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War games

PorBen Schneider - 23 / 12 / 2014

War games

When launching a new product or service on the market, or perhaps starting a new enterprise, one makes every effort to ensure that nothing is overlooked. The due market research is conducted to confirm consumer preferences and options are discussed in "brainstorming" sessions. Financial models are drawn up for the new project and, of course, a solid marketing plan. However, such launches are not always as auspicious as they might be and often end in disappointment.

Why do they go wrong? Why, if every step taught at business school is followed, do the majority of new enterprises falter and many fail? If the first reason that comes to your mind is "competition", you are not alone. When planning new launches most people underestimate the actions of their rivals. Humans are by nature optimistic and generally overconfident. Pressure to sustain revenue growth at firms can also often lead to error.

To avoid this lack of objectivity, companies need the right tools to help them make the right decisions.

One concept becoming increasingly prevalent within the strategic process are so-called "War Games". Companies choose work groups from the various units at their organization to compete against each other by simulating ideas, plans and actions that competitors might adopt. The teams battle to prevail in 3 key areas: The launch of a new product or service, developing plans to consolidate portfolios of new business lines that may be introduced in the medium term and, finally, in introduction strategies for new enterprises.

These cross-functional teams end up producing a series of proposals that not only help to predict and anticipate future strategies from competitors, but also to identify areas where a product might be improved and weaknesses that need to be corrected prior to launch.

The exercise also reveals any areas that might have been overlooked in the original plan or where executives were overly optimistic or confident. This experience helps to drive a process of continuous improvement that can only benefit future plans. When organizing "War Games", a study by the consultancy firm McKinsey recommends that companies ask themselves the following questions:

  • What concepts or ideas could drive our product or service out of the market in the next 3 years?
  • Will we be capable of generating value despite the reaction of our competitors, including once we have responded to their offensives?
  • What new versions of our product or service will be required to ensure that the attributes underpinning the same remain current?

“War Games” are a powerful tool closely linked to the field of innovation, and yet few companies make use of them. In a highly changeable and competitive environment, it is important that "War Games" be harnessed to ensure that we stay in the game.