What is business wargaming?

Business wargaming is a structured simulation in which a leadership team plays out a decision against the people who will react to it: rivals, customers, lenders, regulators and its own organisation. Each round, moves meet counter-moves, a control team rules on the consequences, and a debrief turns what broke into changes to the plan.

Matthieu Bodin··9 min read

A definition

A strategy is usually reviewed by people who share its assumptions. A wargame tests it against the people who do not. The common definition calls it “an adaptation of the art of simulating moves and counter-moves in a commercial setting”.[1]

In practice, senior managers play their own company. Colleagues play selected competitors and the market. A control team plays everything else that can move the outcome, from regulators to suppliers.[2] McKinsey describes war games as a hedge against competitor neglect: the habit of planning as if no one else will respond.[3]

A wargame does not tell you what will happen. BCG puts it plainly: a war game “is not a forecasting tool”.[4] It shows you what could happen, and whether your plan survives it.

Where it comes from

Business wargaming joins two older traditions. Armies built games to practise thinking against an opponent. Business schools and management bodies built games to practise running a firm on numbers.

Military wargamingBusiness games
  1. 1812

    A game table for the King of Prussia[6]

    Georg Leopold von Reisswitz presents King Friedrich Wilhelm III with a table on which commanders move forces against each other.

  2. 1824

    Kriegsspiel enters officer training[6]

    His son adds real maps and an umpire who rules on outcomes. The Prussian army adopts it for officer training.

  3. 1887

    The U.S. Naval War College starts gaming[7]

    William McCarty Little brings wargaming to Newport, where it still runs today.

  4. 1950s

    RAND plays politics[8]

    Political and military games test how governments would respond to each other during the Cold War.

  5. 1957

    The first management game[9]

    The American Management Association's Top Management Decision Simulation has five teams run competing firms, quarter by quarter.

  6. 1990s

    War games reach the boardroom[10]

    Consultancies such as Booz Allen run commercial war games on competitors, pricing and market entry.

Scenario planning grew up alongside it. Shell's planners developed scenarios from the late 1960s, which helped the company prepare for the 1973 oil shock.[11] Scenarios and wargames are often confused, but they answer different questions, as the comparison below shows.

How a wargame runs

Every wargame has the same bones: seats at the table, rounds of moves, someone who rules on what happens, and a debrief.

The table

Your team

Plays the company

Rivals

Answer your moves

Customers

Buy, switch or wait

Lenders and board

Fund or refuse

Control

Control plays everyone not at the table: regulators, the press, suppliers, the market itself.

Each round

Round 1 of 4
  1. 1

    Move

    Your team commits to a decision.

  2. 2

    Counter-move

  3. 3

    Consequences

  4. Debrief

Each round can stand for weeks, quarters or years of real time.
  • Seats. Your team plays the company. Other teams play the parties whose response matters most. A control team plays everyone else and keeps the game honest.[2]
  • Rounds. Each move stands for a stretch of real time. In one classic format, every move covered two years of a fifteen-year horizon.[2]
  • An engine. Without a model of the numbers, outcomes become a matter of opinion. McKinsey recommends a quantitative game engine so that results are not guesswork.[5]
  • The debrief. This is where the value is captured: what held, what broke and what changes in the plan. McKinsey calls it the one element every war game should have.[3]

To run one yourself, the practical guide walks through each step with a worked example and a one-page template you can download.

Wargaming and other methods

The distinguishing feature of a wargame is that other parties respond to you, in their own interest, while you are still deciding.

  • Business wargame

    Others react

    What happens when the people affected by our plan respond?

    Tested moves, the counter-moves you missed, a revised plan

  • Scenario planning

    Others react

    Which futures could we face?

    A few plausible futures to plan against

  • Red teaming

    Others react

    Where is our thinking flawed?

    Challenged assumptions and blind spots

  • Tabletop exercise

    Others react

    Does our response plan work?

    A rehearsed procedure, usually for a crisis

  • Pre-mortem

    Others react

    If this failed, why did it fail?

    A list of risks from one team

  • Training simulation

    Others react

    Can people run a business?

    General skills on a fictional company

Scenario planning builds the futures; a wargame puts opponents into one of them.[5] Red teaming challenges your reasoning but does not play the response.[12] A tabletop exercise rehearses an existing plan, often for a crisis.[13] A pre-mortem asks one team to imagine the project has already failed.[14] Training simulations build general management skill on a fictional company; a wargame tests a real decision you have to make.

