WARGAMING FOR LEADERS
STRATEGIC DECISION MAKING FROM THE BATTLEFIELD TO THE BOARDROOMBy MARK HERMAN MARK FROST ROBERT KURZThe McGraw-Hill Companies, Inc.
Copyright © 2009 Booz Allen Hamilton Inc.
All right reserved.
ISBN: 978-0-07-159688-6
Contents
Chapter One
DESIGNING THE MODERN WARGAME: THREE KEY MOVES It is an axiom of modern life that change is the only constant, and the pace of change certainly has accelerated, presenting new challenges to institutions throughout society. At one time, the velocity of decision making may have seemed adequate to tackle most crises; today, a crisis can spin out of control even if the correct decisions to contain it are made in what once was considered good time. You will see that phenomenon at work in some of our wargames. For example, we have wargamed an outbreak of avian flu several times in several places and learned that authorities would have a pandemic flu on their hands before decisions could be made to bring it under control. As we will see later in this book, the takeaways from these pandemic flu games can inform planning for the real- world crisis if it arrives.
A wargame is not the answer to every problem or challenge. The issue may not be large enough or may be addressed better by one analyst or a small team of analysts. A CEO or an army general may get all she needs for a smart and informed decision by asking her people for the top three courses of action, with the pros and cons for each course.
Also, a wargame probably is not appropriate for teaching the equivalent of first principles. Once we had a prominent government agency ask us to design and conduct a wargame to address one of its problems. It turned out that the agency was having some difficulty rolling out a Six Sigma program. (Six Sigma is the renowned quality-control methodology for sharply reducing defects in processes and systems. It was pioneered at Motorola, but perhaps its most famous disciple was former General Electric CEOJackWelch, who brought Six Sigma to GE in the 1990s.)
The government agency wanted an interactive exercise for its Six Sigma training program, and some of its people thought a wargame would be just the thing. However, there really was nothing to wargame: no stakeholders at the agency fighting over turf, for example, and no wrestling over strategy. This seemed to us perfectly straightforward, a case in which traditional training was the answer. We explained our thinking, and the agency went back and focused on the real issue: training the people who would inculcate Six Sigma throughout the organization.
Our wargames can be intricate affairs, with many moving partsoccasionally, too many. A few years ago an insurance company that was expanding rapidly and diversifying its offerings wanted to know whether we could wargame its future. The company probably had two or three dozen different products and was eager to operate in 50 or more countries. Specifically, its top people, anticipating this huge expansion overseas, proposed that we apply wargaming principles to the whole shooting match. Impossible, we said, unless the project could be divided into a series of wargames that narrowed the scope of each game. But that would take much more time and probably cost more money than traditional market analysis. Sometimes, especially when large, fundamental questions are on the table, an appetite suppressant is prescribed medicine to make the wargame work.
When does a wargame make sense? As a general rule, a successful wargame requires two conditions. First, we and our client must be able to identify a clear objective or, in military parlance, a concept of operations. Second, it is crucial that there be key groups with different equitiesinterests that are at real or imagined odds with one another, based on arguments over strategic or tactical plans, data, or institutional culture. In the military, the U.S. Army, Navy, Air Force, and Marines; the Office of the Secretary of Defense; the Joint Chiefs of Staff; and combat commanders can all take different positions on issues, whether the nation is at peace or at war, and those interservice arguments or rivalries can paralyze decision making.
Imagine a debate about nothing less than the future of the nation's force structure. Someone or something must serve to narrow the disagreements and build a rough consensus on a way forward. That is a perfect situation for what we do because wargames can drive change by the very nature of the process. The game allows military officers or civiliansor corporate executives or leaders in the nonprofit worldto work in a contested environment of their own creation; they can test overarching strategies and specific plans before committing their organization, its people, and its resources to a course of action from which there is no turning back. It is a way to experience the future without the risks attendant in the real world.
The planning, research, design, and preparation of wargames (see Figure 1.1) begin with a conversation or series of conversations with our client's core group of decision makers or policymakers. They have come to us with a problem they want addressed, but we need to drill down to identify the critical objective of a prospective wargame. If the client is a corporation, we often sit down first with senior executives, including the CEO, and ask: What is it that keeps you up at night? What really worries you looking forward?
We expect candor from clients and usually get it, but on rare occasions we learn of a hidden agenda only after the game is afoot. Once we did a game for a company that had enjoyed a near monopoly in its business but recently had encountered a serious competitive challenge from two other firms. The CEO wanted a wargame that tested the new competitive environment. It turned out that all the players on the "home" team and on the two competitor teams were selected carefully from upper-middle management. The CEO, who did not play the game but attended all the briefing sessions, clearly wanted to see how the company's future leadership operated under pressure. Never let them see you sweat? Forget it: The younger executives were visibly nervous, as one could tell from the perspiration on their brows. However, it would have been better if the CEO had given us a heads-up before we designed the game; we probably would have tweaked it to serve his hidden objective more effectively than the simple perspiration test did.
We need to know with as much precision as possible what the client hopes to achieve from the game. It can be ratification of an existing strategic plan, identification of a plan's potential weaknesses, the wisdom of a new-product introduction, an assessment of a program for major change in military procurement, or the implications of a terrorist incident at a major port in the United States, Europe, or Asia. Clarity of purpose is essential because a wargame cannot be all things to all people. The idea is to build the game to meet a set of objectives that challenge the client and meet the client's expectations at the same time.
Often the process requires multiple meetings over several weeks. A few years ago, for example, a large automotive company hired us to wargame the impact of the "Block Exemption" in Europe. The European Union had deregulated various facets of the automobile business. Importantly, the EU had opened up the after-market for parts and service. Before the Block Exemption, new car buyers were required to get their parts and service from the dealers. That was no longer the case, and the new situation meant that automobile manufacturers were facing a wide range of potential competitors. Would parts manufacturers open up their own shops and service centers? What other companiesretailers such as Carrefourmight try to get in on the action? It took us five weeks of meetings, sometimes with 10 to 12 senior people twice a week, to nail down the scope of the game. How many teams would play? How many market segments would they represent? What geographic markets would we try to cover?
A wargame often takes at least 6 weeks and as many as 12 weeksoccasionally even moreof preparation. We realize that one size doesn't fit all in wargaming; everything we do is made to order, and that requires customized research, sometimes a lot of it. In one case, also in the automobile industry, our client, a U.S. parts manufacturer, wanted us to wargame the global market for its products at a time when electronic systems were beginning to sweep through the industry. To build the game, we had to research the technologies, examine what the car companies had on the drawing boards looking forward six or seven years, and develop profiles of how the new electronic systems were likely to be integrated into the vehicles. It took a team of five Booz Allen people, working fulltime, nearly 16 weeks to complete the research work and begin to frame the wargame.
Members of a game's design team argue among themselves as the work moves closer to the finished product. One rule of thumb is that the first construct of a wargame is both brilliant and wrong, prompting us to tear it apart and rebuild it until we think we've got it right. Even then, we always run a test game, using our people and the client core group as participants. In effect, we wargame the wargame. It is not unusual for our clients to be unnerved by this exercise, because a test game amounts to an extension of our internal argumentation by other means. However, a client's participation is crucial because it helps us examine the granularity of the game: whether the level of detail is right, whether the approach is appropriate for the people playing the game.
If the test reveals weaknesses or anomalies we didn't anticipate, we revisit our methodology, fix what's broken, and run a second test game or a third or a fourthhowever many it takes to produce the virtual reality we seek when we take the game live for a client. For example, we did two wargames for a capital goods manufacturer. We tested the first, which was to be played by middle-management executives and centered on cost cutting and product quality, and found that we had not plugged in enough numbers. We retooled the game and played it out.
The second game was to be for senior management, including the CEO, and we found through further test games that the detailed number crunching in the first game was not transferable to the second. We had to widen the lens and reflect the bigger picture. The objective for game 2 was to examine how the corporate brain trust viewed the U.S. marketplace for its products. We challenged the senior executives to describe their three big priorities for the ensuing two-year period. For each priority, they were to tell us what they were trying to do, how they expected to make it happen, how it would affect unit sales and revenues, and how it would change costs and capital investment. In effect, the testing between the two games altered the approach to the second.
The way the real game is played varies with the client and the game's objectives. Military games can involve a few dozen uniformed and civilian participants or as many as several hundred, and can be a single game played in a day or a series of games played episodically over many months. However, most wargames for the government, commercial clients, and nonprofit groups play out over two days with anywhere from 50 to 100 participants and simulate a period of time in the future: a few months to a decade or even more in certain types of military wargames.
