With the military heritage to business wargaming, there is a preconception that it is all about competitors and competitive intelligence. It isn’t. Knowing how your strategy is going to affect / be affected by your competitors is clearly vital. However, it is just as important to know how it will effect / be effected by wider factors such as suppliers, clients, the media, JV partners, unions, employees and the markets, to name but a few.
Certainly when I was a Royal Marines Officer and responsible for the planning of operations in Helmand Province in Afghanistan, we didn’t focus solely on our opponent when we were testing our plans, we also considered the communications infrastructure, legal issues, medical support, interoperability with coalition partners, the logistics supply chain, the local government & tribal structures and all the other factors that could ‘unpick’ what we wanted to achieve if we didn’t get them right. Our mantra was “The plan means nothing, its the planning that counts”.
So if it is designed correctly, and we make sure we include the sort of questions posed in Robert Simons’ article in HBR in 2010, we can use business wargames to gain clarity about our strategy being fit for purpose (and unexpected events) as well as to alleviate risk, in a wide range of situations. These can include:
Using Wargaming as precursor analysis of M&A helps to identify areas of risk, incompatibility, cultural/ethos differences, as well as opportunities and strengths. Traditional M&A analysis revolves around the operational benefits and the likely pitfalls in terms of staff numbers, duplication of departments etc. A wargame takes this much further; it starts to get both sides to debate what they see the future merged organisation looking and feeling like and how it will function. It allows a ‘safe environment’ in which the nascent merged organisation can simulate its future operating model, pro-actively identifying where the cracks appear when it comes under pressure.
Business Wargaming can be a really vital addition to the due diligence process behind an investment. Whether it be for a pensions fund or a private investor, foresight and predicting future performance are a key question behind any investment. If a wargame is conducted on the company or product to be invested in, it adds considerable depth to the investor’s understanding of how it might perform, how robust it is, where the risks are and how significant they are. It places the investment plan under a degree of pressure and goes beyond looking at the numbers on a financial forecast. It gets under the skin of the organisation being invested in and checks that it is as good as it looks on paper.
3. Strategy Testing and Options Analysis
Chris Hafner, in his excellent article for Strategy Magazine, says how he took the opportunity of his role as Conference Chair of the Chief Strategy Officer Summit in 2014 in London, to survey the directors, VPs and chief strategy officers in attendance. Only 13% of the 132 respondents felt they achieved 80% or more of the expected value of their strategic initiatives. One key reason for this he identifies as being a lack of communication and engagement between staff; or “failing to adequately engage in dialogue and feedback so as to capture insights which might improve strategy execution.” This is where business wargames come into their own, as they facilitate an exchange of ideas, debate and dialogue between two sides, one who represent the ‘for’ side of the strategy and one who represent ‘critical friends’. This exposes the strategy to challenge, identifies its flaws & opportunities that hadn’t been considered, and the inherent risks within it. It can also be used to do comparative analysis between strategic choices, to identify which is best suited to the organisation’s needs.
4. Change Management Tool
In much the same way, a business wargame can be used to sow the seeds of successful change. A business wargame can take the people most likely to be affected by a change and make them the ‘red team’, i.e. the team that will be posing a challenge to it. This allows them to feel involved, valued and engaged. They, therefore, are more open to why the change needs to happen, how it will happen and feel they have had a part to play in its design. They, in turn, become champions and agents of change within the organization, increasing the chances of success.
5. Team Building Exercise
A business wargame doesn’t just put a plan or strategy through its paces, it also can be a superb way of getting a team to defend its ideas and concepts and bring them into a more coherent entity. This is team building writ large, without going to an off-site day where the problem is using barrels and ropes to cross ‘bottomless chasms’. Wargaming generates team building and bonds people tighter through simulated pressure in their day-to-day environment, which is so much more valuable.
6. Product Launches / Start Ups
Business wargames aren’t just about big issues and big companies; launches of new products or new businesses are just as much in need of increased foresight. Companies expend significant effort on researching the markets, competitors and customer desires ahead of creating something new, but this only takes into account current trends and existing information. A business wargame allows a simulation of the future, and helps to identify the points at which the product or business is likely to face its pinch points and major challenges. This in turn avoids crises developing and facilitates better risk mitigation measures to be developed.
So don’t assume that business wargames are a one-trick pony. You can call them stress tests, health checks, scenario planning; the choice is yours. At the end of the day, what you call it doesn’t really matter, but what does matter is that you think of using it to support your organisation in business-critical situations.
 ‘Bridging the Gap’, Chris Hafner, Strategy Magazine, Issue 33, June 2015