Monday, February 14, 2011

The Power of War Games

Leonard Fuld, author of The Secret Language of Competitive Intelligence, has a column on Business Week's website today regarding the power of war games for companies. As Fuld writes, "A successful war game not only removes blind spots about the present but also helps anticipate competitive surprises and prepare strategic options should any of those surprises occur."

How do they work? In a business "war game" companies create multiple teams, each representing a competitor or potential entrant into their industry. Then, the teams develop strategic alternatives, trying to generate ideas for how rivals might act in the near future. Then, the company can put some people to work thinking about how the firm might respond to these various moves. In a war game, you ask managers to step into the shoes of the leaders of rival firms. You want them to think and act like them. To the extent possible, you don't simply want a team to think about a rival as a monolithic organization. You want them to really get into the heads of the competitor's executives. What do they care about, and what drives them? What are their backgrounds and how might that influence their future strategies?

You need to be creative, considering multiple scenarios for the future... not just one possible outcome. While the idea may be simple, few firms actually engage in this type of game in a serious way. I've found that the firms that commit to these kinds of role reversal exercises find great benefit in them.

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