Older wargames were played on tabletops or other flat surfaces, with distances and topography adjusted to scale and with moves required of the players. Modern wargames usually are played in moves, too. The typical game consists of three moves, the first of which is a reaction to the world as it is or to a scenario or environment supplied by our design team. Why three? Through trial and error, we have learned that a three-move exercise provides the flexibility to develop and complete the game without placing an unreasonable burden on the players' time. Three moves, furthermore, give the players enough experience with the possible scenarios to get to the endgame and envision a resolution.
Booz Allen wargamers serve as the control group during the game, adding new information or scenario shifts"injects" in our parlanceas the subsequent moves unfold. In a military or business game or a game on a major public policy issue, teams of competitors, adversaries, or stakeholders react to the initial scenariofor example, a major regulatory change in the commercial airline business, the imminent auction of wireless leases, a different approach to missile defense, or the deaths of a few people from avian flu in two large cities.
Team members come from the client: uniformed and civilian personnel in military games, executives in business games, invitees in games we cosponsor with nonprofit groups. We and our client determine which teams will be represented and who will play on each one; we generally mix it up so that many participants get the chance to walk in someone else's shoes by playing an adversary or competitor. Teams usually meet in separate rooms or at separate tables if the game is staged in a huge ballroom. As the game proceeds, teams designate a spokesperson to brief everyone else in a plenary session after each move. There is plenty of opportunity for interteam communication and no small amount of confusion as the participants grapple with alterations in their virtual environment supplied by control.
Our wargaming, as we indicated earlier, has deep historical roots that stretch back millennia, but it also has a contemporary context in the broad field of simulations for the management of large enterprises. These management games basically trace their beginnings to the Massachusetts Institute of Technology. In the early 1960s, social scientists and computer scientists at MIT began experimenting with mainframe computer languages to create rehearsal spaces for what they thought of, even then, as a new form of thinkingwhat we have come to call artificial intelligence.
No one did more to advance this use of computer-based learning than Seymour Papert, a mathematician and computer scientist at MIT, where he cofounded the Artificial Intelligence Laboratory. Papert is a disciple of Jean Piaget, the enormously influential Swiss philosopher whose work on the way children think laid the groundwork for the field of developmental psychology. Papert used Piaget's teachings as the basis for his own theory of learning, which he called constructionism. Papert defines constructionism as "giving children good things to do so that they can learn by doing much better than they could before." He theorized that people constantly build and revise mental models of their world on the basis of their accumulated experience. As he put it in his groundbreaking book Mindstorms (2nd edition, Basic Books, 1993), children are "builders of their own intellectual structures."
Constructionism, then, is the idea that the most effective way to pick up new concepts is through direct experience, in which one makes sense of the theory by "constructing" it out of one's own practice. Scientists were open to constructionism because of their laboratory experiences, in which they assimilated theory through experiments; the more they replicated the uncertainty in an experiment by not being sure of the answer, the more likely they were to learn.
In business, Outward Bound and other experiential programs applied the same principle to problems such as team management, in which people learn to grapple with uncertainty by being thrown into unfamiliar circumstances, albeit in an environment where they cannot do harm to themselves or others. However, there were only a limited number of business problems that an Outward Bound program could help people solve. It could not help people with strategy, finance, or choosing from among technologies. It was not until the advent of the computer that such testing grounds could be set up in virtual space rather than in the wilderness.
Papert coined the term "micro-world" in the late 1970s to describe any computer-based simulation space. The earliest examples of microworlds, using a computer language Papert had designed called Logo, were designed to teach school kids about math. The children were able to program the environment, see what happened, and then hone their understanding of the fundamentals of mathematical relationships. Papert used a turtle as the locus for his approach. It is a computer-controlled object that can be a physical toy or a digital representation. The child moves the turtle by typing commands into the Logo environment. "Forward 50" moves the turtle 50 steps forward. "Right 90" makes the turtle spin 90 degrees. The children then learn to program the turtle by teaching it to obey new commands.
The Logo turtle embodies Papert's approach. "Intellectual activity does not progress, as logicians and designers of school curricula might want us to believe, by going forward step-by-step from one clearly stated and well-confirmed truth to the next," he wrote in Mindstorms. "On the contrary, the constant need for course corrections, which I call 'debugging' ..., is the essence of intellectual activity." It is not hard to see how the idea of microworlds migrated into the business realm to cover the whole spectrum of digital and live simulations in which individuals can experiment with responses and strategies to build their understanding of the dynamics that govern the real world in which they operate.
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Excerpted from WARGAMING FOR LEADERSby MARK HERMAN MARK FROST ROBERT KURZ Copyright © 2009 by Booz Allen Hamilton Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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