A Kappa White Paper

This white paper introduces KappaWest’s Business Wargamingconcept and process.

Its purpose is to help readers determine if and how wargaming mightbe used in their organizations.

WP-BW Entire content © 2007, KappaWest

Business Wargaming

C. J. KurtzPresident, KappaWest

CONTENTS

INTRODUCTION

SETTING THE STAGE

BUSINESS WARGAMING PURPOSES

LEVELS OF BUSINESS WARGAMING

ROLES IN THE WARGAME

TYPICAL WARGAME FORMAT

WARGAME DOCUMENTATION

WHAT DOES IT TAKES?

LESSONS LEARNED

KAPPAWEST’S ROLE

EXAMPLES OF BUSINESS WARGAMES

SUMMARY

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Formed in 1974 as The Kappa Group, KappaWest is a strategic management consulting firmspecializing in helping clients increase the effectiveness and efficiency of their corporate, marketing andsales operations. It is especially known for its application of military concepts, principles and processes- including Business Wargaming - to business.

KappaWest serves clients throughout the world from its Laguna Hills, California offices and hasundertaken projects in more than 25 countries.

Kappa Overview - Basic Data10 Full-time equivalent professionalsEmployee ownedOffice in Tustin, CA

Our MissionTo increase the effectiveness and profitability of our clients by providing customized consulting andtraining services in fields of planning, marketing, sales services and management development...createdand delivered by experienced professionals.

Our FocusUnderstanding that regardless of industry, the key to competitive business lies in the ability to identifytrue customer needs and service those specific needs better than the competition.

ABOUT KAPPAWEST

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C.J. KurtzKappaWest

1371 Warner Avenue Suite ATustin, CA 92780

Office: 714.259.0680Facsimile: 714.259.0681

E-mail: jaykurtz@kappawest.comOr info@kappawest.com

This White Paper provides a basic introduction to KappaWest’s Business Wargaming concept, processand applications. It has been prepared to help readers determine if, and if so, how the wargamingconcept might be used within their own organizations.

KappaWest has spent more than 15 years developing and facilitating Business Wargames for its clients.This work has involved wargames at all levels, from corporate grand strategy to front-line tactics.

Wargames have been conducted for Fortune 500 companies and smaller entrepreneurial ventures andfor a mix of business types including telecommunications, professional services, defense/aerospace,software, and pharmaceuticals.

Many friends of KappaWest contributed useful suggestions during the preparation of this White Paper.We acknowledge their help.

Questions or comments concerning any of the ideas about Business Wargaming outlined in this WhitePaper, or about KappaWest’s services in general, should be referred to KappaWest .

INTRODUCTION

“The more you sweat in peace, the less you bleed in war.” - Chinese proverb

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As shown in Figure 1, the Business Wargaming1

concept is based on the recognition that anorganization’s success reflects three major lines offorce:

1. Your company’s plans and execution

2. Competitors’ plans and actions

3. “Uncontrollables”

Because this model is important in understanding theBusiness Wargaming concept, each of these threelines is outlined in more detail below.

1. Your Company’s Plans and ExecutionAn organization’s success is determined largely, butnot exclusively, by what it plans and does at fourdifferent levels:

A. At the level of its Vision and Grand Strategy, thecompany defines why it exists, and what it wantsto be at some point in the future. To be effective,this in turn must reflect:

• What its stakeholders want it to be• What the reality of the environment within

which it will operate will allow it to be• What the principles of business strategy

suggest it should be.

B. At the Strategy level, the company defines whatmission and goals it wants to achieve to satisfy itsvision, and what major, driving and supportingefforts or thrusts it will undertake to achieve them.For example these might relate to:

• What positions it wants to reach and inwhich markets

• What mix of products and services it willoffer and to whom

• What channels it will use to reach itsmarkets

• What its financial structure will be• What key competencies it will exploitAlthough this paper focuses on the use of Business

Wargaming in a competitive, business-orientedenvironment, the concept and process can also be usedeffectively by governments, institutions, and other not-for-profit organizations.

