AICISM

BUSINESS WARGAMING
(Dynamic Competitive Simulation)
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Why do Companies fail.

• Unable or unwilling to confront change and

uncertainty.
• Failure to pressure test global and regional strategies.

• Don’t develop and test plans to go after existing

competitors or defend against rising threats.

• Fail to “Insulate” new launches.

• Fail to Identify gaps in market knowledge, and create a

defensible business case.
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Current methods of creating strategy do not

work due:
•Discontinuities in external environment
•Strategists Disconnect with Market or
competitors (NIH / Blind spot syndrome)
•Resource based Planning rather than out to
in approach
•Few forums for Idea generation and brain
storming
3
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WHY BUSINESS WARGAMING?

• Better understand the forces at work in the

marketplace and how they affect the business.
• Expose top managers to decision making in
dynamic environment with zero risk due and
failure.
• Confidence comes from looking forward and
responding to the potential discontinuities and
surprises a company might face in the future
marketplace.
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WARGAMING IS A POWERFUL,RISK-FREE
PROCESS FOR THINKING ABOUT THE
FUTURE
• Players are likely to detect weaknesses or gaps
in their own strategy
• Players appreciate possible competitor /
market reactions
• Players think creatively about the future
• Players gain trust into the strategic plan
• Understand and apply flexibility and
manoeuver to reduce risk
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Approach:
•In a corporate war game, senior managers play their own
company, a select group of their competitors, the marketplace
and other forces (eg Govt, facilitators, etc.)
•The game begins with a prepared set of business conditions
(setting) and, anything that can happen in the real world,
including mergers & acquisitions and natural disasters.
•Specific real world conditions, strongly competitive market,
unpredictability are all injected during the game.
•When the dust has settled, managers look back on these
simulations as one of the most challenging and stimulating
exercises of their careers.
 WAR GAME AICISM

• FORMAL PREREQUISITES FOR A WAR GAME

– You need to make a decision.
– There are external third parties which affect the success
of the decision. You do not have direct intelligence on
their intended reactions, nor plans.
– There is a cost involved if your decision is wrong.

• INFORMAL PRE-REQUISITES FOR A WAR GAME

– Management allows for the possibility of plans to go
wrong and is willing to make changes to strategy.
– Management allows a free exchange of information in a
game.
 WAR GAME AICISM

• WHICH PLANS CALL FOR WAR GAMING?

– Meeting a change in market conditions (so-called
Landscape games).
– Launching a new product or service.
– Entering a new market.
– Increasing share of a product/service.
– Reviving a brand.
– Defending against a new competitor or against a
growing threat of lower cost substitutes to your
product/ service
 WAR GAME AICISM

• TYPES OF WAR GAMES

– Landscape games (examine the competitive landscape).
– Test games (test an already developed strategy).

Landscape Games Address Test Games Address

What are the options for us, the What are the possible reactions to our
competition and the others in an open plans.
ended situation

How can we address these issues What should we do to make our plans
better

• LIMITATION
– Focussed on one industry.
– Focussed on one player at a time.
 WAR GAME AICISM

• THE 7 TESTS OF EFFECTIVE WAR GAMING

– Realistic
– Empowering
– Accessible
– Lots of fun
– Inexpensive
– Simple
– Transparent
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SITUATIONS WHERE WARGAMING CAN BE

EFFECTIVE:

• Simulations are usually most effective

when 4 conditions hold in the real world.
1) Industry in question has a competitive dynamic
2) Market reaction is partly or wholly unpredictable because of rapid
change
3) The validity of the answer will be greatly enhanced if the problem is
looked at dynamically over time
4) Simulations are the only viable way of gaining insights when there are
too many unknowns to be amenable to a straightforward, quantitative
solution
 WHAT DO I TAKE AWAY AICISM

FROM WARGAMING?
• Although every simulation is different, there are a few things
that a company could expect to take away from the
experience.
• View of the world will change
• Implicit and explicit assumptions
• A simulation will also give you a view of how markets and
competitors might evolve and, more important, an
understanding of the drivers of that evolution
• It gives companies an opportunity to see "what would happen
if we did X..." This allows both for testing of our own ideas and
seeing how competitors might react to particular situations
• It is not meant to be predictive.
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ACTIONS DURING EACH

ROUND OF PLAY
• During each round, players need to:

– anticipate the moves of other players.

– develop their own strategies.
– decide on what resources and funding are needed.
– Ensure that these exist and are allocated as necessary
in their plans.
 Business and Competitive Analysis
Process for conducting a business war game AICISM

Is a war game
right for you? Yes What do you want
E.g., explore a out of it?
complex problem,
test a plan, team
building Tailored
Team building plus
market specific strategy business war
information game

Start the design Define the

process. Select a objectives and
design team to meet scope of your
assign tasks and set war game.
a schedule.

Gather information Present pre-game

Walk through the
from internal and briefing, e.g.,
game setup to check
external sources, e.g., introduce concepts
all resources are
prepare information and skills to player.
present and
relevant to each of Present information
working.
the teams to play. relevant to role.

