A business War Game allows organizations to test their beliefs and assumptions about their business environment. The process allows organizations to build a better understanding of industry issues and helps them identify emerging opportunities and threats. It is a tool that is of particular use when the competitive environment is undergoing a process of change, as it allows decision makers to consider how different organizations can react to the change, and each other.
The objective of a War Game should be to improve corporate planning processes, and use the lessons learned from the War Game in business strategy.
War Games typically involve a number of teams with each representing different “players” operating in the industry environment. Generally, but depending on the actual purpose and scope of the game, these teams represent different competitors. However they can also include key customers, or other organizations such as regulatory bodies.
How to carry out a War Game
There are a number of ways of carrying out a war game – and different practitioners will suggest various approaches and methodologies. However generally, the actual War Game process involves a number of rounds. Each round represents a different time period, which depends on the exact focus for the game. The time period will usually be from several months to one to two years. Shorter periods are less common, as the decisions taken will become tactical, rather than strategic in nature. Longer periods are also uncommon, as the uncertainty factors mean that War Gaming gives less direction. For such longer-term cases, scenario planning often provides a safer approach.
One approach to war gaming is to set up a computer simulation, mapping what is believed to be the business situation. At the end of each round, the computer scores each team giving financial and market share parameters for the following round. Although these programs allow participants to play out various scenarios, they are artificial in that they will not allow participants to fully play out the real situation operating in the industry. As a result, using such simulations are unlikely to accurately reflect the real world and their main benefits are as training exercises in business strategy – allowing players to model the results of particular plans based on probabilities. Unfortunately, the real world doesn’t always work according to probability – and often events and actions deemed unlikely do occur.
From a competitive intelligence perspective, I believe that computer simulations hold little value. Rather, a key requirement for a successful war game is information on the organizations being modeled. Prior to the start of the game each team should be thoroughly briefed on the available knowledge on each organization. Typically, teams will then meet independently, in workshop sessions, and use the briefing information to plan what they would do during the first time period, playing the role of their chosen or allocated organization.
Following the completion of the round, players then announce their strategies and plans, leading to the second round. During the second round the teams take on board the different organizations’ plans and modify their own for the following period. This process then continues for the agreed number of rounds. During each round, players need to anticipate the moves of other players, develop their own strategies, decide on what resources and funding are needed (and ensure that these exist and are allocated as necessary in their plans). Depending on the rules agreed prior to the start of the game, players may sometimes also communicate with other teams – for example to agree a joint-venture or merger. Following the actual game period, the participants then discuss the situation and the lessons learned.
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. This is important as otherwise the War Game can be too narrow in focus – missing out key operational or financial considerations, etc. in the planning stages.
- A facilitator to ensure the smooth running of the event and to communicate information. The facilitator may also add additional information that changes the business environment, and forces teams to modify plans. An independent facilitator can, additionally act as an umpire to adjudicate in disputes between teams, and to suggest which teams’ strategies are most likely to win out in the given situations. There is sometimes also an “umpire team” that assesses each team’s moves and determines what the outcomes would probably be in real-life had the organizations acted as they did in the game rounds. An external facilitator is often used to ensure an objective, non-company perspective. Avoiding subjective company viewpoints is essential as otherwise the War Game could end up reinforcing, rather than removing, corporate blind spots.
- Adequate time and space for discussion – a minimum of 1 day would be required for a basic War Game – and more sophisticated and wide-reaching games require longer periods.
War game benefits
Depending on the purposes and scope of the War Game a number of benefits can be expected:
