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Scenario Simulations, War-Gaming, & Contingency Planning: Strategies to Excel in a Constantly Changing Market

Posted by Ellie Mirman on Tue May 07, 2019 08:15 AM

Scenario simulations, war-gaming, and contingency planning can be effective tools for planning your competitive moves ahead of major market shifts. Scenario simulations allow your organization to consider how it would act in different future market conditions, considering shifts across social, political, technological, and other broad factors. War-gaming also explores future potential business scenarios, but focuses on interactions between competitors and simulates the series of moves and countermoves each entity would make. Contingency planning takes an even more focused approach, allowing teams to define their strategies for a singular “what-if” scenario. All of these approaches to scenario planning can be helpful business strategy building tools.

Benefits of Scenario Planning Exercises

The benefit of these strategies is that they allow an organization to proactively discuss, plan, or simulate how you will act if or when a particular situation arises. No business can accurately predict every future market shift - unless someone has a crystal ball they’re not sharing - so businesses are often left in a reactive mode whenever a major event occurs. Scenario planning exercises make the business that much more prepared for any of the potential events that could come in the future.

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There are different degrees to which you can take your scenario planning exercise - at the extreme, you can participate in expensive computer-assisted simulations that process inputs and variables to play out a unique future scenario. If you’re looking for a lighter weight scenario planning exercise, you can do in-person role plays with different members of your team acting as key market players interacting with one another. Or, an even lighter weight approach would be to identify a set number of possible future scenarios and discuss plans of action for each, involving key members from each relevant business function.

Scenario planning exercises are critical for a business to be able to guard against future threats but also take maximum advantage of potential opportunities. Too often, businesses end up scrambling to adjust to a competitor’s move or an environmental shift that has significant market implications.

How to Run a Scenario Planning Exercise

If you want to do a full-blown scenario simulation, you can hire a consulting firm or train an internal team member to facilitate such an exercise. Or if you’d like to start by leading your own team in such an activity, here are the steps you can take.

  1. Identify Variables: Brainstorm a list of variables, or things that could change and have an impact on market dynamics. This could include a new competitor emerging, one competitor acquiring another, new regulations going into effect, or any other competitor-driven or environmental forces. If any team members have recently completed a SWOT analysis of competitors or your company, this can be a great starting point for developing your variables.
  2. Create Scenarios: Combine variables to come up with potential scenarios to explore as a team. Narrow these down to a few scenarios that you’d like to flesh out and dig into for the exercise. It can be helpful to focus on those that are the most likely scenarios (e.g., new regulations are already in motion and set to go into effect next year) or scenarios that are wildly different from each other, in order to explore a wide range of potential futures.
  3. Involve Cross-Functional Teams: It’s important to incorporate team members from different functional groups for this exercise, particularly if you are exploring scenarios with far-reaching impact. For a war-gaming or role-playing type exercise, too, you’ll need some team members to “play” as your competitors and customers, so you’ll need extra hands on deck. Bringing together perspectives from different parts of the company will allow you to get a complete picture of the varying impact each scenario can have on the business.
  4. Launch the Exercise: Provide each team member their role, introduce the scenario, and it’s time to play it out! A big part of this exercise is not only the initial actions, but the consequences that result from those actions and seeing how each party interacts. Take note of follow-on circumstances, issues that come up, and new questions to address.
  5. Recap & Document: When the exercise is complete, bring the group back together to discuss. What drove decisions that were made? What factors and questions were discussed? What lessons did the team take away? Then document the takeaways from the exercise, along with guidelines in case a similar scenario were to actually present itself in the future.

Integrating Scenario Planning at the Micro Level

While an interactive scenario planning exercise can be truly engaging and enlightening for your cross-functional teams, most businesses don’t have the luxury of doing this exercise often. But new competitive signals come up frequently, with hints at future threats and opportunities. By teaching this approach to all of your teams, they can start to apply this strategy at the micro level, encouraging each marketer, product manager, sales executive, or anyone else to consider how they can react should different competitive actions become a reality.

For example, this approach can enable a demand gen marketer to plan against a competitor launching a copycat campaign, enable a PR professional to plan against the announcement of a competitor’s fundraising, or enable a product manager to plan against a key integration partner going out of business. These mini contingency planning exercises guard against risks across the business and help every member of your team have deep control over their functional area.

Whether you take advantage of scenario simulations, war-gaming, or contingency planning exercises, these approaches help your team think through not just what they’re doing today in current market conditions, but think ahead and prepare for potential future market scenarios. Planning ahead, considering how different shifts can impact the business, will put the business in the best position to excel no matter what happens in the future.

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