By: Michael Pouch
The purpose of Jan Schwartz research is to introduce wargaming as a useful tool for ex-ante strategy evaluation for the business world. He lists some important benefits of business wargaming as an ex-ante tool such as assessing a particular strategy, by simulating reality, the consequences with respect to the organizational environment (especially its competitors), and with respect to the future impact on the strategy and the future of that strategy.
The author begins to lay out several advantages of using wargaming in the business world to test a particular strategy. First, while using participants, wargaming provides not only the use analyzation of a market or a competitor but the simulation an industry, market, or competition over time. This so-called experience or simulation provides a preview of how a strategy might fare.
Second, Schwartz provides an argument that wargaming can be used to challenge the mental models of participants. Wargaming allows participants to think and act like their competitors, thereby forecasting what their competitors will likely do. In addition, war-gaming provides a simpliﬁed version of strategic planning that allows participants to test strategies but a form strategic planning.
Third, war-gaming can offer a means of fostering organizational learning. When the comparison between situations or moves within the business wargame or with mental models become communal the knowledge derived from a business wargame will be transferred when a similarly structured situation occurs outside the simulation.
Fourth and last, the intense competition that is involved within war-gaming, forces participants to rigorously examine the situation from several perspectives. The benefits that come along with the competition gives the participants the ability to convey a deeper understanding of the competitive situation and an awareness of the participant’s or a team’s strategy will play out, and especially how the industry will develop.
On the whole, a well-designed and conducted business wargame is important to test of strategy that sheds light on competitor’s motives and actions and ultimately see your strategies play out but also the likely results when implemented. As shown in figure 1, wargaming provides many benefits were as other methods are limited to certain actions.
|Figure 1: Characteristics of Business Wargaming|
Overall, the advantages that come with wargaming in business outweigh the limitations. Although wargaming takes up a lot of resources, preparation, and participant demand, the results allow you to come out of the simulation with many external and internal perspectives in mind. Another limitation implies a human element where the simulation might not have the right participants or the participants willingness to engage in the exercise. By and large, it is an essential exercise that needs to be designed, prepared, and well-executed for a successful simulation.
Schwarz, Jan Oliver. (2011). Ex Ante Strategy Evaluation: The case for Business Wargaming. Business Strategy Series. 12. 122-135.