War Games Can Be an Effective Strategic Tool for a Company

By December 20, 2012 Drop a comment
strategies and competitors

When planning a product launch it’s absolutely essential to take the competition into account. However, companies often neglect this vital aspect. One way of avoiding such a potentially disastrous oversight might be to run a war game simulation to help anticipate what rivals might do.

Can video games help major companies refine their innovation strategies and improve their decision-making? Well, we’re not talking about just any old video game. What are known as ‘serious games’ have been gaining traction recently but it appears that war games can also be extremely useful. According to an article published in McKinsey Quarterly, many companies making decisions about developing and launching new products commonly fail to anticipate their rivals’ motivations and actions. To address this challenge, companies require tools and processes that help them “de-bias” their decisions, say the McKinsey experts.Some companies have recognised the problem and are tackling it head-on by incorporating war games into their innovation programmes. The games help to simulate the thoughts, plans, and actions of competitors, which can be useful both when developing the product and in deciding on overall marketing, pricing and sales strategy.

On the front line of product innovation

The McKinsey article highlights the approach taken by a consumer-electronics company which wanted to understand the competitive landscape better and improve its products and services. The aim was to decide the mix of components and features to include in the next version of an important productscheduled for launch the following year. So the company ran an in-depth war game over three days. Cross-functional teams of product designers, marketing and sales experts, and supply-chain managers assumed the roles of executives in the company and in a leading rival firm. The choices the opposing team made were revealing, identifying several new components and technologies the competitor might include in its own update of this product type. “While there were obviously no guarantees that the competitor would act as predicted, the rigorous preparation the company had undertaken to ensure that players on both sides would behave realistically suggested that the competitor’s rationale for making the moves would be strong,” points out the McKinsey team.

Are the predictions reliable?

Fuelled by these insights, the company went on to identify a host of moves it could make to seize the initiative – including bets on particular technologies and an attractive, untapped consumer segment that it could target to spur growth. “Ultimately, many of the game’s predictions did materialise, and when the competitor moved as expected with its new product, the company was ready,” says the report. Meanwhile, “its own updated product proved to be a hit with consumers.” War gaming can however also help companies to develop and deploy their product portfolios more strategically across geographies and customer groups.Overall, the McKinsey research reveals that while “war games are a tried-and-true strategic tool, relatively few companies use them to innovate.”

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