According to an EY survey of the global business environment, 2019 saw a post-WWII high in political risk. Then COVID-19 hit.

It is not hyperbole to say that this is perhaps the most uncertain time in the global economy and geopolitics in at least 30 years. Countries are in lockdown. International cooperation has broken down. And economies are witnessing Great Depression levels of unemployment.

The necessity of planning for the future has never been more important, but that future has never been more uncertain.

Board of a game about where an MNC should relocate production from China

Planning for the unplannable

There are a number of methods to deal with the current tumultuous global environment (check out the Services page for more). One new way is the Matrix Game.

Militaries and businesses have long used wargaming as a technique for confronting uncertainty. From dealing with U-Boats in 1940 to high-tech mergers in 2008, playing out simulations can help researchers and decision-makers get a glimpse of potential futures.

By pushing participants to be creative and instilling a competitive spirit, we can expand the scope of typical analysis to predictive insights in highly complex systems. This is a crucial component of thinking through what might happen, when the world can deviate further out than what we would expect, and a single actor can tip us down a very different path.

As Ed McGrady writes in War on the Rocks about wargames used by the Department of Defense:

Wargames are about understanding, not knowledge. They are about ideas, not facts. They are about people, not technology. They do not help us make better decisions through their outcomes. Rather, they help us make better decisions by sharpening and refining the stories we tell ourselves…
Wargames are the front-end, door-kicking tool of new ideas, dangers, and concepts. In particular, they help you understand how you will get stuff done in the messy, human organizations that we all work in.

Matrix Games, which Two Lanterns runs, are a type of wargames that focus on arguments and discussion as the drivers of the action, with the participants helping to determine the outcomes. They are particularly useful in political risk, where we are looking at novel scenarios and fast-moving environments, and where a game with highly structured rules may be out of date by the time it’s played.

Wargames for political risk

It is odd, given the prominence of wargames in the national security field and in business consulting, that they have not made a major dent into political risk, despite our industry sitting at the confluence of those two.

Most likely, it is because wargames offer something different from the rest of the usual services.

Rather than providing an answer - which is what clients are usually paying for - wargames prompt questions. As McGrady says, “we need to make sure decision-makers understand that a good game is only the beginning of the journey, not the end.”

Wargames help us illuminate what might happen and prompt us to investigate various avenues further.

In a game about the energy policy, for example, one team may lobby a city for a contract to electrify the municipal vehicle fleet. That should send analysts to find out which city’s cars are aging.

Organizations may not instinctively look for an exercise that causes them more work afterwards. But it ought to be considered as a useful technique to help them prepare for the future, for five key reasons.

1. Wargames are learning experiences

Politics can be unpredictable. Upset elections. Trade wars. Pandemics. Each of these can hit an organization rapidly and have to be addressed by each department in different ways.

The best defense against the unexpected is a team that can cope with the unprecedented. As a ConAgra CEO said in an annual report, playing business wargames “sharpen[ed] management’s strategic skills.” They are a fast and fun way to build up that internal capacity that may be your best defense against disruption.

2. Wargames unlock existing knowledge

It is a truism that for many organizations the most valuable assets leave the office every evening.

When I teach political risk workshops at the Department of Defense, I am surrounded by decades of national security experience. At business schools, it’s a mix of academic and private sector knowledge. I’m guessing that your organization is also stocked with highly knowledgeable people who know intimately about their own work, but also have insights on various other parts of your operating environment.

Wargames help to unlock that knowledge. By putting employees and executives on teams to compete against each other, we can break down silos, overcome hierarchies, and encourage the best ideas and arguments to be put into the mix. It can be necessary to receive external advice, of course, but it’s important to also use what your organization already has.

3. Matrix Games forces concise debates

In the world of wargaming, the most derided approach in the BOGSAT - Bunch of Guys/Gals Sitting Around a Table. As everyone who has sat through a long meeting knows, throwing out a scenario and discussing it without direction is the fastest way to an unproductive discussion. Bureaucratic maneuvering skews the debate. Groupthink can set in. Rabbit holes are chased.

In a wargame, specifically in Matrix Games, this kind of rambling is prevented. Teams have a finite amount of time to prepare their moves for each round, are limited to six sentences on why their move will succeed, and other teams are limited to six sentences in rebuttal. Timers ensure that debates do not digress and the exercise keeps moving. You get the value of the debate without the hours lost to muting and unmuting.

4. Wargames force us to consider what we didn’t expect

As the Nobel Prize-winning economist Thomas Schelling wrote in his memo “An Uninhibited Sales Pitch for Crisis Games,”:

it is significant that there is at least something that games can do or generate that cannot be done or generated in any other way. One cuts himself off from an entire set of phenomena by analytical processes or planning processes that do not involve the interaction of two or more decision centers.

A key difficulty in political risk is to imagine what we can’t imagine. Games see us play as different actors trying to achieve our own objectives. It lets the interactions go where they may and the cascading events can spiral into places we hadn’t considered.

For example, who would have thought that David Cameron would call for a Brexit referendum before he announced plans for it? The first mention I can find of it in a political risk database is early 2014 with few mentions before 2016. Firms would have had only a few months before the referendum.

Yet if we had played a game with Boris Johnson and David Cameron as some of the actors, the Brexit outcome may have been uncovered. Cameron thought a referendum was a way to shore up support with UKIP voters; Johnson saw being pro-Brexit was a way to differentiate himself from Cameron. Players seeking to maximize their own interests may have stumbled on the key decisions in a way that analysts might have missed.

5. Wargames are fast and cheap

To quote Schelling again,

A simple test, not the only one I have in mind, is that any participant asked the day after the game, a month after the game, or two years after the game, whether it was worth all the time and trouble will say, with something like 90 per cent probability, that it was unquestionably worth his while.

There are a number of useful techniques for managing risk. Scenario planning, policy trackers, subscriptions, and reports can all be hugely helpful. But, as with all services, there is a cost and a time lag between commissioning and receiving.

Matrix Games take 3 to 5 hours to play - the amount of time that might be spent copy editing a major report. They are also much faster to prepare and leaner to run than many traditional wargames. Each can be set up within a week and executed with only Zoom and Google Sheets.

The largest cost for running a wargame is the time of the people involved which, as Schelling found in his years of wargames with the national security community, is almost always well-spent.

Putting games to work

Matrix Games stress free-form decision-making and allow participants to drive the game with arguments for and against actions. This allows us to bring intelligent people into a room and, with only a little guidance from the game umpires, let them work together to build a new picture of the world. They have been used to game out the war against ISIS, NATO-Russian competition in the Balkans, and even a Senate race.

Two Lanterns runs games about a variety of political risk situations. With Country Acuity Advisors, based in Singapore, we are running games about post-COVID Asia.

Each game comes with a briefing book sent to participants in advance and produces a findings report sent to participants within three business days after running.

Get in touch and let’s talk about how we can help you get a jump on your work by taking a break for a game.

Five reasons to use a Matrix Game in political risk planning