Wargaming in the 21st Century, drawing on history’s greatest generals

WARGAMING might sound like a pastime for adolescent boys but in one interpretation it’s a deadly serious strategic planning tool used by a growing number of the world’s largest organisations.

Such is the importance of this new discipline that failure to follow it can lead to major market losses – as some really big names, including Sony, are reputed to have discovered.

Industry gossip has it that Sony’s failure to appreciate the forthcoming LCD screen technology, and the company’s determination to stick with its then market-leading CRT screens, cost it the number one spot in the marketplace and more than billions of dollars in sales.

So how could wargaming have helped? Leaderboard asked leading wargame specialist Rafaat Rahmani to explain.

“All great generals throughout history have used this form of strategic planning to ensure their success on the battlefield,” he said, “but it is only since the late 20th century that businesses have adopted this concept as their own.”
Rafaat spoke of Alexander the Great – one of the most successful generals of all time – and how Hannibal used elephants to cross the Alps against all odds to attacked the Romans.

“For Alexander it was a question of constraints and resources,” explained Rafaat. “The Alps were a constraint, the elephants were his resources.

“He was able to achieve his success only by preparing for all eventualities, by considering every possible course of action and its likely results, and having a plan in hand on how to deal with them.”

Rafaat first learned about wargaming during his MBA course at the Manchester Business School – at that time one of the two leading institutions of its kind in the UK.
“Since then I have been actively engaged in wargaming with most of the top ten pharma companies in the world, This helps to ’pressure test’ any strategies, and plan for all eventualities that a competitor might throw,” he continued.

When corporations embark on wargaming initiatives, it’s the norm for these to take place off-site and often in an exciting
location. For example, one of the projects took place in Buenos Aires. A leading drug company had discovered that a rival firm intended to launch a product identical to one of its own.

“It was essential for my client to be able to map out strategies in order to neutralise this threat,” said Rafaat.

“The wargame scenario aimed to simulate the competitor’s approach from every possible angle, and work out a response to that approach.”

Depending on the nature of the initiative, the the planning stage for such a wargame may take as much as two to four months, and involves considerable competitive intelligence.

The brand team or upper management define the objectives, the desired final outcome and two to four key competitors they would like to ‘play’. “Once this is done we would draw up key intelligence topics and key intelligence questions for preparing a dossier on all ‘playing’ companies,” said Rafaat.

“First of all we conduct a value chain analysis on the client and Its chosen competitors – we need to find out how they see themselves in relation to the competition,” he continued.
“Then we use competitive intelligence to profile key personnel to see how they have reacted to circumstances in the past, and what kind of leadership is involved.
The players in the wargame are selected from within the client company – “security is a great issue,” he says. They are drawn from relevant departments within the company, including marketing, finance, strategy and sales.

The players are then usually divided into teams of 6 to 8 each. The number of teams would depend on numbers of companies playing – one representing the client company, one the primary opposition and two representing other competitors in the marketplace.

Having sorted out the logistics of the exercise and booked the venue, all the players in the wargame attend a pre-game ‘ice-breaking dinner’ where they get to know each other, learn the ground rules, what to expect and how to interact and prepare themselves for battle the following day.

During the wargame a live ‘newspaper’
keeps all teams updated on events as they occur, and unexpected scenarios are introduced – such as government intervention or the discovery of side effects caused by the drug in question. This widens the possibilities and adds reality to the scenarios and the number of strategies which can be developed.

Each team has a facilitator or moderator to advise, help crystalise ideas and keep the game on track. There is also an expert panel made up of cross-functional top management (marketing, R&D, finance, manufacturing, information technology, human resources), who will be present at the end to listen to the final outcomes and action plans.

“The teams are expected to envisage every possible twist and turn in events and predict results and reactions.” explained Rafaat. “By the end of the game each team has to present an action plan and a strategy, and come up with a budget to implement it.”

Wargames like this have proved incredibly successful for companies facing or considering mergers or takeovers, launching new products and for venturing into new areas of business.
It’s almost certain that the recent takeover of Cadbury by Kraft involved wargames on both sides.

The concept is equally important in cases of litigation, where it can be used to predict how a judge may react, or what approach a prosecutor or defence lawyer might take.
“An increasing number of companies are now using these techniques; they are also being taught in many business schools,” said Rafaat.

“Organisations which don’t or won’t use wargaming will remain reactive rather than proactive. They will find it difficult to respond to the changing business environment, and ultimately will lose out to the opposition.”

A lesson, perhaps, that Sony and others might well be learning.

Rafaat Rahmani has a Bachelor’s degree from the University of Houston, USA and an MBA from Manchester Business School, UK. He began his career with blue chip companies McDonald, Pepsico and Eli Lilly. Rafaat is CEO of Lifescience Dynamics and Revelation Associates, international consulting companies specialising in market research, competitive intelligence, business modelling and strategic consulting. Wargaming is a core offering of both his companies.