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SETTING THE STAGE

Figure 1

Your Company’s Plans and Execution

Vision andGrand Strategy

StrategicPlans

YourSuccess

OperationalProjects and

Programs

TacticalExecution

Other (More-or-Less ) “Uncontrollables”

Competitors’ Plans and Actions

New Forms of Competition

X Y Z P Q R A B C

Indirect Competitors Direct Competitors

Governmentand Regulatory

The Economy Technology Market TrendsIndustry

RationalizationOther

Unknowns

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C. The company’s strategy will be implementedthrough a series of Operational level projects andprograms. At this level, the organization is likelyto be concerned with a series of “sub-whats”, and“which, who, when and where” decisions andanswers. For example:

• Which segments are critical to success ineach market, and which can be ignored?

• What is the appropriate organizationstructure to execute the strategy?

• Who is specifically responsible for whichelements of the strategy?

• When will each element of the strategy beimplemented?

• Where will efforts be concentrated first, thenlater, and in what sequence?

D. The Tactical execution of plans deals primarilywith how things are done. It is critical becausenothing is ever accomplished except at this level.It applies of course to a broad range of thecompany’s activities, including:

• Marketing and sales• Customer service and support• Manufacturing and operations• Contract negotiations• Financial

Business Wargaming can assist in the developmentand evaluation of plans at all four levels. However,there are two other reasons why we introduce theselevels at this point:

• Planning at the first two levels determines whetheror not an organization can succeed. Planning andexecution at the latter two levels determineswhether or not it will win. No matter how(apparently) brilliant a strategy might be, theorganization will not succeed if it is poorlyexecuted at the operational or tactical levels.

• On the other hand, the most efficientlyexecuted tactics will not result in success if theyare in support of the wrong strategy.2

• All four levels of planning must consider the othertwo lines of force.

2. Competitors’ Plans and ActionsNo military commander would try to excuse failure onthe basis that the enemy had done somethingunexpected. Yet, we often find executives of companies“justifying” poor performance by explaining thatcompetitors had taken some unanticipated action.Clearly, one of the primary responsibilities of the seniorpersons in an organization, military or business is toanticipate what the enemy or competitor could do, andto ensure his or her unit’s plans are robust enough toensure success under any realistic combination ofcompetitors’ actions.

In an important sense, this is more difficult to do inbusiness than in the military. The latter is normally facedwith only one enemy.3 On the other hand, a companyinvolved in a market might be faced with many enemies.This problem is compounded in business by otherfactors, including:

• A plan that is superbly crafted to defeat onecompetitor might well create a great opportunityfor another.

• A company might be impacted by the “fallout” ofone competitor’s actions against another,although it was not the intended target of theaggressor’s plans.4

“Never base your plans on what you believe theenemy will do. Base them on what he could do.”

- Old military maxim

Not withstanding the view of many field commanders thatHeadquarters staff represent a more deadly threat than the nominalenemy.

Consider the results of being positioned as the “Poland” in anindustry ... caught in the middle between its “Germany” and “Russia”... with no defensible borders.

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We can make a strong case for the argument that highly efficienttactics in support of a very ineffective strategy will lead to acceleratedfailure.

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So what?As we shall see shortly, Business Wargaming can beused to help a company anticipate the potentialimpacts of a broad range of competitive actions anduncontrollable events against its own plans, thushelping significantly improve the probability of theirsuccess.

The primary purpose of most wargames is to increasethe probability and extent of a company’s success inthe face of competition and a series of uncontrollableevents and trends. Depending upon the level ofwargame, this purpose might involve any mix of othersupporting objectives, both “hard” and “soft”.Examples of these are:

Hard Purposes• Identify opportunities the company could exploit

to increase its success … and how• Identify obstacles the company must overcome

to achieve success … and how• Identify risks and threats the company must

eliminate or neutralize to succeed• Convert data and information into actionable

intelligence• Identify additional data and information the

company must obtain• Build risk profiles to help evaluate alternative

strategies to succeed

Soft Purposes• Increase the level of teamwork and help break

down barriers among functional components ofthe company

• Increase the level of “strategic street smarts”among participants

• Provide insights about the company’s situation,competitors, and other factors that will helpparticipants to make better decisions in their day-to-day work

• Place market forces in a framework to improveunderstanding of the “real situation”

BUSINESS WARGAMINGPURPOSES

The situation a business executive faces is alsomade more difficult because “competition” comes inthree major forms:

• Direct competitors: those that offer, or havethe potential to offer roughly comparableproducts or services to satisfy a need or want

• Indirect competitors: those that offer adifferent way of meeting the same basic need

• New forms of competition: those that eliminatethe basic needs for a company’s products orservices and hence reduce the marketsavailable to it and its direct competitors

In each case, both existing and new competitorsmust be considered.

