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Business War Games: Case Studies
ACS has helped strategists in industries including airlines, chemicals, computers, computer components, gasoline retailing, health and beauty aids, inflight Internet access, medical devices, OTC medication, paper, pharmaceuticals, telecommunications, telephone networks, trucks and buses, vaccines, and more. Our clients are among the world's largest companies.
Our clients include AstraMerck, AT&T Wireless, Bayer, Bell Atlantic (now Verizon), Boeing, British Airways, DuPont, GlaxoSmithKline, Guidant, Intel, Methanex, Nortel, Novartis, Roche, SBC Communications, Shell, Sprint, Telkom South Africa, Weyerhaeuser, Wyeth, and others that prefer for competitive reasons not to be named.
Here are a few examples drawn from our experience in business war games. ACS's experience across many industries makes our expertise and technology particularly valuable because we can draw on out-of-the-industry-box thinking. It helps to look broadly when you want to find innovative solutions to tough problems.
Working with ACS on a business war game to deal with an expected entry from a large competitor, a major pharmaceuticals company discovered a critical competitive threat that it hadn’t anticipated. In the war game the company’s managers developed a pre-emptive move that they implemented two weeks later. They found out later that the competitor planned to do exactly what they figured out in the war game, and that their pre-emptive move was the reason why the competitor did not make their move.
Shell Oil worked with ACS to conduct a business war game before rolling out a change-the-rules strategy. (This case was chronicled in “Putting the Lesson Before the Test,” the final chapter in Wharton on Dynamic Competitive Strategy.) They discovered that their strategy, which had previously passed through multiple reviews, would almost certainly trigger a competitive war that would devastate the industry. They abandoned the strategy, and they credit ACS with saving them over $130 million in one geographical area alone.
A major industrial supplier did a war game with ACS in which they discovered that their “this is how we’ve always done it” strategy would lead to a loss of roughly $500 million over 5 years. Knowing that they had to find a new approach (which they had previously resisted), they developed a paradigm-changing strategy that turned the expected loss into a strong profit...and that led to a promotion for the business’s general manager.
Top management at a large pharmaceutical company demanded that managers triple sales in one business unit over a two-year period. ACS developed a strategy simulator for the business, and ran thousands of scenarios using the simulator. The conclusion was that trebling sales was not possible except for under outrageously optimistic assumptions. The business-unit managers were saved from what would have appeared to be failure, and top management learned in advance what level of performance to expect.
A telecommunications company facing the entry of a serious new competitor had been debating whether to follow a “live and let live” strategy or whether to go to all-out war. Neither side had been able to convince the other. An ACS business war game, using ACS strategy simulation technology, demonstrated that the company would lose 20% market share under one strategy...and 40% under the other. End of debate.
An ACS client conducting a global launch of a potential blockbuster product asked us to help management in one region develop strategies that would improve each country's contribution to the corporate goal. We worked with the international and local managers to develop a strategy simulation model and business war game to support this effort. Country managers gained insight about how they could better meet corporate goals, and they developed guidelines for implementation. In one of the countries analyzed, managers completely changed their competitive strategy as a result of what they learned during the business war game. The strategy simulation model also identified the need in some countries for key financial and clinical-trial support from corporate.
A team planned to introduce a new health and beauty aid product with a strategy that appeared to be as obvious as Marketing 101. Their business war game showed the strategy would likely produce a profit hemorrhage, not a profit gusher. They tested another strategy, liked it, and switched to it.
A team of regional sales managers discovered that they were making fundamental mistakes about competitors and their own capabilities, despite twenty-plus years' experience in their industry. They changed course to a marketing strategy they considered impossible prior to the business war game. It worked.
A client preparing a world-wide launch of a new product into a multiple geographic markets needed to understand its sales potential, taking into account its positioning and the positioning of a major competitor launching its own product at the same time. Working with the client, ACS developed a strategy simulation model that enabled the client to understand the potential for the product in two key market segments in multiple countries where customer needs varied significantly and where the two major competitors had different objectives. The business war game and quantitative analysis helped the team make country-specific decisions about pricing and resource allocation, and has been incorporated into the worldwide rollout.
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