business

Oh, What A Lovely War Game

If Napoleon were alive today, he wouldn't waste his time invading Russia. More likely he would be raking in the big francs lecturing executives on how to rout their enemies in, say, the cognac market. Judging from the avid following that Clausewitz, Sun Tzu, and Attila the Hun still command, executives feel they have plenty to learn from military thinkers. The parallels are obvious. After all, business is hell, too.

So it's no surprise that Booz Allen & Hamilton Inc., the international consulting firm, is enjoying success with a civilian version of the war games it has helped the Pentagon play for more than a decade. It's the latest wrinkle in defense conversion: Instead of pushing toy tanks and battleships around on a big map, Booz Allen's "competitive simulation" clients announce takeovers, introduce products, and file patent-infringement lawsuits, testing real-world strategies without risking real-world money. Among the companies that have undergone the exercises since 1987 are General Electric, AlliedSignal, General Dynamics, Caterpillar, FMC, and Chevron.

Instead of cooperating, as in conventional strategy-setting sessions, executives in war games divide into teams representing each major player in their industry. They're prepped with dossiers on the companies they're portraying. (Assembling the files is an important side benefit.) Then, after each team lays out its plan, a group of executives who represent the market decides how much to buy from each. Games typically last three rounds, one a day.

UNEXPECTED. It gets rough out there. Rival teams aim to ridicule and demolish the home squad--a job that's made easier because they know its secret weaknesses. At Chevron Corp., some "enemies" took on their roles so thoroughly that "they almost had a little bit of trouble getting back into Chevron," says Lloyd E. Elkins, president of Chevron Services Co.

Out of that heated competition arise unexpected and sometimes unnerving outcomes. For example, the Caterpillar Inc. division that makes engines for heavy trucks had always believed that none of its engine-making competitors would dare buy a truck manufacturer, figuring that all rival truckmakers would spurn that company's engines from then on. But in the game, one engine producer did buy a truckmaker--and didn't lose a dollar's worth of engine business from other truckmakers.

Of course, there's no guarantee that game scenarios will play out in real life. But they might. "The game keeps you from making self-serving assumptions about what your competition is going to do," says Tom Rabaut, general manager of FMC Corp.'s Defense Systems Group. Underestimating the enemy "is unconscious," Rabaut says, "but we all do it."

GE Plastics used the Booz Allen game to build the skills of its salespeople, hoping to persuade them to listen to the customer. A simple idea, but one that hit home when they witnessed firsthand the failure of teams that used high-pressure sales tactics. According to Booz Allen, one salesman who finished the game stood up and said: "Now I understand what you've been trying to tell me all these years." Nigel D. T. Andrews, general manager of GE Plastics Americas, says the game easily paid for itself in increased sales in the first year. "The most consistent message was not to presume you know the answer to a customer's need too quickly," he says.

BLINDSIDED. Booz Allen hardly has the gaming field to itself. But most games, such as those from business schools, are more generic and aimed at building general executive skills. Other games are customized for particular clients, but the home teams may play against computers rather than other people. Such games are limited by the imagination of the software developers. Monitor Co., a consultancy based in Cambridge, Mass., runs games that resemble Booz Allen's but without a team to represent the market.

It's the market team that's really put through the wringer in Booz Allen's games, working up to 19 hours a day to represent every customer segment. Booz Allen has two people working on games full-time and perhaps a dozen others who help when the shooting breaks out. To date, it has run nine games, at prices of $250,000 and up. It's booked for three so far in 1993.

Is business war? More or less, says George E. Thibault, who runs the Booz Allen practice as head of the Strategy Analysis Center in McLean, Va. Thibault is a 30-year Navy veteran who worked in the Central Intelligence Agency and headed the National War College's military strategy department. He says that in business, as in the military, the hardest thing to avoid is a surprise. Thibault likes to quote University of Maryland economist Thomas C. Schelling, who says that traditional strategic analysis falls short because "you can't make a list of things you never thought of."

Things you never thought of are exactly what tend to emerge in war gaming. Tapping into that flow of ideas is the main reason business executives from some big companies have been trying out the latest military technology to be converted to civilian use.

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