Deeper Into Business War Gaming and How It Transforms Strategies.
Episode 3: Transforming your strategies with War Gaming
A deeper dive into war gaming and how years of trying to transform an organization can happen in a single day.
LISTEN TO PROACTIVE'S EPISODE #3 ON A DEEPER DIVE INTO BUSINESS WAR GAMES
Staging a War Game Yourself
Organizations can definitely stage their own war games, but there’s a good way to approach building that capability to ensure success and eliminate the risk of a first-try failure which often sours companies on the power of the exercise.
A big challenge to address is the time that’s required to run a full event from start to finish along with the type of exercises that elicit productive war games like Four Corners Analysis or Strategic SWOTs or Business Model Canvases. War games also find the greatest success with a facilitator with strong communication skills along with a grasp of the topic and the ability to expertly control the room.
Organizations that have somebody walk them through the process at least one time get a feel for the process much quicker when they don’t have to figure everything out themselves.
It's a skill that can be learned and you likely won't be good at it the first time. With coaching and guidance, you can observe and then do it along side an expert, gaining feedback and corrective understanding. Companies want to be careful in getting their first war game off the ground successfully. Most almost never do another again if the first attempt falters or others in the organization lose faith.
War games that produce valued experiences will generate a positive buzz and create a demand in people to want to be involved in future games.
Meeting Challenges Before A War Game
The best way to avoid challenges you might face in a war game is in the pre-game design. Look at the personalities involved and focus on those that might be troublesome. Consider for example a brand leader who is really rigid about the whole concept: "I've been in the industry 30 years. What am I gonna learn new in this thing". That’s an opportunity to put them on the competitive team. That forces them to look at their own company with a different lens and a different way of thinking for half a day and probably something they've never done their entire career. How often do you ever get to sit in a skin for a day and think like your competitor?
Think about the questions in the pre-planning phase and potential roadblocks and seek those folks that will challenge and push because that's actually a benefit in a war game when leveraged correctly.
Business War Game Exercises
One is a four corners analysis by Michael Porter. Many may have heard of a four corner analysis but few have really done one.
A four corner analysis assess a company’s drivers, strategies, management assumptions, and capabilities. Take the example of a war game done with a trucking organization. What's really driving this company? Why are they doing what they're doing? Do they wanna be number one? Do they wanna be profitable? What's driving their behavior because what's driving one company is different than what's driving your company. It changes the whole outlook of why they behave the way they do and then you start looking at the strategies and applying Michael's mindset about what strategy is.
Micheal Porter asks what's our unique positioning? How are we going to gain an advantage and how are we going to sustain that advantage over time? By understanding strategy you start to understand competitive intent and then what management is assuming about the market. About the competition. About growth. About new entrants and then finally their capabilities? So in this trucking war game exercise they finally hit upon something, "I don't understand how this trucking company has this unique strategy while we're clobbering them." And then they came to realize, "Wait a second. This is a Japanese-based organization so they don't have a three-year plan or a five-year plan. They have a 20, 25-year plan. The culture is different." And so they realized the competitor was willing to do things now that might not be winning the market share because they're more concerned about years 8, 10 and 12.
Then we started looking at what the competitor is saying its strategy is in the four corner analysis along with their capabilities and discover, "they don't even have the capability to deliver on what they say they're gonna do." That leads to considerations of "are they going to buy, partner or build the capability that they need?" That helps set the indicators of what to watch for to see if they are moving toward a particular direction.
Another tool is strategic SWOTs. Strengths, weakness, opportunities or threats but not a traditional SWOT, but one that looks at the intersections between what are the strategies to leverage the strength of an organization to cease a particular opportunity and the intersection of how is a company uses its strengths to blunt a threat. It's a different conversation that can lead to different types of scenario exercises, moves and counter moves, force field analysis, and use of business model canvases to understand how do we create, deliver, and capture value inside of an organization?
CASE STUDY: a snack food entering new markets
An organization is introducing a new snack food in a unique way where it can be sold in two different isles of the grocery store. It was outside of their normal product categories which meant a whole new set of competitors and they need to understand the mindset of these new companies they were now going to be facing.
Through the exercises, not only did they come to better understand how much of an assault back they were going to face after market entrance but the war game allowed them to think of the moves that the organization would take and in return how to prepare counter moves. They changed some of the marketing efforts and even re-discussed their pricing. They went back and revisited some of the strategy, made some shifts and since then they had an incredibly successful launch.
Case Study: Facing Digital Disruption
A very large retail organization became concerned with their digital strategy. They are a brick and mortar facing a lot of pain and needed to better understand what's going on in their space. Many times, you’ll have old school thinkers where an exercise like this helps wake up their perspective – a little shock and awe. It became clear they didn’t have a strong digital strategy nor the resources and approaches to be able to win the market share right now and even though things have been okay for their business, there’s no growth. In fact they were getting ready to die unless they change some things and were able to engage in a series of exercises where people were very candid and real in talking about the specific challenges. The war game helped identify blind spots, allowed them map out new sets of strategies, and create a timeline and approach that ultimately rolled up to executive leadership and involved a lot of shifts and changes. They achieved buy-in and actually started moving forward and are now stabilized as an organization.
Case Study: Foreign Competitors
A multi-billion dollar company in the chemicals market space is facing real challenges with the production of a specialty chemical and whether or not it will be produced in China. A scenario planning session ultimately got them to understand that if the China government or other resources start owning entities that produce this unique and rather rare chemical or ingredient, what would that mean to us? What would a cheaper, globally distributed version of our product from that region of the world do to us? A war game helped them think about what they needed to start doing to prepare. How could they get out in front?
Fearing the wrong thing.
It happens all the time. Organziations think a particular competitor is really their main thorn when in reality through the war game there might be some other non-traditional competitor that just happens to have certain capabilities that if they were to turn it on or partner with somebody they could disrupt the market space. It’s focusing on competitor A and then realizing through the exercises that if competitor B really wanted to come after the market and because they have the resources, global footprint and established customers, they could easily become a new threat. The attention can shift. Signals can be monitored in the market that would tell us when they might do that. Maybe competitor A isn't as much of an issue as we thought. We have to start watching this other company as they did just acquire somebody in our space. Is that the first sign that they're coming after us?"
There's often a wake-up call during war games that without the event would have never really happened. There may be some side water cooler discussions but not with the decision makers in the room hearing it.
Discovering Hidden Information
This happens in a lot of company's. It’s not easy developing a culture that enables an truthful dialog. Things don’t get said or escalated and pockets of groups hold information until a safe environment and a forum with ground rules is established. Forward-thinking senior leaders will come into war games and say, "we want you to be incredibly candid. That's why I won't be in the room. I want you to say what you wanna say. If you think things could be better say it. If we're missing the mark, say it. Because this is all going to be discussed in two months at our next board strategy meeting."
That’s how a war game encourages and gives permission to people to express ideas, thoughts, comments, and objections that they may normally not know how or where to introduce.
Organizations can find it difficult to look at themselves. A business war game can break that out faster and more efficiently than what most can internally. You can be fighting years and years of tradition in trying to get something to surface. A war game can typically accomplish that in a single day.
A professionally organized war game facilitator is an independent, objective event leader. No bias or reason to have a decision go one way or another. Just whatever is best for the organization found by asking the tough question.
BEFORE BETA TESTING A PRODUCT, BETA TEST A STRATEGY
In our next episode, we go even further up the food-chain in ways most companies don’t even think of.