Predicting competitive interactions with strategic war games/competitive simulations

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War games or competitive simulations, as some companies label them, are extremely useful in estimating, not only what the competitor will do, but also other players, such as the local FDAs, payors, physicians and other key players.

Strategic war games are very flexible, as they are designed on an ad-hoc basis. But, let’s define what is a strategic war game, so it can be better understood what we mean by them:

Definition and main hypothesis:

A war game is a simulation of a business situation, where we try to assess what the likely reactions of key stakeholders will be at the same time, as well as the impact of these reactions on the company’s performance, to refine our strategy.

The main hypothesis for war games is based on the Sun Tzu saying “if you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Running a war game, we will know the competitor (the enemy in Sun Tzu’s parlance), as we put ourselves in its shoes and design its strategy. Indeed, getting teams to put themselves on the shoes of the competitor is generally one of the most difficult tasks, as teams tend to remain on the own company’s mindset. Thus, a key task for the war game coordinator is to ensure that the teams get into the competitors’ roles.

Running a war game, we will also know ourselves better, as we will analyze our strategy from several different points of view (competitors, other players and ourselves) and will discover our potential blind-spots.

Process:

Running a war game does not begin with the dynamic itself, but much earlier, as the following steps are done before running the war game:

Then, there is a lot of work before the war game itself. Indeed, most of a war game success can be attributed to the preparation work. We even run the war game among ourselves before doing it in practice to tweak it a bit, if needed, and make it as successful as possible.

The following steps are done during the war game itself:

Main benefits:

The main benefits can be summarized as:

  • Stress-tests strategy/ies and key assumptions
  • Forms a mindset ideal for dynamic environments. This is a very important point, as pharmaceutical companies live in increasingly tough environments with many of them still not used to it
  • Generates consensus and buy-in on the strategy chosen and goals pursued
  • Produces a common language regarding goals, key success factors, limitations and opportunities
  • Allows for choosing the path of least resistance, due to better understanding of competitors’ boundaries and mindset
  • Lowers the likelihood of having blind-spots

Main uses:

War games are useful any time that:

  • The strategy is changed or
  • There is a significant change in the scenario (including the launch of a disruptive product)

As they are tailor made considering the players, scenarios, etc., any situation can be simulated.

The only limitations to its use are that:

  • You need at least two players to run a war game, as war games are useful when the action or reaction of at least player exerts an influence on the performance of the other
  • The action of one player impacts on the other (if the players are isolated from each other and their actions do not play a role in the performance of the other, it makes no sense to run a war game).

In product launches war games are generally used to test the strategy (either of the new entrant or the incumbent). They can be extremely useful for detecting blind-spots and preempt competitor strategies that might significantly impact the launch or counter-launch of the product. In this case, it is normally useful to consider the framework for competitive interactions, already described in a former article, when developing the war game and playbooks, as it can shed light over many possible moves the competitor might do.

In the case of product launches, it might be useful to do afterwards a tactical war game, so salespeople experience first-hand what will happen in the field and develop approaches to leapfrog competitors. We will also cover tactical war games in a future article.

Key success factors:

The main key success factors can be summarized as:

  • Deliverables are agreed upon beforehand. The result of a war game can’t be guaranteed, so the process and the deliverables (output, such as what is the most damaging strategy the competitor might use).
    • Good playbooks and war game design are key to the success and a lot of time must be invested in developing them
  • Participants know the playbooks by heart. Wisely choosing participants that will engage in lively discussions and stress test all assumptions is key to run a successful war game
  • There is time to change the strategy, if needed. No-one can guarantee that the strategy will not need some tweaking after running the war game, thus, it is always advisable to have time to change it

Final thoughts:

We have run a myriad of war games in Latin America, most of them in product launch situations (either the product launcher or the company reacting to the launch). In all cases war games resulted in management teams tweaking somewhat the strategies and also having higher levels of confidence on the strategy chosen. Thus, allow for time to introduce changes in the strategy.