Napoleon, the man who introduced many ‘disruptive innovations' to the business of warfare, once said: “If I always appear prepared, it is because before entering on an undertaking, I have meditated long and have foreseen what may occur. It is not genius which reveals to me suddenly and secretly what I should do in circumstances unexpected by others; it is thought and preparation.”

Warfare has become far more complex since the days of Napoleon. However, the value of thought and preparation has not diminished, since things rarely turn out as planned in war. To help military leaders prepare for this inevitable ebb and flow of events in the battlefield, and provide a substitute for Napoleon's brains, war-gaming is a technique that has been perfected over the last 200 years. Generals do not posses the luxury of a soft-launch or test-marketing through a mini-war to assess the validity of their strategy before launching a full-scale war. War gaming helps them test and refine their strategies and learn, without having to expend hundreds of thousands of lives.

Business Wargames

"War game" is a simple translation of the German term "kriegspiel." The first modern war game was invented in 1811 by Baron von Reisswitz, a Prussian noble. He constructed a sand table modelled on actual terrain. Military units were represented by blocks. Opposing force teams would give their orders to an umpire who was required to move the troops on this sand model, resolve combat and tell the two sides what their forces would actually be able to do. To determine the outcome of combat the umpire was provided with calculations listing a number of results based on range and other factors. The roll of dice determined the outcome, in order to depict the uncertainties of the battlefield!

In modern times, the efficacy of war games has been proven often, emphatically. The US Pacific commander during World War II Admiral Chester W. Nimitz once said: "The war with Japan had been reenacted in the game rooms [of the US Naval War College] by so many people and in so many different ways that nothing happened during the war that was a surprise -- absolutely nothing except the kamikazis towards the end of the war."

War gaming, also called competitive simulation by some, has evolved considerably as a strategy planning technique since the days of rolling dice. Today, it is a sophisticated tool, which the business world has also embraced whole-heartedly because it helps leaders test their strategies, assumptions and prepare executives for successfully handling the implementation of their strategies. Mark Fuller, the CEO & co-founder along with strategy guru Michael Porter of the strategy consulting firm Monitor Company, says: “Business is just coming to recognise what the military has known for 150 years -- competitive simulation allows managers at all levels to practice converting informed choice into timely action. From such practice comes faster decisions, crisper execution, and better integration. The essence of learning is doing; the essence of doing is teamwork.” Incidentally, the first article on adopting war gaming techniques for developing business strategy appeared in the Harvard Business Review in 1958!

In a business war game, teams of the senior managers of a company play their own company, their competitors and the marketplace. A control team plays adjudicator and other entities that affect the industry. The exercise simulates a set of business conditions and offers lessons and guidance for the real thing. During the game, teams develop goals and strategies, decide on investments, marketing plans, etc. Market reaction is assessed by the market team and market shares awarded accordingly. Everything that can happen in the real world is permitted, including deregulation/regulation, M&As, alliances, even natural disasters. The duration of these games varies. At Anoova Consulting, we work with organisations to develop business wargames ranging from introductory one-day games to full-blown competitive games. The games extend up to several days to help senior executives look at their strategy from different perspectives, and develop a better understanding of the competitive dynamics of their industry.

Testing Assumptions

One of the most important benefits of using wargames is that they help test the assumptions underlying these plans. The chairman of Bell Atlantic, Raymond W. James expressed his experiences with this approach to strategy formulation very eloquently: “Traditional planning models lock managers into assumptions that they find difficult to change... For example, we asked ourselves several years ago why telephone companies couldn't own the content transmitted over our networks -- from directory listings to digitised movies -- when our competitors, most notably the cable companies, could. Left unchallenged, this outdated legalism would have severely hampered our ability to compete. So we decided to play the ‘larger game,' arguing that the ban on selling our own content on our networks violated our First Amendment rights. We won and changed the scope of the competitive game for telephone companies forever.

“This fundamental redefinition of our business would not have been possible unless we had a systematic way of reviewing the initial conditions that shape our destiny. This willingness to see ourselves afresh has resulted in a large number of strategic initiatives, from joint ventures to mergers to new-business development that would have been unheard of in a traditional planning environment…we've put ourselves in a position to play the game -- which, ultimately, is what successful strategic planning is all about.”

Learning from mistakes

War games also play another very important role beyond surfacing assumptions and preparing executives for handling the unexpected. They help you stress test your strategy. A war game is the best place to make mistakes. These mistakes are inexpensive. Executives can learn from them and apply the lessons in the real world. A war game of a specific strategy, or a competitive move helps you test the impact, implications, and most importantly, the unintended consequences of that strategy before going to market. Like Napoleon, thought and preparation ensure far better results than from fielding an untested strategy.

Sun Tzu opined in his ‘Art of War', “The wise general in his deliberations must consider both favourable and unfavourable factors. By taking into account the favourable factors, he makes the plan feasible; by taking into account the unfavourable, he may resolve the difficulties.”

Wargaming your strategy before implementation helps you test both these factors. Though a cliché, plans are nothing; planning is everything. We can predict with certainty that any plan will not play out as expected. Wargaming, by preparing executives for the unplanned, helps them handle the unexpected and unanticipated events as they unfold. It helps the strategies of wise corporate generals survive the uncertainties of the real world.