“Business wargaming”: simulations guide crucial strategy decisions

Abstract

“Business wargaming” is a role‐playing simulation of a dynamic business situation that involves a series of teams, each assigned to assume the identity of an entity with a stake in the situation. The process steps for wargaming, important lessons to follow, and a case study are all presented in this article. Wargames offer unique benefits at two points in an organization’s strategic planning process: (1) at its outset, wargames are helpful to convert data and information (about markets, channels, competitors, etc.) into actionable intelligence for subsequent planning; (2) after a basic plan is developed, a wargame can test the plan to ensure it is robust enough to succeed in any realistic combination of events or actions. Attributes of a business wargame: (1) it involves intense competition among five to ten teams, each representing a distinct stakeholder (such as the market, key customers, suppliers, partners, competitors, channels, regulators); (2) the team interact based both on quantitative and qualitative information. Through the use of role playing, cultural issues, rivalries and other subjective factors guide development and assessment of strategies; (3) the wargame process forces a rigorous exam of a situation from multiple perspectives. The various points of view (some hostile) allow the company to recognize opportunities and threats otherwise not noticed using just an “inside‐out” approach; and (4) the gaming allows a broad range of ideas to be developed while the teams aggressively compete to outsmart each other. The time, cost, and effort in preparing a major wargame are spelled out. The case illustrates the potential pay‐off in situations where the wargame makes strategic choices apparent.