War Games: Gaining Advantage on the Business Battleground

By Cynthia Cheng Correia

This article identifies the preparation necessary for a war game. Examples of candidate companies that might be preparing for a war game are listed below. In addition, at the bottom of the article is a concise list titled "Ten Steps of Business War Gaming."

Competitive Case 1
Company A and competing firms have a number of key clients in the telecommunications industry, which is facing legislative pressures that may change the face of competition. Pending legislation may enable companies outside the telecommunications industry to enter into this space. Its top executives want to understand how key rivals will behave under likely scenarios, so that the executives can form better strategic decisions and observe signals regarding emerging developments.

Competitive Case 2
Company B is planning on introducing a new product in the coming year. Its managers want to understand better the current marketplace, how its main competitor will respond to the product launch, and, in turn, how it should respond.

Competitive Case 3
Company C is expanding into a new geographic region in which a competitor already has a minor presence. Its executives want to understand their competitor's current growth strategy for the region, how their competitors will react when they learn about Company C's plans, and how
Company C can stay ahead of the competitor's reaction.

In each of the above cases, an organization is facing significant issues which require deeper understanding of the external environment - their market, industry forces and competitors - so that management can better inform their strategy, decisions, actions and/or reactions. We can draw on a variety of competitive tools to support cases like these. Among the most effective is the war game.

As its name suggests - and like many competitive intelligence tools and practices - business war gaming draws from long-standing military practices. Just as opponents face one another on the battlefield, competitors confront each other in the marketplace. Among rivals, the challenge is to ensure competitive advantage by
  • minimizing threats, risks, and surprises
  • taking full advantage of opportunities
  • maximizing resources.
This may be achieved through
  • understanding strengths, weakness and options
  • understanding the competitive environment, including the competition
  • anticipating emerging or likely developments
  • taking into account uncertainties and chaos - the "fog of war."
In business settings, this involves knowing the industry, its dynamics and influencing factors and "getting into the heads" of competitors - in other words, understanding the battle landscape, gaining insights to how the opposition will behave in the boardroom and in the field, and being as prepared as possible for factors we can and cannot control.

Like military war games, business war games are exercises that anticipate activities under specific situations or conditions in order to help an organization devise strategies, develop courses of action, plan initiatives and test ideas. Companies often conduct war games when facing a new or high-stakes situation, decision or event; when they are seeking fresh ideas or perspectives, or when they want to build consensus, cohesion or focus in their strategy, planning or decision-making.

Games Companies Play
In its simplest form, a war game involves establishing two teams: one representing a competitor, client, market or other business factor and the other representing the "home" company, another competitor, client, market or business factor. Teams are formed around a question or issue, like a company's or its rival's impending product launch. In the first instance, one team representing the "home" company may take specific actions toward its product launch, testing them against their competitor's actions and reactions. As participants progress through the war game exercise, the "home" team and the "competitor" team may move through phases or rounds of actions and responses, exploring various perspectives, factors and courses of action.

Prior to engaging in a war game exercise, each team must be sufficiently briefed regarding the nature and purpose of the game, the rules of play, role(s) and assignment(s) for each participant. Participants should be supplied relevant research and analysis that will help inform their role-play. This may include company, unit, management and/or market profiles, recent actions taken, external influencing factors, etc. Each team begins the exercise using information or tools that are supplied to them; however, with each round, an opposing team or the facilitator may introduce new factors, tasks, or even surprises that each team needs to consider for its next course of action.

After each round, the game may pause for participants to analyze the outcomes of each phase. This continues until the objectives of the war game exercise are achieved. As the war game concludes, each team identifies likely strategies and actions that its company is likely to or should take, taking into account key information and intelligence gaps, and presents its findings to fellow participants and other relevant personnel. Teams should also outline key lessons regarding their companies and the war game exercise. Finally, the product of the war game effort should inform any formal strategy, plan(s), contingencies and/or courses of action.

War games can range widely in scope and complexity. Each exercise should be designed to accommodate an organization's specific situation. There are cases in which multiple teams of various types are employed, each representing a different competitor, your market(s), business issue(s) or other key factor(s). Given the significance of a war game exercise, the number and functions of participants, and the degree of planning, coordination and design required, it is vital to involve a knowledgeable and experienced coordinator and facilitator. Facilitators also ensure the integrity of the process, including the avoidance of assumptions, blind spots and other factors that may unduly affect the outcome.

In addition to facilitators, the war game needs leaders. Since war games often consider strategic or other key issues, and its results are intended to inform management's decisions and actions, these exercises are best conducted with the support and direct participation of senior managers, who often assume the roles of team leaders, and occasionally, umpires or referees. It is also ideal to involve the direct participation of an organization's war game sponsor. And just as military generals or field marshals rely on their officers and various experts or specialists in their planning or decision-making, the composition of business war game teams is critical to the success of the exercise. Teams comprise a mix of middle managers and key functional staff, who can offer a range of perspectives about the competitor and the specific issue(s) and factor(s) under examination.

A war game session may last from one to a few days, depending on the competitive/business issue(s), gaming model, resources and urgency of the situation. Likewise, preparation for a war game varies. Typically, a three-day war game takes roughly one month to prepare. This includes time for planning, defining the competitive issue(s), team construction, team briefings, research, preliminary analysis and materials processing. Costs for a war game can also vary, ranging from $20,000 to over $500,000. These fees can include research, analysis, game design and/or facilitation services, and are dependent on the complexity of the issue(s) involved and magnitude of the war game effort.

More than a Game
From the above discussion, we can see that war gaming can support an organization's strategy development, planning, and decision-making by helping to
  • lend clarity to a range of business issues
  • identify opportunities and ways to capitalize on them
  • avoid surprises
  • outline courses of action
  • determine the potential impact of specific developments, actions, and conditions
  • identify information or intelligence gaps.
In addition to offering these advantages, war gaming provides a number of auxiliary benefits to a company, its managers, and intelligence teams, such as the following.
  1. Help build competitive awareness throughout all units and levels of the organization.
  2. Develop a deeper understanding of the impact of roles, functions and actions across the organization. This can improve team building, coordination of efforts, and knowledge sharing.
  3. Enhance intelligence generation by more clearly defining intelligence needs, direction, and focus, as well as engaging more personnel in information collection other ways of participation.
Our ever evolving business battleground require continuous vigilance and efforts toward understanding the emerging and likely scenarios that involve our competitors, customers, markets, regulators, technology and other factors and influences. The war game is an effective tool for anticipating and managing a landscape that contains a host of situations, factors and potential outcomes. By understanding our business landscape and gaining more control over our environment, we can map more secure and efficient routes, develop contingencies for the inevitable shifts and detours, and gain necessary advantage for our organizations.

Author's Note: For further background on competitive intelligence, see Competitive Intelligence: A Practical Primer for Location Intelligence also by Cynthia Cheng Correia, Directions Magazine/Location Intelligence, February 21, 2006

Ten Steps of Business War Gaming
  1. Define competitive/market issue(s), related questions, scope and factors (controllable and uncontrollable) of the war game.
  2. Plan and coordinate: participants, teams, timeline, resources, budget, etc.
  3. Conduct competitive research for the war game issue: published source collection and human source collection.
  4. Conduct preliminary analysis based on research results.
  5. Pre-game team preparation: provide briefings, instructions, tutorials, assignments, and the research and analysis materials kit to participants.
  6. Conduct war game exercise(s): simulations of likely actions and reactions under specific scenarios and conditions.
  7. Draw conclusions to likely scenarios and outcomes and form recommendations.
  8. Devise formal strategy, plan(s), contingencies, next steps, etc. based on previous step.
  9. Debrief participants regarding the process: identify key lessons and ways to improve exercises.
  10. Identify additional intelligence efforts that are required (such as establishing a continuous war gaming process or an early warning system for your war game issue).


Published Thursday, August 17th, 2006

Written by Cynthia Cheng Correia



If you liked this article subscribe to our newsletter...stay informed on the latest geospatial technology

© 2016 Directions Media. All Rights Reserved.