When to use one

A wargame earns its place when a decision is large, hard to reverse, and depends on how others will respond.[5]

  • Deals. Acquisitions, divestitures and the months after close, when a value creation plan meets a rival, a lender and a management team.[1]
  • Competitive moves. A launch, a price change or a market entry, and the response it provokes.[4]
  • Regulation and capital. A rule change, a licence, a capital plan the board has to approve.[5]
  • New technology. A shift that makes what you sell easier to replace, such as customers using AI coding tools to build in-house the software they used to buy.
  • Shifting demand. Customers changing what they buy, how they buy it, or from whom, faster than the plan assumed.
  • People. A restructuring, a new leader, a reorganisation that depends on who stays and who resists.

Spreadsheets have limits. On paper, with the right formulas, the plan works. What a spreadsheet cannot hold is the human factor: the rival who answers early, the lender who tightens terms, the manager who quietly resists. It cannot be modelled in a cell, and in most large decisions and value creation plans it is the factor with the most impact.

Does it work?

Most published evidence is case-based, and many cases do not name the company. The strongest controlled evidence comes from forecasting research. In a study of real conflicts, forecasts made by role-playing the parties were right far more often than those of game theorists or experts using their own judgement.[15]

62%

accurate when the parties were role-played

31%

for game theorists, and about the same for unaided judgement

The lesson is not that wargames predict the future. It is that people reason better about others' responses when they have to play them.

Why it stayed rare

If wargaming works, why do so few companies do it? Because the traditional format is expensive in the one resource executives have least of.

  • Preparation. A consultant-run game typically takes four to eight weeks to prepare.[5]
  • Executive time. Classic games ran three to five days with sixty to ninety managers.[2]
  • One-off. The world built for the game is usually discarded once it ends, so the second game costs as much as the first.
  • Guesswork. When outcomes are argued rather than calculated, games slide into workshops.[5]

Wargaming with engines and LLMs

This is the problem NewReLLM was built to solve. Our engines govern how stakeholders communicate, how the world evolves between rounds, and how specific actions lead to specific outcomes, and we keep improving them. They are the backbone on which we build highly specific scenarios and decisions.

The numbers are calculated by the engine. Finely tuned language models carry the human factor: what people say, want and do in response to you. Together they give participants an experience that is realistic and immersive.

The result keeps the rigour of a traditional wargame and drops most of its cost: the same game can be played by one executive in an evening, by a deal team before an investment committee, or by a leadership group in a room.

How we build a scenario

Questions

A role-play simulation in which a leadership team plays its company while others play rivals, customers, lenders or the board. Each round, moves meet counter-moves, a control team rules on the consequences, and a debrief turns what broke into changes to the plan.

Scenario planning describes possible futures. A wargame puts thinking opponents into one of them and makes you decide under time pressure while they respond. The two work well together: scenarios set the stage, the wargame tests the plan on it.

Traditionally, four to eight weeks of preparation followed by one to three days of play, with larger games running longer. Once the world of a wargame is built, it can be replayed in hours, by one person or a full team.

The people who own the decision, plus people who see it from elsewhere in the organisation. Frontline and functional leaders often spot the counter-move the top team did not.

No, and it should not be sold as a forecast. Its value lies in surfacing responses you had not considered and testing whether the plan survives them. That said, research on real conflicts found role-play forecasts about twice as accurate as unaided expert judgement.

It used to be, because a consultant-run game took weeks of preparation and days of senior time. A simulation engine changes the cost: the same rigour can apply to a single deal, a business unit or one executive preparing for a hard conversation.

Sources

  1. Business war games, Wikipedia
  2. Dynamic competitive simulation: wargaming as a strategic tool (J. Treat, G. Thibault, A. Asin), 1996, strategy+business
  3. Bias busters: War games, here's what they're good for, 2020, McKinsey & Company
  4. Pricing war games (F. Schuler), 2014, BCG
  5. How CFOs can use war gaming to support strategic decisions, 2017, McKinsey & Company
  6. Kriegsspiel, Wikipedia
  7. Wargaming at the Naval War College, U.S. Naval War College
  8. Some observations on political gaming (H. Goldhamer, H. Speier), 1959, RAND
  9. Business wargames: early complex text games, IF50
  10. If business is really war, the best preparation is conflict simulation, 1994, The Christian Science Monitor
  11. Pierre Wack and scenario planning at Shell, Wikipedia
  12. Red Teaming Handbook, 3rd edition, 2021, UK Ministry of Defence
  13. Tabletop exercise (glossary), NIST
  14. Performing a project premortem (G. Klein), 2007, Harvard Business Review
  15. Game theory, simulated interaction, and unaided judgement for forecasting decisions in conflicts (K. Green), 2005, International Journal of Forecasting