I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
You just landed a rare opening to pitch your line of products or services to a new Fortune 500 customer. This is an important pitch, especially in a down market. When you walk into this customer's office, do you know the strategic risks this customers is facing in his industry? <br clear="none" /> <br clear="none" /> Of course, you do. It is Sales Management Training 101. You know as much as you can about the customer. Or do you? You might have read some fact sheets about him prepared by sales support. But if this account is truly important to your company, that is just not enough. To truly understand what the customers is facing, you need to get under his skin for a day. Try and think like him. Do you know how to do that? <br clear="none" /> <br clear="none" /> Your management just handed you this new product or service, and the marketing guys upstairs came up with a communication pitch to make it look differentiated. Everyone's eyes are on you and your sales team to sell it despite customers' reluctance to spend competitors' rather similar products, and cheaper alternatives from China or India. Do you know how competitors' will react when you put this new offering in front of customers? Or do you assume they will roll on their back and play dead because your offering is so superior?<br clear="none" /> <br clear="none" /> You are a market leader with comfortable positioning. Your salespeople know the drill. A new competitor made it known it intends to enter your market. Do you prepare your team in advance to face this newcomer or do you take the approach of "We'll cross the bridge when it is already burning?" <br clear="none" /> <br clear="none" /> Who says sales management is easy? <br clear="none" /> <br clear="none" /> Here is a basic truth: If you could anticipate competitors' most likely moves and countermoves, it should help you make your sales plan more robust. If you could predict customers' objections to your offerings, it would increase your sales plan's chance of success. If you could anticipate a newcomer's strategy and weaknesses, it would make a preemptive defense more likely to reduce or block its impact on your sales. <br clear="none" /> <br clear="none" /> So why don't you? Because it is difficult, and we don't have a crystal ball. So most of us pay lip service to predicting competitive dynamics and secretly just hope for the best. <br clear="none" /> <br clear="none" /> <b>Introducing: Wargaming</b><br clear="none" /> <br clear="none" /> Wargaming is the art of getting under the skin of a third party—competitor or a customer (or both)—and seeing the world <i>through their eyes.</i> Think red-team, blue-team games. Why do militaries go through simulating the Red team's (the "enemy") moves as realistically as they can? They are trying to make their, Blue team's strategy more robust. <br clear="none" /> <br clear="none" /> Many managers think war gaming is an expensive ordeal involving senior management and its high powered consultants; huge time investment; and careful, lengthy preparations. None of this is true. Wargaming can be done on the cheap, in a quick order, and can easily migrate to your different regions and countries. But, simulating moves and countermoves does require intelligence, suspended loyalty, and competitive spirit. Most sales department posses a lot of the last requirement, but don’t understand the first two. <br clear="none" /> <br clear="none" /> <b>Intelligence Is Good, Loyalty Is Not </b><br clear="none" /> <br clear="none" /> War games are based on small teams role-playing competitors, customers, and the host company in a mock "battle." To role-play faithfully, the teams need baseline competitive intelligence enabling them to recreate the competitor's "market character." Competitive intelligence available to the salespeople in the majority of companies, however, consists of product information, sample advertising, and technical specifications. Very little attention is placed on making sales managers understand the mind-set of competitors. <br clear="none" /> <br clear="none" /> Some companies suspended loyalty is an even bigger problem than lack of good intelligence on competitors. In role-playing competitors in a war game, teams must suspend their kneejerk tendency to dismiss the competition as inferior. This "suspended loyalty" is hard in competitive companies where being a team member spells total identification with your home team. Think Coke and Pepsi, Microsoft and Google, HP and Dell. Can you imagine Microsoft's salespeople discussing openly the advantages of Google's Cloud Computing? <br clear="none" /> <br clear="none" /> <b>Some Rules of Thumb For a Successful War Game</b><br clear="none" /> <br clear="none" /> There are rules and tools that make wargaming powerful, but the bottom line is to remember its objective: understanding third parties at least as well as your own management. <br clear="none" /> <br clear="none" /> Here are some rules to remember:<br clear="none" /> <br clear="none" /> •<b>Keep it truly simple</b>—No esoteric computer models, no large budgets, no hordes of expensive and annoying MBA consultants, or the whole effort loses its appeal. The Pentagon spent $250 million on a war game in 2002 with dubious results. You need not imitate the Pentagon. Intel, on the other hand, deploys a small team to run war games quickly and cheaply.<br clear="none" /> •<b>Avoid "mirror imaging"</b>—Getting to understand the other parties is about getting to see the world from their <i>pressure points</i>, and anticipating their most likely moves. Just playing "if I am in their shoes, this is what I'll do" is the wrong approach. It creates a little you, not accurate predictions of market dynamics. <br clear="none" /> •<b>You need competitive intelligence, and you typically get too little, or the wrong one</b>—Tap your people's field experience to distill the important predictors of competitors' and customers’ likely behaviors. Use public information to fill in the gaps. <br clear="none" /> •<b>Make it quick</b>—A war game need not last more than one day. You don't need to go back and forth forever. Most games yield powerful results after 2 to 3 "rounds" of moves-countermoves.<br clear="none" /> <br clear="none" /> <b>Honesty or Pain – Your Choice</b><br clear="none" /> <br clear="none" /> War games consist of two phases: First, your teams share intelligence about competitors and/or customers, so everyone is on the same page. This "getting to know you" phase should follow some model of a competitor's behavior and make specific predictions about most likely reactions to your current strategy or plan. A sound model of competitive behavior avoids relying too much on intuition, as well as putting too much weight on very recent anecdotal evidence. Salespeople as a group tend to live in the moment and it is important through war gaming to bring them to put market events in a larger, more strategic industry-wide context. <br clear="none" /> <br clear="none" /> The second phase involves testing various options (tactical or strategic) you can deploy in light of the insights and predictions from the previous phase. In this phase, teams <i>stress test</i> moves against opponents and recipients' most likely responses. Honesty is a requirement. It is your choice—let participants beat honestly on your plan's weaknesses, playing competitors in a safe simulation war game, or let the market show you the door with much less politeness. General George Patton famously said: "The object of war is not to die for your country, but to make the other bastard die for his." To paraphrase: The object of a sales strategy is not to make your salespeople work hard to win customers, but make it harder on competitors to win them over. <br clear="none" /> <br clear="none" /> <br clear="none" /> Ben Gilad is the author of "Business War Games" (Career Press, 2008), and the president of the Academy of Competitive Intelligence. To learn more about this subject, go to <a href="http://www.GiladWarGames.com" target="_blank">www.GiladWarGames.com</a>.