A core challenge for all businesses is understanding, anticipating, and preparing for competitive activity in the marketplace. A powerful tool is business war games, which use war game strategy to arrive at unique perspectives on a business strategy. This unique method of strategic thinking considers elements of a plan that are often missed in traditional strategic planning.
Many business plans contain a section on competition, but the level of detail is often woefully inadequate to arrive at any meaningful understanding of the competitive landscape. Business wargaming can be a powerful way to address this competitive landscape in your business strategy by leveraging asymmetric competition.
This involves unconventional business strategies that give one party a distinct advantage, such as identifying core advantages, finding new financial formulas, and keeping competitors off-balance. For example, Amazon's business model, predicated on offering better terms and innovative strategies, has allowed it to disrupt traditional industries and outcompete old-line publishers.
Business war games are designed to explore the competitive environment deeply and gain a robust understanding of how competitors may behave and what options are available. Additionally, war games usually consider “uncontrollable” elements such as regulation, economy, weather, market trends, and technology.
The Asymmetric Business Wargaming Framework
The Asymmetric approach to business war games is to identify the primary competitors in a given marketplace—usually competing companies, brands, or products. We start by deep-diving into existing market research, including consumer research and competitive disadvantages, studies on consumer behavior, pricing, brand awareness, and any other insights that may be available.
Additionally, analyzing secondary purchase data can provide valuable insights into consumer behavior and inform competitive strategies.
A team approach is ideal. War games are most effective when a cross-functional group of people from various levels of seniority is assembled into three to four teams of approximately six people each.
In war gaming, one team represents the “home team,” or the client company’s brand or product. Teams two and three each represent one of the most significant competitors in the marketplace. The fourth team represents “the market,” which includes elements such as regulation, government intervention, the economy, technology, etc.
Strategic Thinking Frameworks
We want to start business strategy sessions with a half-day session that covers concepts of conflict such as The Art of War and other principles of military strategy. An introduction to competitive strategies and frameworks, such as the Blue Ocean Strategy, Porter’s Five Forces, SWOT Analysis, and Strategic Group Analysis, is presented so the team can access similar tools and models during the war game process.
The remainder of the first day and all of the second day are divided into a series of business strategy sessions where the teams break out to evaluate the situation, analyze their competition using the frameworks, and develop a range of competitive strategies and tactics, including considerations of asymmetric quality competition and numerous mechanisms proposed to explain competitive asymmetries, designed to exploit their unique set of strengths and weaknesses in the context of their competition.
Such asymmetric price competition influences consumer behavior and brand switching, as store brand consumers are likelier to switch to discounted national brands. This dynamic, known as national brands switch, has significant implications for competitive strategy, highlighting the need for strategic positioning to address consumer preferences.
After each break-out session of the war game, the teams come back together to present their findings - often in a highly energized, fun, and competitive environment. War gaming is a unique opportunity for team building in addition to its role as a strategy development process.
In the end, the work is condensed into a finding report that is then used by the company’s leadership and marketing teams to design strategies, plans, campaigns, and contingency plans - all designed to address the unique competitive situation that the company is facing.
Where do War Games Fit in the Planning Process?
Using a war game strategy to evaluate likely outcomes and actions by competitors, considering multiple mechanisms contributing to competitive asymmetries, is a powerful tool. But where do war games fit in the planning process?
The traditional strategic planning process seeks to gain a competitive advantage sequentially. This process includes:
- Assessment of Strategic Variables
- Strategy Development
- Choosing a Strategy
In this context, understanding the 'store brands switch' behavior, where consumers tend to switch from store brands to discounted national brands more frequently, is crucial for evaluating competitive dynamics and consumer behavior.
Business war games can add value by being placed at the end of this process to test the selected strategy to evaluate:
- (Re)Actions of Competitors
- Potential Surprises
- Discontinuities and Frictions
- Potential Regulatory Actions
The unique nature of business war games provides robust insights into the fundamental nature of the competition that are not possible from simple desktop analysis. Business strategy is a complex topic, and a business war game can be one more tool in your planning kit.
Scenario Planning
Scenario planning is very similar to a business war game. It seeks to assist decision-makers in identifying courses of action and estimated impacts, evaluating responses, and anticipating outcomes. This is similar to how a business model innovator like Jeff Bezos continuously changes the game by focusing on customer needs and redefining business models.
It is different primarily in the execution and approach. In the context of consumer behavior, discounted national brands can significantly influence price competition, as consumers are more likely to switch from store brands to discounted national brands. Additionally, discounted store brands play a crucial role in asymmetric price competition, where consumers of store brands are more inclined to switch to discounted national brands rather than vice versa.
Business war games use teams that role-play competitors or markets, considering business models predicated on offering better terms and innovative strategies. This role-playing methodology is key to actively considering key stakeholders' potential actions or reactions in a market.
There are five steps in the scenario planning process:
- Determine a Strategic Position
- Prioritize Objectives
- Develop a Strategic Plan
- Execute and Manage the Plan
- Review and Revise the Plan
The OODA Loop
The OODA Loop is the cycle of:
- Observe
- Orient
- Decide
- Act
Military strategist and United States Air Force Colonel John Boyd developed it. This approach explains how agility can overcome power, similar to how Amazon leverages its distribution centers to gain a competitive edge. It is frequently used in cyber security and cyber warfare applications.
Harry Hillaker, one of John Boyd’s colleagues, explains the OODA Loop:
The key is to obscure your intentions and make them unpredictable to your opponent while you simultaneously clarify his intentions. That is, operate faster to generate rapidly changing conditions that inhibit your opponent from adapting or reacting to those changes and that suppress or destroy his awareness. Thus, a hodgepodge of confusion and disorder occurs to cause him to over- or under-react to conditions or activities that appear uncertain, ambiguous, or incomprehensible.
Competitive Disadvantages and Dynamics
Companies often plan without considering competition. If competitors are considered at all, they are generally evaluated as a static threat to the plan. But competitive dynamics call for evaluating competitors, considering factors such as a distinct business model and the dominance of an otherwise preferred brand as unpredictable variables.
For every move a company makes, one can assume that each of its competitors will act or react in a manner consistent with their objectives - often blunting or even destroying the capacity of a strategic plan to succeed.
A list of tools that can be used to evaluate the competitive dynamics of a market are:
- Competitive Intelligence
- SWOT Analysis
- Blue Ocean Strategy
- 5x5 Risk Matrix
Use Business Wargaming in Your Business
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Mark Hope
Mark A. Hope is the co-founder and Partner at Asymmetric Marketing, an innovative agency dedicated to creating high-performance sales and marketing systems, campaigns, processes, and strategies tailored for small businesses. With extensive experience spanning various industries, Asymmetric Marketing excels in delivering customized solutions that drive growth and success. If you’re looking to implement the strategies discussed in this article or need expert guidance on enhancing your marketing efforts, Mark is here to help. Contact him at 608-410-4450 or via email at mark.hope@asymmetric.pro.