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Playing games

Posted 10/03/2011 by KatieJ

Scenario planning as promoted by Shell a decade or so ago seems to have fallen by the wayside despite being an extremely useful tool to examine the potential impact of business decisions and the impact of various external factors on a business.

Companies do still use various versions of the approach, basing their forecasts on oil prices at a particular level, for example, but as recent events have proved it is dangerous to make just one assumption and focus everything else on that one assumption.

Who could have foreseen the rapid leap in oil prices over just the last few days following the unexpected events in North Africa and also the Middle East. One thing is certain: that chemical companies will be looking very carefully at the provisions they have made for such dramatic increases and how they affect their raw material streams.

But while scenarios have perhaps lost their glamour, one can be sure that there is always someone looking to fill what they see is a potential gap. And so it is that the management consultant McKinsey is now promoting war gaming as the management tool of today.

But not war gaming as some might know it – no moving of miniature replicas of Napoleon’s Old Guard to try and rescue the day in a replay of the Battle of Waterloo or re-enacting the hunt for the Bismark on a tabletop.

McKinsey’s version is not strictly war gaming but a cross between role playing and scenario planning. It involves pitting teams representing competitors and stakeholders against the ‘company’ team and playing out those roles and determining the impact of different responses and decisions. But this approach is not without its own problems, as McKinsey points out.

Some companies can misjudge when this approach is appropriate, while others don’t include the right participants, either in terms of individuals or the organisation that should represented. Others make the mistake of using the same or the wrong game design. The result says McKinsey can be wasted time, money and poor decisions.

There are four questions that McKinsey believes need to be asked before embarking on this war gaming: could it help with our problem? McKinsey says the ‘sweet spot’ for gaming is some moderate level of uncertainty. If the uncertainty is too great then game planners cannot offer enough guidance for players to make reasoned decisions.

Secondly, what kind of game should be played? Should it be tactical, for example, by looking at how a price rise might affect the company and its market, or strategic, for example, looking at how to win increased market share in a changing marketplace? Thirdly, who should design and play the game? Again this will depend on the nature, tactical or strategic, of the proposed game. Finally, how often should the game be played? One-offs are probably more common, but some tactical games, like the price rise example, might be something that should be played regularly.

Anything that makes management think outside their comfort zone has got to be a good thing in today’s rapidly changing marketplace. There is no time to sit back and wait to see what might happen; companies must plan for possible eventualities. And that means thinking the unthinkable – what if managers are not quite as clever and perceptive as they like to think they are? Gaming can be one approach to get them out of that comfort zone with all the benefits that creative thinking can bring

Neil Eisberg - Editor

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  • Anonymous said:
    21/06/2013 05:41

    Which is the roadmap to EU gwtorh? There are difficulties but the last months EU leaders decided to give a boost to EU gwtorh, without sucess. The question of how to make Europe better, has come up several times. Some blame the Euro for creating massive imbalances in terms of competitiveness between EU member-states and suggest scrapping the single currency as a solution. Is any way to make EU better? Do we have the means to overcome the global economic crisis? Single Market is the key? What about employment and flexicurity?

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