Playfully analyse future markets
Forward-looking simulation methods such as scenario analysis, megatrend analysis or business wargaming can be used to illustrate external influences and the future reactions of competitors and markets.
Shorter observation periods
Companies today operate in a dynamic (competitive) environment. Especially due to the agile and dynamic business models of start-ups, short-term simulation methods such as business wargaming are gaining in importance. The period of decades often considered in scenario analysis is often not very useful. Shorter time horizons of 2-5 years are the rule. Of course, the choice of simulation method depends entirely on the task at hand and the industry.
The origins of wargaming
The martial name of wargaming, or "Kriegsspiel" in German, can be traced back to its original application in military planning. Here, too, the aim is to comprehensively analyse the environment in order to gain insights for the real case / battle by playing through simulations. In a corporate context, business wargaming is a suitable tool for better assessing the development of markets, sectors and companies.
Business wargaming involves dynamic strategic simulations in which one's own and opponents' actions are played out. The knowledge gained from this is then used for strategic decisions in business practice.
Goals of a Business Wargame
Depending on the initial situation, there are different goals that are pursued with a wargame:
- Gaining clarity about the competitive situation and the opportunities of the competition.
- Derive opportunities for one's own company
- Recognising market changes through, for example, new market participants
Risk assessment of M&A activities
Advantages of Business Wargames
Pros
Wargaming Types
There are three main types of business wargames:
1. Quantitative Wargames
Quantitative business wargames use existing online simulations that reflect market behaviour. Participants can set specific activities and change parameters. The outcome after each round is determined by the computer and the online simulation.
2. Qualitative Wargames
In qualitative business wargames, the activities and events are decided by the participants and discussed after each round without external technical support. The focus is on the exchange and implementation of different perspectives.
3. Hybride Wargames
In this variant, aspects from both areas are taken into account. The simulation game
The simulation game also takes place in an intensive personal exchange, but delivers quantitative and detailed results through IT support.
The Business Wargaming Process
In wargaming, a period of several years is typically simulated in three rounds of play, with only the starting position given in each round. The participants (company representatives) are divided up and prepare for their roles as company, competitor or market influencer on the basis of detailed gamebooks or gaming playbooks (detailed profiles of the individual players). They simulate taking market share from each other and gaining advantages over the competition.
The course of the simulation is ultimately determined by the reactions of the participants in their roles. A control team directs the simulation, introduces unforeseen events to provide additional dynamics (intervention by a regulator, changes in consumer behaviour) and continuously consolidates the insights gained. At the end of the simulation, participants usually have a better understanding of the competitive forces and behavioural patterns in an industry or market. The fact that they have gained this understanding together strengthens their identification with the subsequently revised business strategy.
War Room
Components of a Business Wargame
A possible wargaming process in four steps is
Step 1 - Data gathering and preparation
Data includes secondary and primary research on competitors and the industry. It is usually collected by internal staff or an external provider and prepared for the wargame.
Step 2 - Analytical framework
On the first day of the wargame, participants learn the framework for analysing the industry, the competitors and identifying the company's blind spots. A well-prepared analytical structure is important here.
Step 3 - The "battle"
The second day of the wargame is the battle between the teams. There are several rounds, often corresponding to financial years. The teams are now asked to define actions for year 1 in the market. They need to anticipate what competitors will do and analyse potential blind spots. In subsequent rounds, the teams develop strategy recommendations for the market based on the information presented after the first round.
Step 4 - Recommendations for action
Finally, the participants discuss their findings and formulate recommendations for action for their own company.
ACRASIOs Business Wargaming Process
Business Wargaming Projects
Business wargames can be prepared and conducted in a conventional way, or they can be made even more tactile by using customised board games. At ACRASIO we have organised and facilitated a number of wargames. For example, the impact of FinTechs on the private banking business in Germany and Switzerland, the electric vehicle market including winners and losers, and the Future of Mobility, the impact of current developments such as electric mobility or autonomous driving on selected industries.
Workshop Wargaming
Conducting a wargame is complex and requires preparation time. At Acrasio, we conduct wargaming workshops in close collaboration with a company's strategy department. We use both qualitative and hybrid business games.
As the attention span of executives is very short, we also use optional haptic simulation elements to break up and anchor the process.
Interested in a Business Wargaming workshop?
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Maximise your growth potential by understanding the competition through simulation!
Further links and references
FAQ
A business wargame is a future-oriented simulation method that allows you to experience the external influences and reactions of competitors and markets.
For a business wargame to be successful, the composition of the teams should be carefully chosen. Each team should be led by a senior executive or an external facilitator. Team members should ideally come from different departments (product management, marketing, strategy, sales). Unless the war game is run with only one functional area (e.g. only product management).