Should Wargaming Be Part of Your Strategic Planning Process?

Despite enormous investments of time, energy, and cold hard cash, many strategic planning efforts frequently fall flat. Why? The reasons are numerous, but one common factor is that strategic planning sessions often fail to adequately consider the reactions of competitors

For example, let’s say that Company A sets a goal to increase its overall market share. During its annual offsite strategic planning session, Company A’s management identifies an opportunity to buy market share through discounting. Convinced of the merits of this strategy, management immediately implements large-scale discounting programs, and waits for new customers to pour in. And management waits. And waits. And waits. By year end, management realizes that its market share hardly moved and, to add salt to the wound, margins that were once healthy have gone down the drain.

So what happened? The market didn’t sit still. Company A’s competitors weren’t content to just watch customers walk out the door, so they implemented similar discounting programs. In the end, the entire industry suffered from lower aggregate profits.

This is a rather simplistic example, but it illustrates that for every action there is a reaction. Want to acquire another business to expand offerings and attract more customers? Your competition will react.  Want to expand your geographic footprint to match that of potential customers? Your competition will react. You probably get the idea.

So how can refine your strategic planning efforts to address this shifting landscape?

One potential option is wargaming. The concept is relatively simple and can add new energy to lackluster strategic planning initiatives. Wargaming involves establishing teams with one team playing the role of your company, while the others play the roles of your competitors.

Based on significant advance research, each team is armed with information about the company it will play, including customers, products, geographic reach, suppliers, key employees, competitive strengths, financial data (if available), and management team members. The latter is of particular interest, because teams can often anticipate the response of a competitor based on the backgrounds of key employees. If the competitor has a high-powered M&A expert at the helm, you can bet that their strategic response will leverage that experience.

Once all of the teams have been assembled and background information has been digested, the team playing the role of your company starts the war by making a strategic move. After that move, each of the other competitor teams makes their move which, in turn, forces your team to react.

This iterative process not only adds life to the strategic planning process, but also allows you to identify significant issues before they arise, leading to more robust plans with a much higher likelihood of success. So if you think your planning efforts are ineffective or a bit stale, think about declaring war.

Christopher F Meshginpoosh CPAChristopher F. Meshginpoosh is managing director of Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email.   

 

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