WHAT IS A COMPETITIVE SIMULATION?
A competitive war game creates a real-time simulation of an actual business situation.
It is used to anticipate the impact of possible business choices, allowing the test of alternative business strategies at very low cost and no risk.
It helps understanding how a given industry may evolve and what might be the behavior of specific players.
When analysis on its own is not enough to provide answers, war gaming can shed a beneficial light on the range of possibilities to be considered.
War gaming is particularly useful when there is a moderate level of uncertainty in the industry. When the level of uncertainty is higher, scenario planning might be a better alternative.
WHEN TO USE COMPETITIVE SIMULATIONS
Competitive simulations are a powerful instrument in case of, e.g.:
NEW MARKET ENTRIES
NEW PRODUCT LAUNCHES
NEW COMPETITOR ENTRIES
MERGERS & ACQUISITIONS
BENEFITS OF COMPETITIVE SIMULATIONS
Identify opportunities in an evolving industry
Prepare for competitive reactions
Reach agreement on the most suitable strategy
Increase robustness of strategic plans
Make the best use of competitive intelligence information
APPROACH TO COMPETITIVE SIMULATION INTERVENTIONS
Competitive simulations can be designed and run relatively quickly, with a maximum process length of six weeks.
The approach is structured in 4 key steps, with well-articulated and analytically intense pre-game and post-game phases, that are are essential for the success of the initiative.
1. DEFINE THE SET OF GAMES TO BE PLAYED
- Determine who should design the game and who should participate, given the game's objectives
Define a discrete range of choices to be tested
Determine the set of levers to be tested (e.g., prices, contracting, alliances)
Translate choices and levers into specific war game simulation runs
Specify the needed simulation teams (company, competitors, other stakeholders, e.g. consumers, payers, government, etc.)
2. PREPARE A REALISTIC INDUSTRY MODEL
Identify key market trends
Run industry SWOT analysis
Investigate recent and expected competitor moves
Run competitive intelligence on selected key players
Collect and formalize the information available and distribute pre-reads to participants
3. RUN THE COMPETITIVE SIMULATION (1-2 DAYS)
Teams run SWOT, define strategic options and select key levers
2-3 competitive moves simulation (3-4 hours each) and dynamic challenging
Inter-move modeling of market impact
Inter-move modeling of players financials
Final definition and assessment of available strategic options
4. DRAW STRATEGIC CONCLUSIONS
Summarize workshop learnings
Describe strategic options
Translate strategies into concrete action plans