Wargaming is one of the oldest simulation methods, dating back as far as the 17th century. It originated in conflict-games, which were used to prepare for unexpected developments in military confrontations. These so-called “wargames” were used to anticipate the reactions and moves of the opponent, and thus being able to plan more strategically and proactively.
How does business wargaming work?
Since the middle of the 20th century the wargaming concept has been used in an economic context in business games. The basic idea is to generate scenarios and anticipate reactions and results based on interdependencies in an environment with different players. Think “the art of war”, but interactive and connected to business.
Whoever manages to understand and anticipate the reactions triggered by one´s actions can be provoked in the counterpart will act in a more forward-looking, calculated and sustainable way. By trying out a variety of tactics, one can gather experience in a safe environment, which helps to avoid weak decisions in the future as well as helps one act more agile in response to the competition.
Within corporations, business wargames can help to approach complex situations in quickly changing (VUCA) environments. The economic and business challenges can be made more tangible using the simulated model, which helps to gather, analyze and process information and practice behaviors. It also allows to see how your strategy resists mayor disruptions and you can extract key learning on what you need to do to optimize the operationalization of your strategy.
The main difference to the more conventional business simulations is that in a wargame setting, participants can develop and put in action their own strategic planning and tactics created separately from the simulation but which are then built into the simulation. This allows for flexibility in terms of format, industry and subject and full flow to innovation and ideation in a 100% safe environment.
What is the best use for wargaming simulations?
This method is particularly useful to identify and understand strategic interdependencies in a company or other complex economic (business) environment. The idea behind this is to critically analyze business decisions related to their sustainability and effect on overall performance.
Where conventional business games are more operational, the business wargaming is highly strategic. It allows companies to try pricing-strategies, market entries, new product development as well as the potential effect of future disruptions of the industry and related reactions of the marketplace to name just a few application examples. It fosters a probabilistic approach to decision making in organizations, agility and resilience. It also helps to identify potential barriers to change and transformation and proactively set measure to avoid them.
How can wargaming be used most efficiently?
Business wargaming allows you to draft answers to questions such as what is the best way to position ourselves in the new market? How should we best anticipate the future of the industry? How can I collect data points in the future to optimize strategy setting?
Some application examples:
1. New strategic orientation: example from the automotive industry
This automotive client wanted to conduct wargaming training for strategy implementation. The focus of this workshop was the used-car market in China, which was a new market the company wanted to expand into.
The main objective of the workshop was to define and implement the new strategic orientation and then communicate it. The idea was to use the wargaming approach to “test” the strategy in the most realistic setting possible and then set clear action steps for implementation. It also allowed senior leaders to conduct a cross-cultural and cross-functional dynamic and interactive ideation workshop and extract key insights.
2. Understanding the Corporate Strategy: Household Goods
This production company of cleaning equipment and systems used a wargaming training developed for their senior leadership to generate a deep level understanding of the corporate strategy and link it to clear actions as well as help them to stay in alignment with the company goals.
This customized simulation allows managers to experience the strategy from different angles and internalize it. As it combines open and closed elements within the wargaming workshop, participants can try different strategic planning and execution options and come up with their own ideas. An additional effect was that participants feel an active part of the strategy setting with generates more engagement.
Wargaming workshops are a highly flexible, dynamic and engaging learning tool. They help to reduces risk and uncertainty and improve quality of strategy setting and implementation measurably.
