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Most executives treat competitive intelligence like weather forecasting. They collect data, spot patterns, and make predictions about what their rivals might do next. Then they build plans around those predictions. The problem is that competitors are not storm systems. They adapt, they bluff, and they read the same forecasts you do.
Wargaming flips this script. Instead of predicting what competitors will do, you become them. You sit in their chair, inherit their constraints, and make decisions with their information. The goal is not to guess their next move but to understand the logic that drives it. This shift from observation to embodiment changes everything about how intelligence becomes useful.
Think of it as method acting for strategy. Daniel Day-Lewis does not just study Abraham Lincoln’s speeches. He walks like Lincoln, thinks in his cadence, and temporarily adopts his worldview. Wargaming demands the same commitment to perspective. You cannot half inhabit a competitor’s mindset and expect genuine insights.
Why Traditional Analysis Falls Short
Traditional competitive analysis suffers from a fundamental flaw. It treats your company as the sun and competitors as planets orbiting around your decisions. You launch a product, and analysts predict how rivals will react. You cut prices, and models estimate their countermoves. Everything revolves around you.
But in the real world, your competitors see themselves as the sun. They have their own strategies, their own momentum, and their own logic that has nothing to do with you. Most of their moves are not reactions to your brilliance. They are pursuing goals you barely understand because you have never seriously tried to think from inside their reality.
This is where wargaming introduces something closer to astronomy than astrology. You map the actual forces acting on each player. You recognize that markets contain multiple centers of gravity, each following its own path. Sometimes these paths intersect. Sometimes they run parallel for years. The magic happens when you can see the whole system rather than just your corner of it.
The Core Mechanics
A wargame begins with role assignment. Different teams represent different companies or stakeholders. One team becomes your fiercest competitor. Another might play a disruptive startup. A third could represent customers or regulators. The key is that once you assign roles, people must argue from that perspective, not from what they personally believe or what benefits your company.
This creates immediate discomfort. Marketing executives must advocate for a competitor’s brand positioning. Finance teams must defend another company’s capital allocation. Product managers must champion rival features they have spent months criticizing. The discomfort is the point. Comfort means you are still thinking from home base.
Each team receives an intelligence brief. This includes public information, reasonable assumptions about internal capabilities, and the strategic context as that company would see it. Note the last part. The brief does not describe how your competitor views you. It describes how they view the entire market, including themselves. You are a footnote in their story, not the main character.
Teams then make decisions across several simulated time periods. They allocate resources, launch initiatives, and respond to market events. After each round, a control team introduces new information or external shocks. Maybe a technology shifts. Maybe a regulation passes. Maybe consumer preferences evolve. Teams adapt their strategies accordingly.
The exercise surfaces something that spreadsheets cannot. It reveals the interactive complexity of competitive dynamics. When you lower prices, three things happen simultaneously. Your direct competitor must decide whether to match. A premium player must decide whether this validates their positioning or threatens it. A budget alternative must decide whether the market is collapsing or expanding. Each decision creates ripples that trigger more decisions.
What You Actually Learn
The first insight usually arrives as a surprise. Your competitor’s most threatening move is not the one you feared. You spent months preparing for them to attack your core market. Instead, they are ignoring you completely and targeting an adjacent space you considered safe. The wargame shows you why. From their seat, your core market looks mature and defensive. The adjacent space looks like the future.
This matters because resource allocation follows fear. Companies pour money into defending against the attacks they imagine rather than the attacks that make strategic sense for the attacker. Wargaming reorients your defensive investments toward actual vulnerabilities rather than projected anxieties.
The second insight cuts deeper. You discover that your competitor is constrained in ways you never appreciated. Maybe their sales force is built around a different customer segment. Maybe their supply chain is optimized for scale over flexibility. Maybe their brand promise locks them into certain positions. These constraints are not weaknesses you can exploit. They are realities that shape what they can and cannot do.
Understanding constraints changes how you interpret signals. When a competitor fails to respond to your move, the default assumption is weakness or ignorance. But the wargame often reveals a different story. They saw your move. They ran the numbers. Their constraints made a response too costly or too risky. This is not weakness. It is calculation.
The third insight arrives when you inhabit a disruptive player. You realize that disruption rarely aims at the incumbent. It aims at a non-consumer or an underserved segment. The incumbent’s products are not the target. The incumbent’s economic model is not the template. The disruptor is playing a different game on a different field. By the time you notice them, they have already built momentum somewhere you were not looking.
This explains why incumbents struggle to respond to disruption. They finally notice the threat and try to compete on the disruptor’s terms. But the terms themselves are the innovation. Launching a cheaper version of your premium product is not a response. It is a concession that the game has changed and you are now playing catch-up in someone else’s design.
The Human Element
Wargaming works because people are competitive even in simulation. Once you assign someone to represent a competitor, their ego gets involved. They want their team to win. They start thinking creatively about how to exploit your weaknesses. They debate strategy with genuine intensity. The artificial stakes create real cognitive engagement.
This is the opposite of brainstorming, where people throw out ideas without commitment. In a wargame, you must commit to a position and defend it against people actively trying to undermine it. You must allocate finite resources, which means prioritizing some opportunities over others. You must make trade-offs where every option has downsides.
