Top managers often argue that Strategic Business Wargaming is a slightly old-fashioned tool from the late 90s, only applicable to very specific situations and with limited insights in overall market strategy. However, as current day-to-day business in an increasingly fast-moving world shows, managers are required to take decisions where uncertainty increases, time-pressure is high, budgets are limited and available human resources are scarce. We have experienced the Strategic Business Wargaming approach as a very powerful tool to support top managers’ strategic decision making processes:
- Even if Strategic Business Wargaming provides only a limited insight in overall strategy, it provides a lot more than no insight at all and it allows to derive generally valid strategic patterns out of given specific situations
- Strategic Business Wargaming definitely helps to find an answer to serious challenges which are or could become major threats to the whole company. In this situation it helps top managers to:
- focus on the real issue,
- bring competences and people in a common room,
- get the capability to solve the problem,
- find ways to convince their organization, that there is only one best solution for the challenge
- Due to the interactions between people with different capabilities and functions Strategic Business Wargaming assures that all participants act in concert to implement the commonly selected solution
And last but not least: top managers will definitively benefit from a transformational mindset created by Strategic Business Wargaming within the team for a long time.
Strategic Business Wargaming – understanding competitors’ reactions is key
Top managers dispose of a broad range of tools to evaluate business strategies today. They can be split into three situative segments: (1) tools to analyze situations (2) tools to project the future and (3) tools to validate specific situations. We have experienced that Strategic Business Wargaming fits best to deliver validated results in complex, highly dynamic and forward-looking issues. Which is basically what business today in our global, digitalized and fast moving world is all about. The main objective of Strategic Business Wargaming is to find out what strategy leads to the highest value for an organization based on the most valuable strategic options for its competitors. Even it state-of-the-art marketing and sales organizations today fully integrate the perspective of customers, suppliers and regulators, the additional value of Strategic Business Wargaming is to understand competitors’ reactions and subsequently understand threats, opportunities and strategic implications generated by a change in competitive dynamics. This is also where Strategic Business Wargaming differentiates from the regular strategy development process as it incorporates competitive behavior into own decision-making.
Methodology – how to simulate the best strategy scenario
Strategic Business Wargaming derives the best strategic option through so-called heat-maps integrating all major input factors: information about competitors, products, addressable markets and customer behavior. The as-is cost base, valid strategic levers like price, promotion, sales force and additional market data complements the input data for simulation. All simulations lead to a “best strategy”, to the definition of strategic breakpoints and to measures how to implement the strategy. It clearly shows the dependencies between the own strategy and the best strategies of the competitors.
Not only the result matters – team interaction and transformational impact is key!
On top of giving a logical path to strategic decisions, our experience shows that Strategic Business Wargaming helps to foster a common understanding for the strategic situation and related challenges and thus to build a sound basis for transformational initiatives. Based on our experience, we recommend a 4-step approach: The central part of the Strategic Business Wargaming approach is the workshop in step 3 which generally lasts 1,5 days. Organizations will build three teams with dedicated roles and tasks to fulfill:
- Market player team (own organization and every main competitor)
- Define product offerings (price, positioning, features and capacities)
- Picture the competitive dynamics
- Evaluate the value of the options
- Market team
- Judge offerings‘ attractiveness
- React towards competitors‘ product offerings and strategies
- Picture market dynamics
- Control team
- Structure and monitor wargame
- Invent external shocks and calculate implications, KPIs and financials, based on quantitative model developed
At the end of the process, the approach provides fundamental input for top managers: on the one hand clearly defined strategic options depending on strategic breakpoints derived from market dynamics and, on the other hand enabling actions to strengthen the organization’s capabilities to react. Strategic Business Wargaming leads top managers to a clear picture of how to act in uncertain strategic situations and to a trained management team able to react to changes in competitors‘ behaviors. The investment for this stays very limited both in human resources and time. Our experience shows that both the clear picture of strategic options and the trained management team are essential in the current fast moving business environment and lead to a sustainable competitive advantage. Burkhard Wagner, Senior Partner, Advancy Further information at www.advancy.de