Often a company is able to deal with its directcompetitors. It might not always win against them,but if it is reasonably mature, it is at least comfortablefighting them. On the other hand, few largecompanies are adept at fighting, let aloneunderstanding, new forms of competition.

3. “Uncontrollables”The level of success a company achieves at anypoint in time is affected by more than what it and itscompetitors do. To a greater or lesser extent, andpositively or negatively, it is impacted by a series ofother factors. As suggested in Figure 1(Page 2),these include the economy, market trends,technology, industry rationalization, social andcultural shifts, government actions and world affairs.

In most cases, neither the company nor itscompetitors have any significant control over theseevents or trends. At best, they can exploit thepositive ones and minimize the impacts of thenegatives ones. Some companies, like some armies,are adept at turning apparently negative situations totheir advantage. Like an army using the coverprovided by a violent storm to launch an attack, acompany might use a downturn in the economy toimprove its relative competitive position againstcompetitors that are hunkered down.

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It is especially important to select the right level ofwargame, particularly the first time a companyundertakes to plan one. If it tries to conduct one that istoo advanced, the participants are likely to be ill-prepared to play their roles effectively, and will befrustrated with their inability to achieve their objectives.On the other hand, if it chooses too basic a game, it willnot address real needs. In either case, the experiencemight turn participants off what should and could havebeen a very powerful tool.

Based on KappaWest’s involvement in more than 100Business Wargames, there are four major levels ofBusiness Wargames:

Level AThis is the simplest, most basic level of wargame andusually involves a 1/2 to 1 day session, based on ageneric situation. It is aimed at introducing thewargaming concept and process to help participantsdetermine if it should be used at a higher level to dealwith a specific situation within their company.

Level BA wargame at this level is often designed to serve as a“consciousness raiser”…helping participants tounderstand key issues and concerns related to their owncompany’s situation. The wargame is customized toreflect a company’s specific industry, markets, accountsand competitors and typically involves one to two days.

LEVELS OF BUSINESSWARGAMING

“How can any man say what he should do himself if heis ignorant of what his adversary is about?”

- Antoine Henri Jomini

Level CA Level C wargame is more intensive and aimed athelping develop and/or evaluate strategies to deal with aspecific situation or issue. It involves the preparation ofa significant amount of background material andextensive customization to reflect as much as possiblethe real markets, customers, products, competitors and“uncontrollables” of the situation. Level C wargamesusually require two to four days to conduct.

Level DThis is the most intensive level of business wargamingand often involves two or more separate sessions, eachtwo to four days in duration. This wargame is usuallydesigned to help conduct a very detailed evaluation ofproposed strategies and supporting operational levelplans before a company makes a final commitment toimplement them.

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It is often a good idea to assign two home teams. Thisallows two different strategies to be evaluated at thesame time. In fact, this approach involves running twoparallel wargames with all competitor teams playing inboth, but against a different home team in each case.

Market or Customer TeamThis team is assigned to play the role of either themarket or customer throughout the wargame, and isusually responsible for:

• rationalizing the competing interests within themarket or buying organization so that the relativeimportance of all decision/selection criteria canbe determined

• evaluating how well each competitor meets itscriteria

• determining how effective each competitor’sstrategies are in persuading it to change itsopinions

The team should include participants who reflect abroad knowledge of business in general, as well ashaving in-depth knowledge of the marketplace orcustomer.

X TeamIn some especially complex wargames, or onesfocused on situations in which “uncontrollables” arelikely to have a significant effect, it might beappropriate to assign a special “x” team to undertake aseries of role-playing tasks beyond those assigned tothe competitor and market customer teams. Forexample it might be asked to:

• play the role of third parties that might influenceoutcomes in real life, such as governments,regulatory bodies, and the financial community

• set scenarios involving trends and events thatwill affect all teams, but over which they will havelittle or no control, such as the economy, markettrends, and geopolitical events

Competitor Team (s)Each Competitor Team in the wargame is assigned toplay the role of a specific competitor. As needed tomeet the purpose of the wargame, these might includea mix of direct, indirect and new forms of competitors.Depending again on the level and purposes of thewargame, the competitors considered might be real orfictional.

