Battle for Value: Wargaming for Business, Non-Profit, and Government Strategy Development

Battle for Value: Wargaming for Business, Non-Profit, and Government Strategy Development

Micah May (New York Public Library, USA) and Timothy Smith (Competitive Simulations, Inc., USA)
DOI: 10.4018/978-1-4666-0149-9.ch029

Abstract

A wargame is competitive simulation used to build and test strategy. Wargames have been used by military leaders throughout history, notably by the Persians and Napoleon (Figure 1), and more recently by the U.S. when planning its invasion of Iraq. They have also been used effectively by business executives, leaders in government agencies, and even non-profits. They can be powerful tools to generate creative ideas, surface and resolve taboo issues, anticipate competitive responses, identify and prioritize stakeholder needs, assess likely market acceptance of a product or service, or to build and test a strategic plan. In following chapter, the authors (1) define what a wargame is and briefly introduce the reader to the concept and history of wargaming, (2) explain why wargaming is valuable and when it can be used most fruitfully, and finally (3) describe how to run a wargame, spanning from the relatively simple to the more complex. As Karl Von Clausewitz so eloquently put it, “everything in war is simple; but the simplest thing is difficult...”
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I. Introduction: What Wargaming Is

Figure 1.

Figurines used by Napoleon in his wargames (© Victrix Limted. Used with permission)

A wargame is a competitive time-based simulation in which participants “playing” on teams develop and present competing strategies. A quantitative model, panel of judges or a combination of both evaluates the competitor's proposed strategies. During rounds of play the teams get feedback and eventually win or lose, based on their performance, relative to the other teams.

Military commanders from the Persian Empire to the present day Pentagon have used wargaming as a tool for military planning. Military historians report that Napoleon was obsessed with assessing the battlefield through the eyes of opposing generals and often attribute his success to clever analysis of the terrain (Duggan, 2002). In recent times, before the U.S. invasion of Iraq in 2003, the Pentagon conducted a number of wargaming exercises. They predicted that the U.S. could easily win on the battlefield but would struggle to create lasting peace. They also anticipated details like the damage to infrastructure and the burgeoning influence of Iran to fill the political vacuum.

Beginning in the early 1970’s, business leaders began to adapt wargaming techniques developed for the battlefield to help with strategic planning. Dutch Shell was the first of the Fortune 500 companies to seriously invest in gaming to support planning. Shell used wargames to, amongst other things, explore alternative pricing models and avoid costly price wars. Today a large number of Fortune 500 Companies use the wargaming process to develop and test elements of their strategies. Participants take on the roles of the regulatory bodies, customer segments and competitors in teams and develop competing strategies. The lessons learned from the game are then incorporated into the institution's planning process.

Below we describe one successful wargame. As with all the examples in this chapter, the names and confidential content have been changed, but it is based on a real event.

Figure 2.

Tips for wargaming success (© Victrix Limted. Used with permission)

Key Terms in this Chapter

Stakeholders: Those individuals or groups that have a right to expect the entity to meet certain goals, or behave in a specified manner. If a stakeholder is not satisfied with the entity's strategic direction, they can, and often do, make things hard on the executive team.

Competitor Teams: The Sponsors will select what they feel are the most relevant competitors to include in the game. Each team will be made up of five or six Participants, who will do their best to assimilate the culture and strategic direction of the company they are representing.

Market Segmentation: Segmentation offers a way to look at your customers, grouping them by demographic, geographic, psychographic, or other means. Often a company is successful when they view their customers (or potential customers) through a different lens.

Sponsors: The Sponsors are the individuals not only responsible for funding the game and setting the expectations; they are also the ones that must be satisfied that the game met their objectives. Facilitators should be in constant contact with the Sponsors throughout the exercise to ensure they are pleased with the direction of the game.

Competitor Profile: A summary document prepared before the wargame to help prepare the Participants to get into the role of the team they are representing. It contains a brief overview of the company, as well as insights on their strategic direction, a SWOT analysis, and recent press releases.

Rules of Engagement: The parameters that set the boundaries for the game, letting the teams know what they will be allowed to do strategically throughout the course of the exercise.

Segmentation Scheme: A process used in marketing, whereby customers are separated and grouped by some differentiating factor (geographic, demographic, psychographic, etc.) so that the user is able to target them with relevant messaging.

Judges Panel: The Judges Panel represents the external market forces that impact a company's success. They will take on the role of the customer, as well as any other market participant deemed relevant by the Sponsors. They will evaluate the strategies proposed by the teams and decide how effective they will be, often with the help of a model.

Stakeholder Analysis: A rigorous assessment of all individuals or groups that depend on, or can impact the success of the organization to determine their needs and wants, and how well the organization is doing in addressing these needs and wants, relative to their competitors.

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