Business Wargaming

Securing Corporate Value

Daniel F. Oriesek, Jan Oliver Schwarz

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317170402
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Industry consolidation, mergers, changes to business models, the emergence of new threats all require managers to understand highly complex situations, assess risk and opportunity and make informed decisions. How can senior managers do this effectively when so often they are wrestling with brand new scenarios? One of the emerging solutions is business wargaming. Daniel F. Oriesek and Jan Oliver Schwarz provide the first comprehensive look at wargaming as a business tool in a book that explores the anatomy and success factors of a typical wargame. The authors explain how and when wargaming can be used to test strategies, plan and prepare for crises, manage change or increase your organization's ability to anticipate and adapt for the future. Creating imaginative and credible scenarios, and testing them against smart opponents who are eager to find holes and counter your strategy, allows you to learn about a plan or a new venture in the security of the conference room rather than learning the hard way when you go live. Business wargames are sophisticated but they are also very demanding in terms of time and resources. Business Wargaming: Securing Corporate Value will enable you to assess the potential value of the technique for your own organization, to understand what you will be committing to and develop an informed business case and brief for working with the organization that will facilitate the game.

PART I
Background to Business Wargaming

CHAPTER 1
The History of Wargaming

The development and employment of wargaming reaches far back in time and is probably as old as war itself (Perla 1990). Wargaming most likely grew out of a military necessity, namely to better prepare military leaders and their officers for unforeseen developments on the battlefield. The ability to better understand what likely hostile reactions one’s own planned course of action would evoke and how to best counter these reactions constitutes a source of competitive advantage, because such knowledge helps the commander to avoid fatal decisions that would result in unnecessary losses of soldiers, equipment and territory. This in turn allows for a more “economic” way of warfare, which would significantly raise the sustainability of any military campaign, in essence ensuring that an army does not only “win the battle” but ultimately “wins the war.” Another likely driver for the proliferation of wargaming was the opportunity to test new doctrines and tactics without actually engaging in combat. This proved especially valuable in refining the art of warfare during peacetime and training thousands of new officers in a uniform way of thinking. Of course there are more advantages to wargaming, but the above are the most significant ones up to this date.

The existing literature on wargaming (e.g. Brewer and Shubik 1979; Perla 1990; Treat et al. 1996; Dunnigan 2000; Caffrey Jr 2000; Oriesek and Friedrich 2003) focuses on three fields: first, the application of wargaming in the US military, in particular at the Naval War College; second the development of wargaming in Prussian Germany; and third, the use of wargaming by civilians as a hobby. The application of wargaming in a business context, also called business wargaming is, in comparison to the overall evolution of the methodology, a recent development, which is also reflected in the fact that currently very little literature is available on the subject. We will start with the earliest accounts of wargaming and highlight its development over time up to the current day.

Wei-Hai and Go in Ancient China

Perla (1990) credits the Chinese general and military philosopher Sun Tzu for developing the first wargame about five thousand years ago, called “Wei-Hai”, meaning “encirclement.” Wei-Hai used an abstract playing surface on which each of the contestants maneuvered their armies of colored stones. Reflecting on Sun Tzu’s philosophy of resorting to the chances of battle only as a last resort, victory went not to the player who could bludgeon his opponent head-on, but to the first player who could outflank his enemy (Perla 1990). While no pictures or artifacts are available of this particular game it appears that it was quite similar to the game of “Go” which we still know today and which was developed around 2200 BC. Go is an abstract strategy game which is played on a wooden board consisting of a 19 × 19 matrix using black and white stones. It spread throughout the Orient and underwent further extensive developments in both Japan, where it is known as “I-Go” or simply “Go” (the name now universally applied), and Korea where it is known as “Baduk.” The objective of Go is to obtain as much territory as possible on the game board.