It is critical to the success of the wargame that allparticipants assigned to a particular competitor teamevaluate, decide, invest and act as they believe thatcompetitor would, given its culture, history,organization, resources and style. They must notassume the competitor would see things the sameway their own company would.

All competitor teams should be staffed with abalanced mix of participants in terms of theirexperience and functional specialization. No teamshould be stacked with a disproportionate number ofparticipants reflecting a particular level of experienceor function.

In some situations, it might be appropriate toincorporate a “wild card” competitor team into thewargame, even though all other teams represent realcompanies. This might be especially important whenthe wargame is focused on longer term strategic timehorizons, and when the entry of new players who willnot play by the traditional “rules” of the industry islikely. To reflect such companies, the teamrepresenting the wild card is given more flexibility thanthe other competitive teams in terms of what it isallowed to do.

Home Team(s)The home team is assigned to represent the companyitself throughout the wargame. As in the case of thecompetitor teams, it should be well-balanced in termsof the mix of its members.

There is likely to be a strong desire on the part of thehome team to play its role as it believes the companyshould act, rather than as it can or will act given itsstarting position. During at least the first round of awargame, the umpires should hold the home team towhat it could realistically do. Later, and if the teammakes a strong case for change, it may be allowed tomake moves that would not be feasible at the presenttime.

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Umpire TeamThe primary role of the Umpire Team is to determinethe most likely outcomes, if the decision reached bythe Market/Customer Team and the strategies selectedby each of the competitor teams were in fact playedout in real life.

Much of the umpire’s work can be made reasonablyobjective through the use of some appropriate andwell-tested principles and tools. It often involves theuse of “maps”5 on which the moves and results of allother players are recorded.

However, there is almost always some degree ofsubjectivity involved in the umpire’s work. Accordingly,it is very important that the members of the UmpireTeam be individuals who have solid and relevantbusiness credentials, and that they be credible to otherparticipants in the game. They must not be executivesor managers who might be assumed to have a vestedinterest in a particular outcome to the game.

FacilitatorsWell-qualified facilitators are critical to the success of aBusiness Wargame. At least two are required for anysession, and more are likely to be needed for Level Cand D games, especially if the total number of playingteams is greater than four.

The primary role of the facilitators is to ensure thewargame is prepared and executed in a way thatachieves its objectives as effectively as practicable.

Doing so usually involves a mix of the followingfunctions:

• Liaison with the wargame’s sponsor to confirmits purposes, scope and format

• Preparation of the Pre-Wargame Briefing andAssignment package

• Developing a customized Wargaming Guideand all other support materials needed toconduct the game.

• Anticipating and overcoming obstacles toprogress throughout the game

• Helping teams to maintain a high level ofintensity and creativity, and to overcome“inside the box” thinking during theirdiscussions

ν Capturing all useful insights, lessons learned,decisions reached and critical questions raisedduring the game

ν Preparing and presenting the After Action Reportthat summarizes all output from the game.

In most cases, the facilitators will be professionals froman outside organization. However, if a companyconducts wargames frequently, it might want to identifyand train in-house facilitators.

Administrative/Logistical Support TeamGood administration and logistical support will not ensurea successful wargame. However, poor support willalmost always guarantee its failure.Even an apparently simple wargame can involvesignificant “behind the scenes” efforts to keep it runningsmoothly. The cost of providing two or three well-qualified secretarial or administrative supportprofessionals is usually easily justified by the increasedeffectiveness of the game.Their functions are likely to include:

• Helping the teams prepare graphics and othermaterials needed to support their presentations

• Ensuring “rations” are available on time• Documenting the wargame’s output “on the fly”• Acting as liaison with the hotel or meeting facility.

In some wargames, it might also be necessary to providecomputer support to each team. If pricing and costmodels are critical to developing or supporting a team’sstrategy, it might be necessary to include someonefamiliar with spreadsheet processing models as part ofthe Administrative/Logistical Support Team.

“In war, the only sure defense is offense, and theefficiency of the offense depends upon the

warlike souls of those conducting it.”- George S. Patton, Jr.

For example, a Market and Competitive Map in the case of a market-focused wargame, or a Decision Map in the case of a major salesopportunity wargame.

