully run a full event, from start to finish. This includes exercises that elicit productive war games, like Four Corners Analyses, Strategic SWOTs and Business Model Canvases. A facilitator with strong communication skills is essential to success, too. Someone with a solid grasp of the topic and the ability to control the room and confidently manage participants.
Organizations that have someone walk them through the war game process at least one time tend to master it much quicker because they don’t have to figure everything out themselves.
Staging a war game is a learned skill, so you likely won’t be good at it the first time. With coaching and guidance you can observe and do it alongside an expert first, gaining feedback and corrective understanding, before staging your own. The ultimate goal is getting your first war game off the ground successfully. War games that produce valuable experiences will generate a positive buzz and increase people’s desire to participate in future games.
MEETING CHALLENGES BEFORE A WAR GAME
The best way to avoid challenges in a war game is during pre-game planning. Look at the personalities involved and focus on those that might be troublesome. For example, a brand leader who is resistant to the war game concept: “I’ve been in the industry 30 years; there’s nothing new I’m gonna learn in this thing.” That’s an opportunity to put them on the competitive team. That forces them to look at their own company through a different lens and way of thinking for half a day. Probably something they’ve never done before. How often do you get to sit in someone else’s skin for a day and think like a competitor?
Think about the game questions in your pre-planning phase. Anticipate potential roadblocks and seek those folks who will challenge and push, because that’s actually a benefit in a war game when leveraged correctly.
BUSINESS WAR GAME EXERCISES
Four Corners Analysis, by Michael Porter, is a war game exercise many have heard about but few have done. A Four Corner Analysis assesses a company’s drivers, strategies, management assumptions and capabilities.
For example, in a war game done with a trucking organization, questions included: What’s the main driver for this company? Why are they doing what they’re doing? Do they want to be number one? Do they want to be more profitable? It’s important to know what’s driving their behavior, because what’s driving one company is different from what’s driving your company. Knowing drivers changes the whole outlook on why they behave the way they do. Then you start looking at strategies and applying Michael’s mindset about strategy.
Michael Porter asks, What is your unique positioning? How are you going to gain an advantage, and how are you going to sustain that advantage over time? By understanding strategy you start to understand competitive intent, and what management is assuming about the market—competition, growth, new entrants and capabilities. So, in this trucking war game exercise they finally hit on something: “I don’t understand how this trucking company has this unique strategy while we’re clobbering them.” Then they realized, “Wait a second. This is a Japanese-based organization so they don’t have a three-year plan or a five-year plan. They have a 20- or 25-year plan. The culture is very different.” And so they realized the competitor was willing to do things now that might not be winning the market share, because it was more concerned about years 8, 10 and 12.
In the Four Corner Analysis, the trucking organization started looking at what their competitor was saying its strategy was, along with its capabilities. They discovered, “They don’t even have the capability to deliver on what they say they’re gonna do.” That leads to considerations of “are they going to buy, partner or build the capability that they need?” That helped set the indicators of what to watch for to see if the competitor was moving in a particular direction.
Another tool is Strategic SWOT – strengths, weakness, opportunities and threats. Rather than a traditional SWOT, this looks at the intersections between the strategies that leverage an organization’s strength to increase a particular opportunity and those used to blunt a threat. It’s a new conversation that can lead to different types of scenario exercises, moves and counter moves, force field analyses, and use of business model canvases to understand how to create, deliver and capture value inside of an organization.
CASE STUDY: A SNACK FOOD ENTERING NEW MARKETS
An organization is introducing a new snack food in a unique way, where it can be sold in two different isles of a grocery store. The new product fell outside of their normal product categories, which meant a new set of competitors, and the organization wanted to understand the mindset of these new competitors.
Through the war game exercises, not only did they come to anticipate the backlash they were going to face after they entered the market. They also thought about how to prepare the best moves and counter moves. They then changed some of their marketing efforts and even reevaluated their pricing. They went back and revisited some of the strategy, made some shifts and since then had an incredibly successful launch.
CASE STUDY: FACING DIGITAL DISRUPTION
A very large retail organization became concerned with its digital strategy. They are a brick and mortar, facing a lot of pain, and needed to better understand what’s going on in their space. Many times, you’ll have old school thinkers where an exercise like this helps wake up their perspective – a little shock and awe. It became clear they didn’t have a strong digital strategy. They lacked the resources and expertise necessary to win market share. Even though business was okay, there was no growth. In fact, they were getting ready to pull the plug unless something changed monumentally. Their war game helped identify blind spots, map out new strategies, and create a timeline and approach that rolled up to executive leadership and involved a lot of shifts and changes. They achieved buy-in, started moving forward and are now a stabile organization.
CASE STUDY: FOREIGN COMPETITORS
A multibillion-dollar company in the chemicals market space is facing challenges with the production of a specialty chemical and whether or not it will be produced in China. A scenario planning session ultimately got them to understand that if the Chinese government, or another entity, start owning companies that produce this rare chemical or ingredient, that would have an impact on them. “What would a cheaper, globally distributed version of our product from that region of the world do to us?” A war game helped them think about what they needed to do to secure and maintain their lead in the market.
FEARING THE WRONG THING.
It happens all the time. Organizations believe a particular competitor is their main thorn. But when analyzed through a war game, it’s revealed that other non-traditional competitors have capabilities that could disrupt the market space independently or by partnering with another organization.
It’s focusing on competitor A, then realizing that competitor B could easily become a new threat if they wanted to because they have the resources, global footprint and established customers. Attention can quickly shift. Events in the market can signal these changes. Competitor A can turn out to be less threatening than we thought. “Maybe we should start watching this other organization since they just acquired a company in our space. Is that the first sign that they’re coming after us?”
There’s often a wake-up call during war games that would never have happened without running the event. Sure, there may be some private water cooler discussions, but decision makers aren’t in the room to hear it.
DISCOVERING HIDDEN INFORMATION
For many companies, developing a culture of truthful dialog is not easy. Things don’t get said. People withhold information unless a safe forum with ground rules is established. Forward-thinking senior leaders will come into war games and say, “We want you to be incredibly candid. That’s why I won’t be in the room. If you think things could be better, say it. If we’re missing the mark, say it. Because this is all going to be discussed in two months at our next board strategy meeting.”
That’s how a war game encourages and gives permission to people to express ideas, thoughts, comments and objections that they may otherwise not know how or where to introduce.
Organizations can find it difficult to look at themselves. A business war game can cut to the truth faster and more efficiently than traditional internal processes. You can be fighting years and years of tradition when trying to get something to surface. A war game can typically accomplish this in a single day.
A professional war game facilitator is an independent, objective event leader. No bias or reason to have a decision go one way or another. They just want whatever is best for the organization, and that’s found through asking the tough questions.
EPISODE 4: BEFORE BETA TESTING A PRODUCT, BETA TEST A STRATEGY
In our next episode we go even further up the food chain, in ways most companies never even think of.