From Chaturanga in India to Chess

Around 500 BC a game by the name of “Chaturanga” appeared in India. Like Go, the game consisted of a board, on which colored stones had to be moved around according to specific rules, but the stones were more differentiated than those used in Go, representing different foot soldiers, chariots, elephants, and cavalry. Between two and four players moved four peasants, one king, one elephant, a horse and a chariot over the game board with the objective to capture the hostile figures, not to gain as much space on the board as possible. With the help of a dice-like device, the outcome of the moves and encounters of different figures (e.g. chariot beats foot soldier or vice-versa) were determined. The interesting aspect of Chaturanga is that now not only stones or figures with different value were introduced, but that with the use of a dice, an element of randomness or uncertainty was introduced as well. This game made its way to Persia and most writers agree that Chaturanga is the forerunner of what we today know as “chess.”

Chess and Further Developments

The modern game of chess was mentioned for the first time in the thirteenth century in southern Europe. It is believed that Arabs, known as Moors, learned chess from the Persians when they invaded Persia in the eighth century and later brought the game to Europe when they invaded Spain. From Spain chess quickly spread across Europe. The Europeans gave chess pieces the names we know today, in part because they had a hard time in pronouncing and spelling the Persian names, but also to reflect the world and the hierarchy in which they lived.

The pawns on the chessboard represent serfs, or laborers. There are more of them than any other piece on the board, and often they are sacrificed to save the more valuable pieces. In medieval times, serfs were considered no more than the property of landowners—chattels. Life was brutally hard for serfs during this era of history. They worked hard and died young. They were often left unprotected while wars raged around them. They could be traded, used as a diversion, or even sacrificed to allow the landowners to escape harm. The castle signifies the home, or the refuge, just as it was a home in medieval times. The knight represents the professional soldier of medieval times whose job it was to protect persons of rank; knights are more important than pawns, but less important than bishops, kings, or queens. Their purpose in the game is to protect the more important pieces, and they can be sacrificed to save those pieces. There are two bishops in the game, who represent the Church. The Church was a rich and powerful force in medieval times, and religion played a large part in every person’s life. The queen is the only piece on the board that represents a woman, and she is the most powerful piece of the game. There is only one queen for each side. The king is the most important, but not the most powerful piece in chess. He is as well defended on the chessboard as in medieval life. In medieval times, the surrender of the king would mean the loss of the kingdom to invading armies and that could mean change for the worse. It was to everyone’s advantage, from the lowest serf to the highest-ranking official, to keep the king safe from harm. Although chess is characterized by a high degree of abstraction, it contains the typical elements of contemporary warfare. However, with the introduction of firearms in the seventeenth century, chess lost its value for military simulations, as was quickly recognized by the leading military strategists, and so new forms of wargaming had to be developed.

In 1664 Christopher Weikhmann developed an advanced chess game, which reflected more military details in Ulm, Germany. His game was called “Königsspiel” or “King’s Game” and, compared with ordinary chess, this game was played on a larger board and comprised more figures. The King’s Game, as well as other more military-oriented versions of chess, also known as “Military Chess” or “War Chess”, represented more complex versions of the traditional chess game. Weikhmann intended his game not only for entertainment purposes, but foremost as a tool for those who were interested and wanted to study military as well as political structures and workings.

However, it remains doubtful that the complex and abstract King’s Game was ever employed by the military for training purposes. Although the King’s Game and other games belonging to the group of war chess were of little practical use to the military and constituted rudimentary simulations at best, the elements used to play them led to the introduction of three principles which up to this day are considered of vital importance to any wargaming simulation. Although it is not possible to trace back when the different elements were exactly introduced for the first time, all three of them could be found in a new game, developed by the German Dr. C.L. Helwig, intended to introduce more realism into the game.

These three principles were: first, the change that now a game figure represented a larger contingent of soldiers and no longer individuals; second, replacing the two-colored game board with a multicolored game board, representing different terrains; and third, a referee was installed to run the game and watch over its proper execution. As a teacher and educator at the court of the Count of Braunschweig, Helwig used his game to educate his students in military thinking and decision making. Although his game represented a major innovation, it was still strongly influenced by chess, but was successful in as far as it was copied beyond the borders of Germany and played by noblemen in France, Italy and Austria alike.