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A wargame might take any of several different formats depending upon its purposes, level, scope, numberof teams involved and time available. However, the Figure 3 provides an example of the format of a typicalLevel C or D session.

Distributed to participantsprior to the wargame

INTRODUCTION

SETTING THE STAGE

PLENARY GROUPPLENARY GROUP DEBRIEFING

UPDATE THE “SITUATION”

INTERIMLESSONS LEARNED

PUTTING IT ALL TOGETHERAND WRAP-UP

PLENARY GROUP DEBRIEFINGINTERIM

LESSONS LEARNED

ADDITIONAL ROUNDS(IF APPROPRIATE)

CONCLUSION

OUTPUT• Lessons Learned• Decisions• Recommendations• Tasks

Figure 3

ROUND 2: TEAM WORKSHOPS

UMPIRE’S ANALYSIS

Team Output

Team Output

Team Output

Team Output

Team Output

Team A Team B Team C Team DOther Teams

Pre-wargame Briefing andAssignment

TYPICAL WARGAME FORMAT

ROUND 1: TEAM WORKSHOPS

UMPIRE’S ANALYSIS

Team Output

Team Output

Team Output

Team Output

Team Output

Team A Team B Team C Team DOther Teams

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As suggested in this example, a wargame shouldinvolve at least two, and preferably, more rounds.Each of these might represent a different time or anew set of external conditions. It is particularlyimportant in live situations to allow teams to considerstrategies that might not appear successfulimmediately, but which after several rounds of thegame, will prove their effectiveness against thosedeveloped by teams with shorter term views.Depending upon the complexity of the game, the teamworkshops in each case will require two to five hoursto complete.

At the conclusion of each workshop, the teams providea copy of their decisions and other output to theumpires usually in the form of completed worksheetsor templates, or on a diskette. At this point, theumpires update the overall situation and prepare theiranalysis for the discussions during the Plenary GroupDebriefing. These debriefing sessions might bepostponed during the wargame (until all competitionhas been completed) if the nature of the game is suchthat teams should not disclose any parts of theirstrategy until its conclusion.

Discussions held during the wargame are especiallyuseful in helping to capture “raw” lessons learned, andin deciding what new avenues the wargame mightinvestigate in subsequent rounds.

Again, as shown in this example and as suggestedunder Roles in the Wargame, there are several teamsinvolved in a typical wargame. It is usually necessaryto balance between incorporating all the companiesand other forces at work in the real situation, and thepracticality of handling a reasonable number of teamsin a game. It is best to have four and eight teams.

The sessions at the bottom of Figure 3 are especiallyimportant. The “Putting It All Together” discussionscapture the key lessons learned, recommendationsand newly identified issues while they are still fresh inthe minds of the participants, ready for subsequentdocumentation in the form of the Wargame Summary.

Good documentation is critical to the efficient operationof the wargame and value of its output. The type andlevel of documentation involved will depend upon thepurposes, level and format of the wargame.

Figure 4 below outlines the various types ofdocumentation involved in representative wargames.

Brief descriptions of the purposes of each form ofdocumentation follow.

Pre-Wargame Briefing and AssignmentThis document is intended to prepare all participants toplay an effective role in the wargame by ensuring eachhas at least a baseline level of knowledge about thebackground of the situation being simulated, and theprocess that will be followed. Depending upon thelevel of wargame and its complexity, it will is likely torange between 10 and 100 pages.

WARGAME DOCUMENTATION

Figure 4

Wargame

Map(s)

Umpires

Team Worksheets

UmpireOutputs

WargamingGuide

CompetitorProfiles

Market orCustomer

Team

CompetitorTeams

Pre-wargameBriefing andAssignment

Post-Wargame Documentation

“To lack intelligence is to be in thering blindfolded.”

- General D. M. Shoup, USMC

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Typically, the contents of the Briefing include:• The purposes, scope and format of the

wargame• An introduction to some of the key concepts,

models and tools that will be used during thewargame

• An overview of the background situation suchas, the industry, markets, technologies and“uncontrollables” involved

• An overview of all competitors that will be role-played during the wargame

• An assignment designed to help the participantensure he or she has digested the keyelements of the situation described in theBriefing.

To ensure participants have an adequate opportunityto study the package, it should be distributed two tothree weeks prior to the wargame.

