War games? Here’s what they’re good for
War games can be an effective hedge against competitor neglect. Not just for the military, these exercises can also help senior business leaders assess potential strategies and determine how well they are likely to perform given potential competitor responses.4
One consumer-electronics company used war games to optimize the launch of the next version of its flagship product. The company convened a team of senior leaders and industry experts to build deeply researched profiles of two primary competitors. The information in the dossiers informed a multiround war game that projected likely actions and reactions among the three companies in response to the product launch. In each round, a team was assigned to represent a competitor, and each team independently chose a pricing and promotion strategy for its company. Industry experts weighed in about whether their respective strategy choices were likely to succeed or not, and the company developed a simple simulation model to crunch the numbers. After several rounds of analysis and discussion, the company’s launch plans were adjusted accordingly, enabling it to achieve a first-mover advantage in the market.
Further reading: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/bias-busters-war-games-heres-what-theyre-good-for?cid=other-eml-alt-mip-mck&hdpid=f44f3d41-5420-4a91-be68-56b2a17a6019&hctky=11705927&hlkid=06ee88451d0b4d669405b086c4d747af