You’ve probably heard the term: “War games.”

Long used in a military context to plan for future conflicts, when applied in a business setting, the phrase refers to a group exercise in which participants try to anticipate the possible moves of a competitor by pretending to “play for the other side.”

I have used this technique many times, across a range of clients and industries and it is consistently effective as a planning and resource allocation tool. That’s because organizations don’t operate in a vacuum. If you make a change in your approach, pricing, product, service, etc., you can expect your competitors to react, leading you to react to their reaction, and so on.

Best of all, this can be done quite realistically without having to build sophisticated computer simulation models.

How Do Business War Games Work?

There are many possible variations, but typically, these exercises take place off-site over a few days and involve a select group of internal staff and leadership. Standard elements include…

  • External research.

    This gives participants a basic grounding regarding competitors. For example, when working with a pharmaceutical company client to anticipate how a competitor might enter a specific drug category, we shared information with game participants about how that competitor behaved in the past when launching new drugs.
  • Front line players.

    As Rita McGrath points out in her book Seeing around Corners, it is often the people in the field of a given organization that have the best understanding of what is happening in the market and how competitors may behave. Typically, we create teams representing different functions (e.g., product development, marketing, sales, etc.) and assign them to play the competitor.

    Our instructions to them are simple: “Imagine you just left the company and went to work for that competitor. What weaknesses or gaps in our approach would you attack? How would you compete against us? What actions would you take?”
  • Group presentations.

    We place facilitators within each team and reconvene at the end of the day so that groups can present their assumptions and plans for the year. That evening, senior leadership and the consulting team consider the various “competitive moves” and determine what we think the resulting market situation will look like.

    We present this picture to the group in the morning and send the teams back to plan out the next year based on our market situation description. In most cases, we run the process through three cycles, giving both sides an opportunity to react and respond as the playing field continually evolves.

Suggestions for Doing This Well

As with any simulation, there are limitations to what can be learned. But the main benefit arises from taking a hard, objective look at your organization through the eyes of a competitor. A few key suggestions…

  • Make participation “safe.” Done correctly, you are likely to learn some hard-to-hear facts about weaknesses within your company or its operations. If you greet these challenges with defensiveness, and your teams therefore don’t feel safe shining a light on areas in need of improvement, you will shut down the discussion and the insights that come with it.
  • Try to remain objective. As you review data regarding your competitors (through public filings, news reports, their own website, etc.) and think about the actions they may take and your ability to respond, it’s natural to favor your own perspective and capabilities over theirs. Underestimating the competition is a common flaw, so try not to fall into that trap.
  • A partial exercise is still worthwhile. You may not have the resources, budget, or flexibility needed to take a large group of people off-site for several days. That’s fine. The main benefit of a business war game is in stepping back and looking at your organization and your competitors from a different perspective.
  • Take real action. The only thing more dangerous than ignoring the competition is carrying out an exercise like this and then doing nothing. Even a healthy process and discussion can be devastating to team morale — not to mention your future success if real threats are uncovered — if nothing changes as a result.

Reflections

Paying careful attention to how an opponent has acted before and may act in the future, in addition to fully considering its key strengths and vulnerabilities, goes a long way in helping your organization stay sharp and perform well, whatever the future may bring.

© 2021 HORWITZ & COMPANY, LLC

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