Participant GuideThe Guide is provided to all participants at theopening of the wargame. It is intended to serve as areference throughout the game and to complementthe Pre-Wargame Briefing by providing more detailedinformation. Depending upon the level andcomplexity of the game, it might include:• Additional explanations of the concepts, models

and tools that will be used• More recent information about the situation• Roles and functions of each of the teams• Wargame guidelines and “rules of engagement”• Team assignments and worksheets

Competitor ProfilesBasic information about all competitors being playedin the wargame is provided to participants in theBriefing described earlier. This usually includes thelevel of data about a competitor that would be knownby or available to a reasonably knowledgeable personin the industry.

Again depending upon the level and complexity of thegame, a Profile might be as few as three or fourpages, or up to 50 in length.

Umpire FeedbackThese documents are prepared by the Umpire Teamthroughout the wargame, usually after each round, toprovide updated information to be used by thecompetitor teams in the next round. A typicalFeedback might include:

• An updated Market and Competitive Map orDecision Map showing the results of latestmoves by competitors

• Recent “uncontrollable” events and trends tobe considered in the next session.

• Outlines of additional issues to be addressed

• Umpire-approved “news releases” issued byCompetitor Teams

Wargame SummaryMany useful ideas, insights, lessons learned andrecommendations are developed throughout awargame. Unless these are captured, evaluated anddisseminated shortly after the wargame, many will belost, especially in the case of an intensive Level C orD game.

Therefore, it is often a good idea to prepare theequivalent of a comprehensive military “After ActionReport” to summarize all significant intelligencedeveloped throughout the game. Often, this is bestundertaken by either the umpires or facilitators whoare likely to have the best overall view of whatoccurred throughout the game, and the opportunity torecord it.

“In things such as war, those errors which proceedfrom a spirit of benevolence are the worst.”

- Karl von Clausewitz

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An effective Business Wargame doesn’t happen by accident. It takes extensive, and sometimesexpensive, preparation to ensure it accomplishes its purposes and is worth the time and effort of theparticipants.

Figure 5 provides an overview of some of the effort that is usually involved.

As shown, it is critical to identify and gain the support of a high-level sponsor early in the planningprocess. This executive-level backing is usually needed to:

• Confirm the purposes and scope of the wargame

• Identify key issues that executives want the wargame to consider

• Provide funding, facilities and people needed to help prepare and conduct the wargame

• Ensure the cooperation of all company resources needed to prepare background information,competitor profiles, and other documentation

• Ensure the participants needed to play the wargame are available

• Establish a high priority for the wargame

Figure 5

Get support of a high level sponsor.Confirm basic purposes and scope.

Wargame definition and planning workshop

WargameDesign

Market andcompetitorresearch

Identify andconfirm

participants

Build wargameand supporting

materials

DistributePre-wargame

material toparticipants

Rehearsal andwalk-through

Administrativeand logisticalpreparations Pre-wargame

briefing andassignment

WARGAME

Follow-up toparticipants Wargame

Summary

WHAT DOES IT TAKE?

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With the input of the sponsor, those assigned to “makeit happen” can proceed to conduct the intensiveworkshop required to define and plan the wargame.During this session, the planning team will, forexample:

• Lock in the specific objectives to be accomplishedby the game

• Set its boundaries

• Confirm the competitor teams to be role-played

• Confirm other teams to be assigned (e.g. market,customers, suppliers, X-team, etc.)

• Identify potential participating players, umpires,and support personnel

• Identify potential sources of competitive and otherbackground information

• Prepare a list of administrative and logistical tasks

• Develop a preparation task list and a preliminaryschedule

Once the design of the wargame has been completed,reviewed and approved (usually by the sponsor), fourmajor lines of development activity can begin.

As shown in Figure 5 (Page 12), these involve:

1. Defining and preparing administrative/logisticalarrangements. While even excellent facilities,refreshments, and support won’t guarantee asuccessful wargame, poor arrangements candestroy its effectiveness.

2. Collecting, assessing and documenting allmaterials needed for the Pre-Wargame Briefingand Assignment. This activity normally dictatesthe critical path of all development work.

3. Identifying and gaining commitment fromparticipants. Assigning them to teams.

4. Creating all materials, and if appropriate,developing computer support needed to conductthe wargame. In some cases, it is well worth thetime and effort involved in conducting a rehearsalor walkthrough of the wargame to test allprocesses, instructions and forms.