Games for Military Use

Around approximately the same time as Dr. C.L. Helwig developed his game, the Scotsman John Clerk invented a method to simulate ship battles, which was effectively the first naval wargame. Clerk’s aim was to analyze the moves and tactics of battle ships in more detail and thus he not only studied their tactics, but also performed mathematical calculations in order to determine the firepower of the ship guns and the possible damage they could cause. John Clerk’s conclusions were published in 1790, under the title: An Essay on Naval Tactics, Systematic and Historic. One simple advantage of his game setup was that no model of the terrain was needed. In fact a simple table would suffice to simulate the surface of the ocean. Copies of Clerk’s work were distributed to influential naval decision makers, including Admiral Sir George Rodney. Later Rodney credited Clerk’s tactics as one of the causes for British success against the French fleet in the West Indies. It is reported that Lord Nelson employed variations of Clerk’s tactics in 1797 off Cape St. Vincent and also in his victory at Trafalgar in 1805.

At the end of the eighteenth century, the Schleswig-born scholar and military author Georg Venturini set out to develop a new wargame. In 1796 he published the book Regeln für ein Neues Kriegsspiel für den Gebrauch an Militärlehranstalten or Rules for a new Wargame for Use at Military Educational Institutions. Venturini, like Helwig, also used a game board, consisting of quadrants, but in comparison to Helwig and others his game board was significantly larger, consisting of 3600 fields, each representing one square mile and in total representing a chosen terrain, namely the border between Belgium and France.

In his game the players could not only simulate various troops, but also the use of equipment, strongholds, bridges and depots. Unlike in a chess game, where figures could easily move from one field to another, Venturini’s game applied a high degree of realism with respect to how fast and easy elements could be moved from one field to another contingent on the underlying territory. The game was used in particular for military education at various military academies. Due to its size and complexity, it could not be played outside of military settings.

The nineteenth century was characterized by a growth in troop sizes, which made real-life exercises and relocations more difficult as well as by a number of industrial developments, which made fighting more complex. On the one hand, the weapons of the infantry and the guns of the artillery had ever longer firing ranges, precision and firing cadences and, on the other hand, the introduction of the machine gun in the late nineteenth century offered a totally new form of fire power, which significantly changed the game for attackers and defenders alike. Furthermore, the construction of a dense railway infrastructure now offered ways to more quickly move and concentrate entire armies.

At the same time contemporary societies, first and foremost in Prussian Germany, became increasingly “militarized” and the study of military affairs was perceived to be “chic” especially among the commoners of the time. The rise in popularity of wargaming in the nineteenth century can be credited especially to the Baron von Reisswitz, not a soldier but a civilian war counselor. He replaced the centrepiece of many games thus far, the two-dimensional game board, with a sandbox, in which three-dimensional models of the terrain could be replicated. Von Reisswitz further introduced wooden game pieces, which represented the actual size of military formations to scale.

In doing so, the simulations gained additional realism. Furthermore, von Reisswitz introduced the use of scenarios, placing the players in a particular situation at the outset of the game. Through a lucky coincidence, von Reisswitz introduced the two sons of the Prussian King Friedrich Wilhelm II, Friedrich and Wilhelm (who later became Kaiser Wilhelm I), to his wargame and in 1811 and 1812 respectively von Reisswitz even had the opportunity to demonstrate his wargame to King Friedrich Wilhelm II personally, who was impressed. However, von Reisswitz’s game never became widely popular because it was simply too bulky and difficult to move to different locations.

