Strategic Management: What is Intelligent Wargaming?

Strategic Management: What is Intelligent Wargaming?

Intelligent Wargaming uses real-time analytics and techniques such as machine learning for business management. The CIO is also required. […]

Strategy games such as Sim City should be known to many. The task of the player is to build a city and always develop it. Various measurement and key figures are made available to him by the system. How busy is the industry? What about unemployment? On which roads is the traffic jam? If the player expands the industrial area of his city, he experiences all the consequences that this entails in real time. Is his city experiencing a boom or has he overlooked something in his planning?

This playful economic simulation was first published in 1989. But such simulation games are not an invention of the computer age. Their history, according to official data, even dates back to the third millennium BC. In particular, the military used this methodology to evaluate different tactics and strategies, weigh possible decision options against each other or better elaborate them in detail. It was in this context that the term Wargaming finally arose.

Already in the early management theories, the method of wargaming was used to better evaluate and plan decisions within the framework of so-called strategic corporate management. This applied to both the strategic and operational levels. The methodology enjoyed great popularity and also found its playful way into teaching in the context of business studies – or was reflected in the development of computer games such as Sim City.

Since then, the world has changed fundamentally. New technologies have emerged that allow military and corporate leaders to incorporate even more precise, realistic data into the simulations. The available computing power has increased dramatically. The digital transformation of the economy and society is well advanced.

However, strategic corporate management could not quite keep up with its proven tools. Their plans are still largely based on Excel spreadsheets. Therefore, it is high time to involve the CIO much more in strategic corporate management – and to pursue an enterprise-wide approach of Intelligent Wargaming.

What is Intelligent Wargaming?

Already today, all company data is provided via digital interfaces and used in the various internal IT applications – be it the ERP systems, merchandise management programs or personnel management. Thanks to process mining or robotic Process Automation (RPA), for example, business processes themselves “talk” to the respective users or to each other using automated machine-to-machine communication. So there is a veritable flood of data, which itself always generates new data. Companies use only a fraction of them systematically.

This is where Intelligent Wargaming comes in. It draws on all this already existing data and also uses sensors and other available data along the value chain. By using IoT (Internet of Things) and RFID transponders, for example, the database for business analyses and controls can be considerably expanded. Questions that can be answered with the help of the data could be: What about the performance of your own machines? How does inventory evolve in real time? What resources are available or missing on a daily basis?

Possibly enriched with information from corporate partners and suppliers, this wealth of data can be used in the next step by machine learning for training algorithms. In turn, they are able to provide active suggestions for the strategic management of their own company.

Intelligent Wargaming relies on existing data and also uses sensors and other available data along the value chain. By using IoT and RFID transponders, for example, the database for company analyses and controls can be considerably expanded.
(c) nirutft / stock.adobe.com

From simulation to simulation

The classic simulation game, which comes along as a static collection of numbers, is thus increasingly turning into a comprehensive simulation. A system that basically provides and evaluates data in real time faces a rotational planning. Largely controlled automatically, Intelligent Wargaming can at best help to establish a stable, automated control loop in the company. You could say: the autopilot takes over.

A fictitious scenario from the manufacturing industry shows what this means in practice: the failure of a production line can have far-reaching consequences. But an algorithm determines exactly which ones – broken down to the individual minute or hour. Based on its findings, the algorithm also suggests the management the best possible options for action for the specific situations. Which supply chain needs to be adjusted?

Who should be notified? Which replacement solutions are possible? Depending on the degree, type and duration of the failure of the production line, these options for action can differ from one another to a greater or lesser extent. Many of these solution steps and their explanations could also be automated and thus initiated directly by the algorithm itself and without prior consultation with a management representative.

New tasks for the CIO

This is accompanied by a number of organizational changes. The role of the CEO is changing. Through the use of Intelligent Wargaming, he has the opportunity, together with his strategy department, to focus on the search for new markets that can secure the long-term growth of the company. The normal operation of the company, on the other hand, is secured by the algorithm of Intelligent Wargaming as well as the established control loop.

The importance of the CIO is also growing. He should drive a corresponding initiative in the company, enable its implementation in practice and ultimately carry the goal of a truly data-driven organization from IT to corporate management. However, this also means that it must strengthen the networking of its own organization and ensure that data is systematically provided along the value chain.

Every department, every supplier, every business partner must be taken into account. The quality of Intelligent Wargaming stands and falls with the availability and quality of data available to this system. In this way, companies can create much more transparency across all processes. This not only brings advantages in strategic management, but also, for example, in meeting compliance requirements.

* Strategy consultant Kris Steinberg heads the management consultancy with a focus on Industries at Sopra Steria.

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