Debrief players, e.g., PLAY THE

discuss insights gained GAME
PUT THE RESULTS
TO PRACTICAL USE and compile report
 REQUIREMENTS FOR SUCCESSAICISM
Requirements for Success
• Successful war games require a number of features:
– Considerable information on each of the organizations being
examined.
– Teams with a wide perspective, and members with a variety
of experiences - sales, marketing, general management,
operations, finance, etc.
– A facilitator to ensure the smooth running of the event and
to communicate information.
– An umpire team
– An external facilitator to ensure an objective, non-company
perspective.
– Adequate time and space for discussion
 WARGAME BENEFITS AICISM

1. A full understanding of the current situation, opportunities,

threats and issues that may arise in the short-medium terms,
both external and internal.
2. Recommendations and suggestions for future actions - with
these being tested during the game.
3. The identification of corporate blind-spots (obsolete
assumptions; ineffective practices; wishful thinking) in both the
organization playing the game, and those being examined: this
can lead to the identification of particular vulnerabilities and
proactive strategies that can protect or take advantage of the
weaknesses.
4. The identification of missing intelligence on the market and
business environment.
5. Improved teamwork and understanding between decision-
makers in different functional areas.
6. Anticipation and awareness of how the market may change over
the short-medium term-which can lead to major cost savings,
through better planned responses to both threats and emerging
opportunities.
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Levels of Business Wargames

• Level A – Usually a half to a full day in duration – usually aimed at

introducing the concept and process of wargaming before a higher level
wargame. Will often be based on a generic situation.
• Level B – Typically two days in duration – aimed at raising awareness of
issues such as changing markets, or new forms of competition. It is
especially appropriate prior to major new planning initiatives.
• Level C – Usually two to four days in duration – aimed at more rigorous
analysis of plans or situations. It is frequently used to “shake down” a
preliminary plan. It requires much more preparation than a Level A or B
wargame.
• Level D – Typical three to five days in duration – designed to conduct a
very rigorous review of a plan to identify its potential weaknesses or to
improve its deployment. It requires a very high level of preparation.
 Development of the Portable Audio AICISM

Market
Recruiting Game at top business schools
(The CEO Challenge)
Key Questions:
•How will the market for portable audio devices
develop?
•Can Apple defend expand it‘s dominant market
position?
•What will the devices of the future look like?
 KEY LEARNINGS AICISM

• Apple will be able to successfully and

profitably defend its position.
• The biggest threat for Apple is not coming
from portable audio device manufacturers,
but mobile phone manufacturers.
• Believed-to-be-dead brands will be
reactivated; e.g. Sony Ericsson with the
new-old "Walkman“ logo
 Why companies don’t learn from AICISM

war games ?
• Some misjudge when they are appropriate.
• Some foul up the game’s design by not
including the right participants.
• Rely on standardized game design
software.
• Apply to operational problems the same
approach they previously used for strategic
or organizational ones.
 How can war games help with the AICISM

problems ?
• Uncertainty is the sweet spot for games. When
no amount of analysis will provide the right
answer, the results of gaming can shed valuable
light on the range of possibilities that executives
should be considering.
• There should be a clear way of representing the
most relevant players.
• Scenario planning can help with decision
making if there is too much uncertainty.
• Be wary of the argument that war games are
primarily about generating new ideas. So idea
generation workshops can help in this.
 designers and players of game AICISM

The choice of who will design and play the

game depends on the game’s objective-
TACTICAL or STRATEGIC.

• TACTICAL GAMES- They will have detailed

moves and evaluation criteria and are
relatively straightforward. Leaders with deep
expertise and responsibility for implementing
the decisions are critical sources of input.
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• STRATEGIC GAMES – It requires much

broader interaction. It ensures that the
game wasn’t influenced by the hypotheses
of its designers, like, asking all the
executives who would play it and which
trends, scenarios, and decisions should be
tested.
 No. of players AICISM

• TACTICAL- Relatively small set of participants.

• STRATEGIC – Large number of participants.
• ORGANISATIONAL – Much wider cast in which
the objective is to get people on board for a
strategic move.
In a game in which the goal is organizational
alignment around a strategic decision,
leaders of all functions that will be involved
in its execution can be included. Also
frontline managers, product designers, and
account managers can also be included,
since they can raise different viewpoints
during the game and disseminate the
lessons to colleagues afterward.
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• A more diverse set of participants also

creates valuable opportunities to broaden
their understanding of the industry.
 How often the game should be AICISM

played ?
It is usually pointless to run a game
repeatedly to test the same uncertainties with
the same participants.

• However it can be beneficial when you want

to bring along people who didn’t experience
the first game.
• Repeating games also can be useful when
conditions are changing. If competitors or
technologies have evolved.
 Repeating same games AICISM

• Tactical games like those for pricing

negotiations may bear repeating as frequently
as every three or four months, with the same set
of players and slight modifications to reflect
changes in the market.
• You can however, run the same set of players
through a game repeatedly and rapidly to
practice for a critical upcoming test.
• The participants can replay the game several
times in one day, to reflected on the results, and
repeat the exercise the following week so as to
know the improvement between the first and the
last sessions.
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• With this the players can find out the

uncovered areas where they can stand
firm.
• They also become more confident and
ready to flex their muscles in real
negotiations with the provider.