Coevolutionary Gaming Theory Can Facilitate Decision Making

How Coevolutionary Gaming Can Facilitate Group Decision Making

Introduction:

Coevolutionary war gaming is an unconventional scenario planning process put forward by Jeff Cares and Jim Miskel in their article "Take Your Third Move First" which essentially builds on the argument that planning and subsequent decision making should not be conducted in a vacuum, i.e., it is not enough to just look at the current facts and historical data to make decisions and plans and just assume that those who will be affected (e.g., competition) will just take them sitting down. Plans and decisions made using this "vacuum" process are characteristically shortsighted at best, because they normally do not take the impact of the counterplans and actions that could possibly be taken by the affected parties into consideration.

A decision taken based on available data could turn out to be worse than just maintaining the status quo if reactionary moves are considered. A simple but good example of this is the decision of a market newcomer to implement price reductions in order to grab market share. Based on available data, it seems so simple a decision to just cut prices since this is probably what the data will say. However, this decision erroneously assumes that the market share leaders will just do nothing. What the data does not show is that the market leaders are better equipped to fight in a price war than the newcomer because of their incumbent market volume (which gives them economies of scale). The market leaders can even aggressively fight to the point where they bring down their prices below the breakeven point of the newcomer (which is normally higher) until such time that it collapses because its sales cannot support its operations. In other words, then, if this decision is taken by the newcomer (and assuming it can only last for so long without major sales), it could be more fatal for it than, for example, identifying geographic market niches to enter and build brand awareness before going into the turf of the market leaders.

This is where the value of coevolutionary war gaming lies. In this scenario planning process, the possible reactions and counteractions of those who will be affected are taken into consideration and the impacts thereof are evaluated for the purpose of revisiting the plans and decisions being developed before they are actually taken or implemented. Groups tasked to make decisions are divided into sub-groups and given one objective: Ultimately dominate the other sub-groups in terms, for example, of sales, market share, or other similar criteria to determine the winner, in a multi-stage (or round) "war game". Each subgroup is given a different set of beginning assumptions (e.g., resources, market share, brand awareness levels, etc.) which change depending on the outcome of each stage or round of the game. Further decisions are then made by each subgroup (e.g., "attack", "defend", "attack and defend"), which are again evaluated to determine the outcomes. At the end of this process, learnings and insights are gathered from which the final plans and decisions are developed.

How Group Decision Making Benefits from Coevolutionary War Gaming

As a result of the coevolutionary war gaming process, the group tasked to make the decision will be able to:

Ð'* Assess their current capability to undertake a plan viz. the capability of their competition to react to it. Clearly, competition will react to whatever plans that affect them. If they are bigger, they have the ability not only to defend, but counterattack as well.

Ð'* Determine the point below which