Learning faster than the competition: war games give the advantage

Business war games support competitive‐strategy decisions under uncertainty. They are especially useful in combating confirmation bias, the human tendency to look for reassuring evidence that a desired future will come true. There is no generally accepted definition of what a business war game is, and there are many ways to conduct them. This paper aims to describe why, when, and how to use different types of business war games.

The author has conducted some 100 business war games for major companies around the world, and has 30 years' experience in strategy analysis. The paper draws on the author's observations of thousands of managers in those war games, on his familiarity with simulation technologies, and on research in social psychology, to categorize and recommend war‐gaming techniques for different business needs. The paper includes two illustrative case descriptions.

The paper finds that business war game objectives include: stimulating excitement around a strategy; building skill on strategic thinking; creating strategy options and anticipating threats and opportunities; and testing strategy options and making decisions. When the war‐game objective calls for quantitative models, traditional financial or trend‐line analysis can be dangerous. The objective will also influence the scope and length of the game, and its “rules of engagement.”

Few managers have participated in a business war game, and even fewer are aware of the variety of war games. This paper describes the link between war gaming and competitive advantage, and helps managers (and those who advise them) know why, when, and how to use different types of business war games.