The original “von Reisswitz” wargame was significantly enhanced when his son, Georg Heinrich Rudolf Johann von Reisswitz, replaced the bulky sandbox with a topographical map modelled to a 1:1800 scale. Georg, who had served as a first lieutenant in the Prussian artillery, attempted to codify actual military experience and introduced the details of real-life military operations into the game, a factor missing in his father’s version. The rulebook for the game now included all imaginable military operations, starting at the company level all the way up to the division and corps level. This rulebook was published in 1824 under the title Anleitung zur Darstellung militärischer Manöver mit dem Apparat des Kriegsspiels, or Instructions for the Representation of Military Maneuvers by Use of Wargaming. It is at this point that the term wargaming came into existence and there was a decisive breakthrough in its application when von Reisswitz was given the opportunity to present his game to the Chief of the General Staff of the Prussian Army, von Müffling. Historians record that on observing the demonstration von Müffling shouted: “This is not a game! This is a preparation for war! I need to recommend this to be rolled out to the whole army” (Perla 1990, 26). He then published a very favorable article in the Berlin Military Week, a highly regarded publication.

The “Kriegsspiel” or wargame was played on a topographical map with little metal figures that could be moved, representing military formations. The rules of the game included details on exactly how these figures could be moved, details on how battles would be carried out and in addition a referee was appointed to watch over these rules and resolve any issues. Over the course of the following years the “Kriegsspiel” gained popularity, yet it was criticized for allowing junior officers a simulated taste of commanding forces well beyond their rank, which, in turn would cause them to lose a sense of reality and be less ambitious in performing their assigned tasks. Over time, with the introduction of new and more complex weapon systems, the rules for the game grew so complex that it could only be executed with the help of wargaming experts. Although, on the one hand, great progress was made in trying to simulate ever more details of the actual realities of war, on the other hand the system of increasing detail and pseudo-exactitude detracted from the very realism that the game had hoped to improve (Perla 1990).

Nevertheless, wargaming became popular beyond Prussia in countries such as the US, Great Britain, Italy, France, Russia, and Japan. This popularity was to a large extent driven by the fact that the Chief of the Prussian General Staff under the high command of General Gebhard Blücher, Gerhard von Scharnhorst, made extensive use of wargaming to simulate the moves of his own troops and the likely reactions of Napoleon as a way of preparing his very modest resources for battle. Ironically von Scharnhorst died before Napoleon and his troops were finally defeated, but the success of the Prussians is in no small part attributed to his preparations using wargaming.

However, the complexity in the Prussian “Kriegsspiel” led in 1876 to Prussian Colonel Jules von Verdy du Vernois pointing out that the reason for the lack of popularity of wargaming was due to the numerous difficulties that beginners encountered when handling tables, calculating losses and so forth. In contrast to von Reisswitz’s “Kriegsspiel” he proposed the “Free Kriegsspiel”, characterized by replacing many of the rigid rules by a regulator who would explain his actions and assessments after the game. Although enthusiastically accepted and applied by those who found the rigid games too complex and boring, “Free Kriegsspiel” had its own problems. The connection between the proponents of rigid and free “Kriegsspiel” brought into sharper focus the tension between realism and playability. More important, it revealed the fact that the lack of realism could result in a lack of playability, just as lack of playability could lead to a shortage of realism. The late nineteenth and early twentieth centuries thus began to see increased efforts to achieve some sort of balance between the false realism of “Rigid Kriegsspiel” and the false playability of “Free Kriegsspiel” (Perla 1990).

Up to this point in history, the wargaming used in the military was primarily focused on training and educating its participants, be it in specific military tactics, educating them about a doctrine for using new weapon systems or simply fostering an understanding for military matters. With the ongoing “industrialization” of warfare came the recognition in the late nineteenth and early twentieth century that successful warfare no longer was a simple matter of superior tactics, but increasingly of superior logistics. What really mattered now was who could mobilize and deploy his troops faster than the enemy and thus have them on time, in the right location with the right equipment. The emphasis on wargaming to test mobilization scenarios increased, for one because it was indeed a key success factor to successful engagement of the enemy, but also because the size of armies was ever growing and thus full-scale mobilization exercises ...