HBR On Strategy: "Stress Test Your Strategy Before It Fails"

Release Date: June 4, 2025
Host/Author: Harvard Business Review
Episode Focus: Corporate Wargaming as a Strategic Framework

Introduction to Corporate Wargaming

In the episode titled "Stress Test Your Strategy Before It Fails," HBR On Strategy delves into the concept of corporate wargaming, a strategic framework that enables businesses to anticipate and navigate competitive challenges effectively. Southern Methodist University Adjunct Professor Arjun Singh joins host Alison Beard to explore how organizations can employ wargaming to fortify their strategies against potential market disruptions and competitive maneuvers.

Defining Corporate Wargaming

Alison Beard (02:08): "Now I do want to be sensitive about this term war games, because as we know, many people in the world, from Ukraine to Israel and Palestine, are dealing with actual war right now. But explain for us why you use it and what exactly it means."

Arjun Singh (02:22):
"War games are essentially dress rehearsals for companies to really test and stress test their strategies before deploying them into the marketplace. Wargaming is very popular in the military. It crossed over into the business world about 40, 50 years ago. The terminology has stuck on since then. It is also referred to as competitive simulations."

Corporate wargaming involves simulating competitive environments to evaluate how strategies withstand real-world challenges. Originating from military practices, this approach has been adapted by businesses to understand their competitive landscape comprehensively.

Wargaming vs. Traditional Scenario Planning

Alison Beard (03:14): "And how does it differ from traditional scenario planning?"

Arjun Singh (03:19):
"Traditional scenario planning, the notion there is really around thinking through different outcomes that may happen in a competitive environment. You hope for the best, but you prepare for the worst and you work out strategies built on these alternative worlds that are there. Wargaming takes scenarios to another element... it really drives home the actionability and moving it beyond an intellectual exercise to really pragmatic next steps for organizations to really bring them to life."

While both methodologies involve envisioning future scenarios, wargaming extends beyond by incorporating the probable actions of competitors and devising concrete responses, thereby transforming theoretical scenarios into actionable strategies.

Implementing Wargaming: Educational and Practical Applications

Example Exercise: Battle for Mobility
Arjun Singh (04:10):
"The Battle for Mobility... six different teams represented: traditional automakers like GM, Volkswagen, Toyota; next-generation providers like Tesla; Uber and Waymo. The notion is around who's going to win in the battle for mobility... considering non-ownership of cars, AI technologies, and their impact on future transportation."

This exercise demonstrates how participants simulate competitive strategies among leading automotive and tech companies to foresee and shape the future of mobility.

Real-World Application: Pharmaceutical Sector
Arjun Singh (15:20):
"One recent game in the pharmaceutical space involved a potential blockbuster drug expected to generate over $5 billion in revenue. A key scenario was an FDA rejection. Despite initial defensiveness, the playbook developed through wargaming enabled the company to respond effectively, ultimately securing FDA approval upon resubmission."

This case illustrates how wargaming prepares companies to handle critical setbacks proactively, ensuring resilience and adaptability.

Benefits of Corporate Wargaming

Avoiding Blind Spots
Arjun Singh (08:45):
"The opportunity part of wargaming is really around helping companies avoid blind spots... It's a forum for having these conversations. It's particularly important when the conversations are going to be uncomfortable. It challenges the status quo and makes an organization think differently."

Wargaming encourages organizations to scrutinize their assumptions, fostering a culture of critical thinking and strategic foresight that can prevent stagnation and decline, as seen in historical cases like Kodak and Blockbuster.

Actionable Insights and Alignment
Alison Beard (20:44):
"The output from these sessions is a playbook for a variety of scenarios..."

Arjun Singh (20:58):
"Actionability really from a war game comes from the playbook. It's the actions to take versus some of the scenarios... everyone aligning as a group in terms of we understand the core issues, we understand where our opportunities are, we align on what our next steps are going to be."

The creation of a playbook ensures that the insights gained translate into tangible actions, aligning the organization's efforts towards shared strategic goals.

Challenges and Overcoming Resistance

Time and Resource Constraints
Arjun Singh (10:24):
"It's a function of resources and time... logistics around getting people together, especially senior management. Culturally, some organizations are not comfortable having their assumptions challenged."

Organizations often face hurdles in dedicating the necessary time and resources to conduct comprehensive wargaming sessions, compounded by cultural resistance to challenging entrenched viewpoints.

Overcoming Pushback
Arjun Singh (26:46):
"Sometimes companies just have to kind of go through that whole process to get that realization... the catalyst for breaking that is if someone in the team's actually been through a game and they're the champions of talking through wargaming and the benefits that are there."

Championing the benefits through internal advocates who have experienced the value of wargaming can help mitigate resistance and justify the investment.

Best Practices: Frequency and Integration

Annual Integration for Best Practices
Arjun Singh (22:42):
"A lot of best-in-class companies have integrated wargaming into their annual planning process... if you're in a fast-moving area like technology, you could do it once a year, or even multiple times a year."

Regularly scheduled wargaming sessions, tailored to the pace of the industry, ensure that strategies remain relevant and responsive to evolving market dynamics.

Functional and Startup Applications
Arjun Singh (24:13):
"Functional areas... sales, marketing, R&D, finance... startups can use this toolkit to role-play and anticipate competition reactions, saving costly mistakes by internal strategizing."

Wargaming is versatile, benefiting various departments within organizations and offering strategic advantages to startups by preemptively addressing competitive challenges.

Case Study: Travel Industry and COVID-19

Preemptive Scenario Planning
Arjun Singh (17:28):
"In 2017, we conducted the 'Battle for the Traveler' game. A COVID scenario was introduced, predicting a 95% decline in travel demand. Initially dismissed, this exercise forced participants to revise their strategies, aligning with real-world disruptions caused by the pandemic."

This retrospective example underscores the importance of flexible and robust wargaming frameworks that can adapt to unforeseen global events, enhancing organizational resilience.

Conclusion: Driving Strategic Success Through Wargaming

Corporate wargaming emerges as a critical tool for businesses aiming to refine their strategies, anticipate competitive moves, and navigate uncertain market landscapes effectively. By fostering a culture of proactive strategic planning and aligning organizational efforts through actionable playbooks, wargaming equips companies to face challenges head-on and seize emerging opportunities with confidence.

Key Quote for Emphasis:
Arjun Singh (08:45):
"Wargaming is particularly important when the conversations are going to be uncomfortable. It challenges the status quo and makes an organization think differently."

For organizations seeking to bolster their strategic frameworks and build resilience against market uncertainties, integrating corporate wargaming can be a transformative step towards sustained success.