This article examines how business wargaming can benefit business managers with strategy-making in comparison t0 using computer-based simulations and scenario planning. The author, Jan Oliver Schwarz, finds that business wargaming helps facilitate an ex ante evaluation of strategy; which he describes as the act of testing strategies prior to their implementation. Schwarz defines business wargaming as a "dynamic strategic simulation". The main difference, as described in this article, between business wargaming and scenario planning is that business wargaming focuses on the views of competitors, whereas it is difficult to incorporate competitor views in a scenario exercise. In regards to computer-based simulations, Schwarz states that these simulations represent the perspective of the analyst that created them. This contrasts from business wargaming, as Schwarz explains, because business wargaming may include computer-based simulations, but it is driven by its participants and not by the model of the simulation.
Before explaining the business wargaming process and its advantages, Schwarz highlights the important steps in the strategy-planning process. According to Schwarz, planning a strategy within a business begins with setting objectives, an analysis of the company and its environment, creating a set of strategic options, and then developing strategic plans from the proposed strategic options. Business wargaming allows for this, as it utilizes the participation of an industry's competitors, clients, market experts, and wargaming experts. The business wargaming process begins in the present and is based on available data retrieved from extensive research on the industry in which the business takes place. The client team, which consists of the business manager's role, must create and adjust its strategies according to the decisions made by the stakeholder and customer teams. A diagram of the business wargaming process is illustrated below in Figure 1. Following the completion of the process, the managers of the client company and the wargaming experts carry out an analysis of the exercise and discuss their findings.
Schwarz explains that managers can benefit from using business wargaming because it allows them to actively participate in developing a strategy that is future-oriented. This is crucial for an ex ante evaluation of strategy. Business wargaming also allows the managers to experience the consequences of their strategies, and in turn allows them to identify the early signals of change that pertain to their industry. In Figure 2, Schwarz provides a chart of these advantages, which he pulls from previous research and literature, to portray how business wargaming is a useful form of ex ante strategy evaluation.
Source
Schwarz, J.O. (2011). Ex ante strategy evaluation: The case for business wargaming. Emerald Group Publishing Limited, 12(3), 122-135. Retrieved from: https://www.researchgate.net/profile/Jan_Oliver_Schwarz/publication/254191296_Ex_ante_strategy_evaluation_The_case_for_business_wargaming/links/53dca7430cf2cfac992909ff.pdf
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Aubrey, nice find. My question for your article is similar to that of Hank's. In the event players/participants of the war game can assess their performance throughout the duration of the war game, do you think the participants ability to reflect and gauge their performance helps in the overall forecasting accuracy of the war game?
ReplyDeleteTom, that's a good question. Are you strictly asking about forecasting accuracy during the war game, or forecasting accuracy in reality? Schwarz specifically referred to forecasting accuracy within business wargaming only once, and stated that the process of business wargaming did improve forecasting accuracy within the game. This was based off of the evidence by Green (2002), who compared role-playing and game theory.
DeleteIt is hard for me to say for myself since I've never experienced wargaming, but I would think that a participant can improve their forecasting accuracy by reflecting on their performance, since their performance is affecting much of the outcome of the game.
Aubrey, it seems our author Schwarz is a popular one on this topic! Several of his points mirror those I found in the article I summarized about business wargaming in education. When I look at the model in Figure 1, I can't help but think about the issues with intelligence cycle models and how so many problems stem from their resemblance to an essentially linear process. So that makes me wonder, what is wrong with this model? Does it really play out this way (one thing happening at a time) in practice? This is kind of a rhetorical question, but you can take a stab at it if you like!
ReplyDeleteHank, that is a very interesting observation! I did not think about that when reading this article. I'm not sure if I'll fully answer your question, or if I'll come anywhere close, but from what I understood while reading Schwarz's explanation on Figure 1 is that this is a continuous cycle within each round of business wargaming. Everything, from the client's decisions, to the effects it will have on the stakeholders and the market/customer representation (and to the effects their decisions will have on the client, as well), is all considered during each round. I suppose this would signify that one decision/turn is taken at a time, but it would seem like the game tries to incorporate all aspects of the industry in order to make it as accurate as possible. Again, I'm not sure if that came close to answering your question, but that's my best shot!
DeleteI found this article very interesting, due to all the different variables that are dependent on each individual industry. Did Schwarz mention anything of the particular industry he was using his model for? or off of? I see client and stakeholder and it makes it sound its modeled after more of a stock market based industry.
ReplyDeleteRoland, that's a good question. Schwarz did not specify a particular industry when describing the process. The only thing he specified was that he was referring to business managers when referencing the "client". He explained that the stakeholder teams are comprised of the client's competitor companies.
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