Why war games are not the answer to understanding markets - Part One
In 1832 in his classic work On War, Carl von Clausewitz describes the aim of war as being the need to reduce the resistance of a group so that they will bend to your will. The object is political, to bend a group/country to your will and the aim is military, to reduce their resistance. This description of war, including war against multiple opponents, even civil war, has stood the test of time.
If we accept this definition and apply it to the healthcare industry, particularly to those markets where multiple competitors are active, it seems that the popularity of war games in healthcare means that the goals are to bend people to your will and reduce their resistance to your desire. Who do you bend to your will, patients, doctors, pharmacists, payors? How do you reduce their resistance?
This is not what people in healthcare want to do. Perhaps they want to convince a certain group of people, but not bend them to their will. Or, maybe they want to remove barriers to use, but not reduce resistance to their ideas in a physical or aggressive way. So, why follow the advice of Clausewitz in commercial thinking about pharmaceuticals and devices?
Likewise, Sun Tzu, the ubiquitous character in the war games PowerPoint deck, is not always your best advisor either. “To know your enemy, you must become your enemy” he is quoted as saying. That’s true if your interest is in defeating only that enemy. “Even the finest sword plunged into water will eventually rust” sounds philosophical but I doubt it has helped many marketing strategies. And all this talk of enemies; who is your enemy in a healthcare market? Think about this carefully. In healthcare, choice is important; pharmaceutical, and other healthcare companies support choice, they do not want to, or be seen to, limit choice, they support the availability of competitor brands. They do not view other brands or companies as enemies; they are merely other organizations and brands operating in the same market. To use phrases such as we must win, they must lose, they must be wiped out, goes against the values of healthcare organizations and may be illegal in some countries and at least viewed as immoral. Therefore, the language of war and war games is often unhelpful in imagining pharmaceutical and medical device markets. It often drives marketers to the wrong thinking and the wrong solutions. This is because there are specific considerations in healthcare that are not served well by the application of the concepts of war.
A Market Is Not a Battlefield
The fundamental misjudgment is one of perspective. In war, you have an enemy and you directly target them. One will win and one will lose. In markets you too have competitors, though your focus is, or should be, on the market and your customers, not on your competitors. To be specific, you have goals to achieve that are driven by your interaction with the market. You can allow your competitors to be successful if you are successful too. This is not war, it’s marketing. It’s about position, segmentation, communication, knowing where you can be successful and where you cannot. You are choosing approaches to the market to generate your success, not competitive strategies to beat/kill/destroy another brand.
Of course, a consequence of your interactions with the market may be that another company or brand does less well than they wanted. However, this is not the objective, it would merely be a consequence of a market-focused strategy.
In this context the healthcare marketer does not have an enemy to focus on. Perhaps the greatest challenge for the healthcare marketer, in the sense that it will reduce your success rate significantly, is a market you don’t understand, needs that you have not deeply understood and trends that you have not identified and dealt with that take your customers and opportunities away from you. The enemy of your success is your lack of market understanding.
The Popularity of War Games
If what I describe above is true, then why do war games remain a popular pastime of marketers? The war game concept appeals to the simple, static, concept of a market, where the size of the market is fixed, all players have access to all the market and to win someone else must lose. People with this static and simple view of markets will find the concept of traditional war games attractive.
Secondly, and related to this first point, much of the data that marketers look at is based on market shares and tends not to provide thinking about market growth and drives the thinking that your competitor’s share must go down for you to be successful. Indeed, many marketers will look at another company’s market share data before they look at their own. With this thinking, war games may be attractive.
Thirdly, when a war game is run well it can produce a clear set of actions and this is often appealing to action-oriented marketers who are perhaps more focused on a plan and actions rather than a greater understanding of a market that may lead to important insights and actions that will drive their business forward.
However, the above arguments are not compelling. Markets are as they are described above. They have segments, defined as different groups of customers with differing needs, where one product is better suited than another, they have the potential to grow when organizations help customers see the broad utility of a product, customers can change, processes in the market (think of a treatment algorithm) can be radically altered and, most importantly, markets are influenced by much more than so-called competitor companies. Governments, payors, the public, patients, nurses, physicians, science, society and other elements can change the dynamics of markets and take them in different directions. It is these elements, often, that will define whether your approach to the market is successful, not other companies like yours.
If you think about what you’re trying to understand – how a market changes over time and how you should act to respond to the future market to be successful – you need to think about all of these elements if you want to be able to hypothesize how your market will evolve with reasonable accuracy. Other companies like yours are only one of the many forces at play in the evolution of any market.
Are War Games of Any Use?
Let’s call it competitive simulation, or, to be more specific, the simulation of how other companies relevant to you may behave in a changing market. This is of value, if it is done against a backdrop of other forces acting upon the market and driving change in their own way. How other companies will respond to the change or, for example, how they might launch a product, can provide a lot of useful information about how the market might evolve. It may highlight to you if a potentially disruptive approach to the market is likely to happen or if a company may target a part of the market you are interested in or involved with. It may highlight how customer thinking and behavior might change.
The important point is that this is a simulation, a model of the future market and is not a war game in the classic sense. It is a market simulation, built on a clear understanding of all the trends and all the forces that will shape the market you are interested in. Other companies and their products play only a part in this thinking and your goal is not to beat them, it is to understand how you can most successfully engage with your changing market.
(Stay connected to read Part Two of this series...)