War Games and Expecting the Unexpected

I’ve been thinking about war games because recently several of our clients have asked us to help them run war games. Companies turn to war games as a tool to understand the thinking behind competitors’ actions and help reduce uncertainty in turbulent times. But are war games really effective at delivering strategic insight?

Fletcher/CSI has had the honor of being selected as one of four firms participating in the Strategic and Competitive Intelligence Professionals (SCIP) war game simulations at their past two annual international conferences. We were selected to participate again at the SCIP Conference in Orlando on May 6-9, 2013. (Have we participated in SCIP War Game simulation since then? If so is there a new story to share?)

 

The Simulation:

The simulation pits four teams, each led by one of the consulting firms, against each other in a contest to determine how competitors in a given industry would act. One fun aspect of the simulations is that, by design, none of the participants have worked in the industry, so everyone starts on a level playing field and comes in without preconceived notions.

Each team works with briefing books to get into the mindset of the company it is representing and determine their likely strategies.

 

Result:

While the results of our 2012 round are waiting for events to show how close the teams came to the companies’ actual strategies, the results of our first round in 2011 turned out to be very accurate. All four teams predicted some of the competitors’ actions, and two predicted full strategies that have already been carried out. Even with participants who don’t know all the ins and outs of an industry, a war game can be a very effective way to understand competitive dynamics and predict how companies will try to navigate them.

 

So, What Makes an Effective War Game?
1. A Well-Designed Briefing Book.

A well-designed briefing book allows participants to get deep into the competitor’s capacities, culture, and intentions is a necessity. The book must balance depth of analysis with brevity of content to ensure accessibility.

2. Structured progression throughout the exercise.

An experienced and skillful facilitator is essential for keeping the war game on track. Typically, in the first round, participants use the briefing books to build an understanding of the competitor’s current strategy. In the second round they deduce what the next steps of that strategy are likely to be. It’s in the third round when specific scenarios, designed to reflect likely futures, come into play.

By this point participants have developed a detailed understanding of the company and can focus on how it may respond to real situations.

3. Ability to challenge assumptions and move beyond the scenarios to explore substitutes that could/will emerge.

A war game really shines is when it challenges assumptions and breaks through perceived notions. To realize this benefit, the war game must move beyond the scenarios that explore the effects of four of Porter’s Five Forces – the usual suspects of rivalry, new entrants, suppliers, buyers – and explore the potentials of his fifth force: substitutes.

Often, companies engage in war games to assess how a competitor will react to what the company hopes, rather than fears, will happen. However, the greatest threats a company can face are tied to its greatest fears – which are realized when a substitute emerges and changes the entire market. This type of scenario is usually not on the radar screen, and exploring it is an area where a war game can offer great insight and make a significant contribution to developing strategy by helping participants imagine possible futures and expect the unexpected.

 

In the SCIP war games, unlike those we lead for clients, the goal is to demonstrate how a war game operates. In the real world, participants in a war game have some competitor knowledge and can leverage that knowledge to better understand a competitor and its potential actions. For companies facing the uncertain future, a war game can be the best way to challenge assumptions and prepare for what could be around the corner – which makes it all the more important to properly design and execute the war game.

– Erik Glitman, CEO