Originally published in LinkedIn
In a 2010 book, Seizing the White Space: Business Model Innovation for Growth and Renewal (Harvard Business Press), author Mark Johnson describes a path changing event for Dow Corning- the creation of Xiameter, a low-touch, self-service and standardized operation aimed at capturing the low end of the silicone market which was almost diametrically opposed to the model that governed Dow Corning’s core operating mode (high end, high price, bundled product and services).
The executive in charge of the new venture set up a war game to test the reactions of existing Dow Corning’s units to the new business model. The new model got crushed. It was too foreign to Dow Corning’s dominant business model. The way forward then became clear: The new venture would need to be free from the core business model if it was to succeed. Xiameter was born.
Several case studies (including an HBS’ case) and book chapters recognize Dow Corning’s approach with Xiameter as a breakthrough model for dealing with commoditization of the low-end of a market. The executive in charge, J. D Sheets, is now Dow’s CFO. Still, not too many executives pay enough attention to the crucial role his war game played in clearing up the strategy path and settling the debate.
In August this year, Delta Airlines announced the deployment of the first of its new Bombardier C-Series airliners into service in New York and Los Angeles. This innocuous piece of business news hides a culmination of nine years of strategic effort by Pratt & Whitney (A UTC company) to break through the dominance of GE and Rolls Royce in the commercial aircraft engine. The success of P&W against much bigger rivals is a case study in creative business thinking. Their new engine was a technological breakthrough in efficiency and green tech, but the real success was the clever strategy of bypassing both Boeing and Airbus in gaining a “beachhead” in the market. And it started with a war game held nine years earlier.
War games are not suitable for every company. They require willingness to confront some hefty elephants in the room. They are useless in arrogant cultures such as at some big Pharma companies for example, where as one executive put it to me, managers believe their drug is the best in the market and no one can touch it (and 2/3 of launches fail to meet expectations as a result..). They are useless in certain cultures where different perspectives are not encouraged.
But when a war game is run right, it’s a safe space where strategic direction becomes clear in one intense day. Compare that with endless discussions in a typical firm where internal battles can last for years without a resolution. War games make it clear which argument can win in the market and which is wishful thinking.
So yes, war games can change the future of your company, and your future too.