After the wargame itself has been conducted, aWargame Summary should be prepared to capture alllessons learned and to document the participants’recommendations. As appropriate, versions of thesummary should be distributed to participants andpresented to the sponsor and other executives.

KappaWest has developed and facilitated a broadrange of Business Wargames, for many different typesof organizations. This experience has suggested aseries of lessons that apply to most wargames,especially those at the C and D Levels.

• Once it gets underway, a wargame will often getmore complex than originally planned. Keep itsimple to start with, but allow for increasedsophistication as it progresses.

• Ensure umpires are credible, apolitical and haveno vested interest in any particular outcome tothe wargame.

• Participants might find the process difficult thefirst time through. Consider providing a facilitatorfor each team, and/or a detailed task list,supported by a set of well-structured templates orworksheets that will help a team to maintain itsmomentum and to use its time efficiently.

• Participants will probably not digest the Pre-Wargame Briefing unless it is complemented byan “Assignment.”

• Once the participants in a wargame begin to seehow the process works and the value of theresults it produces, they will want to try moreideas. Be prepared to create new assignments,worksheets, forms, etc. “on the fly” ... or tosuggest a follow-up session focused on morespecific issues.

• Teams are likely to become mentally fatigued bythe second day of an intense wargame. Considerfrequent breaks and some planned physicalactivity. Perpetual “energy food” is often a goodidea.

• The amount of paper generated during awargame can become overwhelming, especiallyas its pace accelerates. Consider using color-coded, pre-printed forms for control purposes. Or,distribute templates on diskettes to allow teams toenter decisions and other inputs directly intolaptops or personal computers.

LESSONS LEARNED

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• Keep teams balanced in terms of the rank ofparticipants, their functions and experiencelevels. Do not stack one team with all salespersonnel, another with technologists, a thirdwith financial staff.

• In many cases, the senior managers orexecutives who are briefed on the results of awargame might not like the results and tend todenigrate the process. Be prepared to explainthe many real-life situations in which“commanders” (military or business) ignored thelessons of a wargame and suffered disasters asa result.

Successful Business Wargames require closeteamwork between the sponsoring company and thefacilitators. The specific roles in the development andconduct of a wargame assigned to an organizationsuch as KappaWest are usually confirmed during theWargame Definition and Planning Meeting.Depending upon the sponsoring company’s experienceand resources, KappaWest’s responsibilities mightinvolve any mix of the following:

• Conducting market, competitive and otherresearch needed to collect the data andinformation needed to generate the profiles thatwill be incorporated into the Pre-WargameBriefing and Assignment

• Conducting briefings or preparing templates forcompany personnel assigned to collect data andinformation and/or to create supportingdocumentation

• Creating team workshop assignments

• Preparing computer models

• Preparing any or all documentation needed toconduct the wargame

• Creating competitive profiles of fictionalcompanies if needed

• Defining administrative and logisticalrequirements

• Conducting mini-seminars on “businesswarfare”, strategic or operational planning,market and competitive intelligence or relatedtopics throughout the wargame

• Briefing company personnel assigned to act asumpires

• Acting as facilitators throughout the wargame

• Documenting the After Action Reportsummarizing the output from the wargame.

The Business Wargaming concept and process hasbeen applied successfully in a broad range of situationsfor many different types of companies. Examples ofseveral wargames developed and facilitated byKappaWest are outlined below:

Telecommunications Equipment Manufacturer• A one-day Level B wargame designed to help

anticipate strategies likely to be used by a majorcompetitor expected to make a massive moveinto the company’s home geographic market.

• An intensive Level D session prepared todevelop and evaluate alternative research andinvestment strategies for a major product family.The wargame involved nine major productclasses within the family, five key competitorsand six global markets.

• A Level C wargame aimed at identifying how amajor international competitor might penetrateone of the company’s leading customers, and tohelp develop and evaluate the effectiveness ofalternative responses.

• A three-day Level C wargame conducted toevaluate competing technological strategiesaimed the cellular market.

EXAMPLES OFBUSINESS WARGAMES

KAPPAWEST’S ROLE

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• A Level C wargame aimed at identifying how amajor international competitor might penetrateone of the company’s leading customers, andto help develop and evaluate the effectivenessof alternative responses.

