Use of war games to sharpen innovation decisions

How do you decide to innovate, and where do you place you innovation resources?  These and many more questions that you need to think about as you strategize for innovation.  But, now do you know you have asked all the right questions?  Are there areas that bias your decision making?  A McKinsey report from December, 2012 suggests that you may be biased against certain information.

What is the major bias you might have?  The report suggests that you are biased against your competition, i.e., you don't anticipate your rivals motivations and actions.  This bias is one of dozens biases that humans have.  This bias, along with overconfidence and excessive optimism will blind you to critical information necessary to make a good strategic decision.

How can one counter these biases and oversights?  Companies that are in very competitive environments have turned to war gaming as a strategy to help them make decisions that involve potential responses from rivals.  War gaming can help one understand the potential outcome of a product change or introduction or a go-to-market decision.  It can also lead to a better understanding of potential disruptive innovation introductions into the marketplace.

What do you think?  Have you tried war gaming to help you understand you competitors actions and reactions?