Where IT Fits in the Business Battlefield
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Plenty of corporate executives have channeled the successes and failures of military leaders to help them better understand their business. And that's no surprise: The armed forces' focus on strategy and execution has long held many lessons for forward-looking executives.
Mark Herman, a vice president at the business consultancy Booz Allen Hamilton, specializes in putting those business leaders into a different kind of battlefield. Herman, co-author of Wargaming for Leaders: Strategic Decision Making from the Battlefield to the Boardroom (McGraw-Hill, December 2008), designs and stages business wargames for firm's clients.
In the book, Herman and co-authors Robert Kurz and Mark Frost lay out how, through the use of different gaming scenarios, they've helped businesses understand pressures from within their industries and from around the globe.
Wargames play on what the writers call "cognitive warfare"--the combined brainpower of colleagues and teammates working on various scenarios. Wargames also thrive on the "impossibility theorem": No matter how imaginative or determined a person is, he or she can't list the things that would never occur to them.
Unlike some other critics of IT leadership, Herman says there's no question that CIOs need to be deeply involved in these wargaming scenarios (which always include top corporate executives), regardless of whether they had anything to do with the problem at hand.
Herman explained why--along with what business leaders learn from wargames--in a conversation with CIO Insight Online Editor Brian P. Watson. What follows is an edited, condensed version of that conversation.
CIO Insight: What do wargames teach business leaders that other analyses can't?
Mark Herman: Technology people love computers and all the things computers do. But there's a fundamental thing people need to remember: Computers don't think. That's important.
You want to bash numbers around? Computers are awesome. Anytime you're looking at a problem that's fully understood, you don't want to do a wargame. It's a closed-form, an algorithm, and that's where a computer reigns supreme. You plug in your variables, you push a button, and voilÃ , an answer pours out rapidly and in volume.
However, there are many, many problems in life--particularly around strategy and competition--where there are unknowns.
One of the guys who objected to the 2004 change in the rules of what kind of leverage banks and institutions can have with their money thought that they were relying on computer models of Wall Street to avoid disaster, but the computer models couldn't deal with the continuity.
Consequently, part of the problem was an overreliance on what the models said would happen. So they tried to treat an unspecified problem with a closed-form solution. As long as everything stayed on a continuous, linear vector, everything was cool. But the first time property started diminishing in value, the whole thing unraveled rapidly and the computer models couldn't see it.
Why a wargame?
Herman: You could hold a wargame with a lot of different people, but the key is that you're holding it with people who are knowledgeable and experienced in the topic. You get the people who do it for a living and put them in a context. Humans don't know what they know, but if you put them in the context of making decisions, all of a sudden, in the context of the moment, you're going to get some very fine answers.
You're leveraging the human cognitive models you can't get at any other way. For the most part, you ask a question, and you get an answer. In a wargame, you ask what the question is. When you ask that, you get a whole different set of answers.
Then you get a competitive element: What you think is not necessarily going to go without a challenge. So you create this dynamic with human models that is extraordinary. Ultimately, that's the difference between a wargame and an analysis.
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