The best wargames include a twist. After several rounds, teams swap roles. The group that represented your company now plays your competitor. The competitor team takes your seat. This role reversal is brutal and clarifying. You suddenly see how your own strategy looks from the outside. The brilliant positioning you crafted feels less brilliant when you are trying to attack it. The decisive advantages you counted on feel less decisive when someone else controls them.
This swap also reveals how much of strategy is storytelling. The narrative you built about your company’s strengths and trajectory feels compelling from inside. From outside, it looks like selective interpretation of ambiguous data. Your competitor has an equally compelling narrative about their trajectory. Both stories cannot be true in the same way. The wargame forces you to hold both simultaneously and recognize that markets are built from competing interpretations of incomplete information.
Common Mistakes
The biggest mistake is playing yourself while pretending to be someone else. You advocate for moves that would benefit your company, not moves that make sense for the role you inhabit. This is natural but useless. The whole point is to genuinely adopt a foreign perspective, not to smuggle your preferences into the simulation.
Facilitators watch for this carefully. When a team playing a competitor suggests a strategy that conveniently weakens them while strengthening you, that is a red flag. Real competitors do not strategize for your benefit. They strategize for their own success, which might mean ignoring you entirely or attacking where you feel strongest.
Another mistake is treating the wargame as a prediction engine. You run the simulation and assume the results show what will happen. But wargaming does not predict the future. It maps the possibility space. It shows you what could happen under different assumptions and how various players might respond to changing conditions. The value is not a single forecast but a range of scenarios and the strategic logic behind each.
The subtler mistake is focusing only on competitive dynamics. Markets are not just companies fighting for share. They include customers making choices, regulators setting boundaries, technologies enabling new solutions, and cultural shifts changing what people value. A good wargame models all these forces, not just corporate chess moves.
Beyond the War Room
The real return on wargaming shows up in daily decisions. After you have inhabited a competitor’s perspective, you interpret their moves differently. A price increase is not aggression or desperation. It might be a test, a signal to the market, or a move in a completely different game than the one you imagined.
You also plan differently. Instead of optimizing your strategy in isolation, you consider how it intersects with what others are trying to achieve. Sometimes the smart move is to avoid collision. Sometimes it is to force a competitor into a choice where all their options are bad. Sometimes it is to let them win a battle because the victory will cost them the war.
This is where wargaming connects to game theory, but in a more practical way. Game theory provides elegant mathematical models of strategic interaction. Wargaming provides messy, human, imperfect simulations. The math tells you what rational actors would do in simplified scenarios. The simulation tells you what actual organizations might do given their cultures, constraints, and cognitive biases.
Consider the prisoner’s dilemma, the most famous game theory scenario. Two prisoners must decide whether to cooperate or defect. The math shows that rational actors defect. But real companies are not isolated decision points. They have histories, reputations, and ongoing relationships. They signal intentions, build trust, and sometimes cooperate even when defection looks optimal in a single round. Wargaming captures this complexity in ways that equations cannot.
Making It Practical
You do not need a war room and three days to benefit from wargaming principles. Start smaller. Before your next major decision, spend an hour with your team role-playing your top competitor. What would they do if they knew your plan? What constraints would shape their response? What would victory look like from their perspective?
This simple exercise often surfaces blindspots. You realize your plan assumes they will do nothing, which is rarely true. Or you realize your plan only works if they are stupid, which is a dangerous assumption. Or you realize they might welcome your move because it solves a problem for them.
As you get comfortable with the approach, scale up. Run a half-day session before annual planning. Assign teams to represent your top three competitors plus an unknown disruptor. Give each team 30 minutes to develop a strategy, then have them present and defend their approaches. The discussion that follows will generate more insight than a month of reports.
The ultimate goal is to make wargaming a reflex rather than an event. Whenever you evaluate a strategy, you automatically ask what the world looks like from other perspectives. This is not about being defensive or paranoid. It is about recognizing that markets are multiplayer games where everyone is simultaneously protagonist and antagonist in different stories.
The Uncomfortable Truth
Wargaming often reveals that your competitive advantage is smaller than you thought. When you genuinely inhabit competitor perspectives, you see they have advantages too. They have capabilities you lack. They have positions you cannot easily attack. They have customer relationships you cannot quickly replicate.
This is uncomfortable but valuable. Overconfidence is expensive. It leads to aggressive moves that provoke retaliation or expansion into markets where you lack the fundamentals to compete. Wargaming does not make you timid. It makes you precise. You attack where you have real advantage and defend where you face real threat. You stop fighting imaginary battles and start engaging actual ones.
The deeper truth is that most competitive intelligence is not about intelligence at all. It is about imagination disciplined by constraints. You imagine what someone else might do, but you discipline that imagination by forcing yourself to think through their actual situation. Wargaming provides the structure to make this imagination rigorous rather than wishful.
In the end, competitive intelligence is not about knowing more than your rivals. It is about understanding the game better than they do. And sometimes, after a good wargame, you realize you are all playing different games entirely.