• A three-day Level C wargame conducted toevaluate competing technological strategiesaimed the cellular market.

Regional Telephone Company 1• A series of 25 two-day Level B wargames,

each conducted for a group of 25 to 40executives and senior managers, designed toincrease their awareness of the seriousness ofthe inroads being made by competitors.

Regional Telephone Company 2• A Level C wargame designed to help

understand the strategic situation prior to thedevelopment of plans to increase thecompany’s share of market in the wirelesssegment.

Defense Systems Contractor• An intensive Level C wargame to evaluate the

company’s proposed BAFO (Best and FinalOffer) strategy for a major procurement. Thewargame included a team representing theseveral different components of thegovernment’s selection committees and othersrepresenting the two other competing consortiathat had been “shortlisted”.

• A Level B wargame designed to help anticipatethe key issues likely to be involved in thenegotiation of a joint venture with a largerinternational vendor to pursue a major defensesystems contract.

Aerospace Manufacturer• A three-day Level C wargame prepared to help

evaluate three alternative strategies relative tothe company’s position in the jet engine market… abandon it, develop a derivative of anexisting engine, or develop a new centerline.The wargame involved team representing thebusiness aviation market, several airframemanufacturers as well as competing enginecompanies.

• A five-day Level D wargame to help determinewhere a new engine should be targeted withina broad spectrum of engine sizes. Thewargame required a comprehensive financialmodel and projected financial returns over a20-year time horizon.

National Long Distance Carrier• A series of two-day Level C wargames,

designed to evaluate and improve key accountand major opportunity plans. Each wargamewas focused on specific account or opportunityand involved teams representing both thecustomer and several competitors.

Regional Electric Utility• A Level B wargame to introduce the company’s

executives to the potential strategies ofdifferent classes of competition expected as itsmarkets are deregulated. The wargame alsoidentified a series of critical elements of marketand competitive intelligence the companyneeded to collect and process.

Pharmaceutical Company• A Level C wargame conducted to help evaluate

and improve operational level plans for thelaunch of a major new product. The sessionled to the recognition that the planned currentlaunch strategy was likely to fail in the face of amuch more powerful competitor, and the rapiddevelopment of a highly successful newapproach.

“It is better to act quickly and err, than to hesitate until the time of action is past.” - Carl von Clausewitz

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European Telecommunications Utility• A Level B wargame designed to help the

company’s line and staff executives anticipatethe strategies likely to be used by a broad rangeof competitors as the European telecommsmarket is opened to competition. The sessionalso contributed significant input to the rapidreaction “Competitive Response Process” beingdeveloped by the company.

Electric Utility Conglomerate• A Level B wargame conducted for the senior

executives of each of the conglomerate’scompanies to help each identify how to assessand deal with the specific competitive threats toits markets and operations. The wargame alsoidentified key “holes” in the conglomerate’soverall strategy.

Supermarket Chain• A Level B wargame to help senior management

of a multi-billion dollar chain of supermarkets toidentify and test creative ways to grow itsmarket share against its traditional “sharedleader” competitor.

Business wargaming is not a “solves all problems”process. However, a Business Wargame can be highlyeffective and useful in the right situations and when it iswell prepared and conducted.

Here are the criteria KappaWest uses when helping aclient decide if a wargame is likely to be helpful:

• The company’s markets are saturating orshifting

• New forces or competitors are entering thecompany’s markets

• The company’s industry is undergoingsignificant churn and turmoil. The old rules nolonger seem to apply

• The company’s industry is rationalizing orconsolidating

• The company is evaluating alternativestrategies and needs help in reaching aconsensus as to which is best

• The company is concerned that its marketposition is weakening

Once it has been determined that a Business Wargamecould help to develop or evaluate strategies, a companymust ensure the right conditions are in place to allowthe wargame to proceed and be successful. Againbased on KappaWest’s experience, these conditionsare:

• A high-level sponsor is willing to fund thewargame and to “make it happen”

• The company has, or can get, enough relevantmarket and competitive information to allow thewargame to be reasonably realistic

• The company is open to considering significant“change”

• Enough qualified people can be made availableto staff the teams needed

“The best form of welfare for the troops is first-class training.” - Irwin Rommel

SUMMARY