The Cost of Ignoring Competitor Reactions: Why Wargames Should Be Part of Your Strategy

Introduction: The Blind Spot in Strategy

Most executives are well aware of their competitors. They track product launches, pricing moves, and market share shifts. Yet when it comes to building strategy, competitor reactions are often treated as an afterthought—something to monitor later, not anticipate now

This blind spot is costly. According to Harvard Business Review (April 2009), while executives consistently recognize the importance of predicting competitor reactions, fewer than one in ten actually do it when developing strategies. The result? Costly missteps, avoidable surprises, and lost opportunities

That’s where business wargames come in. They provide a structured way to stress-test your strategy by simulating how competitors, customers, and even regulators might respond—before you make your move.

Why Ignoring Competitor Reactions Is So Expensive

• Overestimating Your Own Advantage. Companies often assume their competitive edge will last longer than it really does. A new product may look unbeatable—until a rival counters with an aggressive promotion, a partnership, or even litigation. Without anticipating these reactions, companies overinvest in strategies that unravel quickly

• Misallocating Resources. If you launch in a new market believing competitors will stay passive, you may allocate budgets too optimistically. The reality is that competitors will likely defend their turf—forcing you to spend more than planned. The true cost of entry isn’t just your own investment, but also the escalation triggered by competitor responses

• Eroding Credibility with Stakeholders. Boards, investors, and even employees lose confidence when strategies look solid on paper but stumble in practice. The pattern is often the same: leadership underestimated how rivals would react. As one of our clients put it when mentioning a former experience:

“We weren’t beaten by the market—we were blindsided by our competitors.”

How Wargames Reduce Those Costs

At Midas Consulting, we’ve facilitated wargames across industries—from pharmaceuticals to automotive and B2B technology. The benefits consistently fall into three categories:

• Sharper Strategic Assumptions. Wargames force executives to step into a competitor’s shoes. What would you do if you were losing market share? What price cuts, alliances, or innovations would you launch? This process reveals blind spots and challenges rosy assumptions

• Stronger Alignment. Leadership teams often disagree on how competitors think. By role-playing as rivals, they surface different views and build a shared understanding. This alignment reduces costly internal conflicts later

• Faster, More Resilient Decisions. When scenarios have already been pressure-tested in a wargame, leaders make faster, bolder moves. They know the risks, the likely responses, and their counter-moves—avoiding hesitation when it matters most

Practical Example of a Wargame

A Latin American consumer goods company approached us before a major product launch. Their internal forecast assumed competitors would not retaliate aggressively. In the wargame, however, one team role-playing a competitor quickly countered with a massive discount campaign

The exercise was sobering. The company realized their pricing assumptions were fragile. They adjusted the launch plan:

• Built a defensive pricing strategy,

• Strengthened retailer relationships, and

• Allocated budget for a rapid-response promotion

When the launch went live, competitors did respond with discounts—exactly as simulated. But this time, our client was ready. Instead of suffering margin losses, they captured market share profitably

As their Marketing VP later told us:

“The wargame saved us millions. We didn’t just predict the reaction—we had the counter-move ready.”

Strengths and Limitations of Wargames

Like any tool, wargames have strengths and weaknesses. Recognizing both ensures they’re used effectively

Strengths of Wargames

• Realism – They expose you to how competitors may actually behave, not how you hope they will

• Engagement – Leaders are far more invested when role-playing than when reading static reports

• Actionability – Wargames generate clear counter-strategies, not just abstract insights

Limitations of Wargames

• Quality of Inputs – A wargame is only as good as the intelligence about competitors you bring in

• Time and Resources – They require preparation and skilled facilitation to avoid becoming guesswork

• Overconfidence Risk – A single simulation can never capture all possibilities; wargames should guide, not dictate

As one of our clients in industrial equipment told us:
“The value was not in predicting the exact future—it was in building a playbook for how to react, no matter what happened.”

The Strategic Payoff

The real cost of ignoring competitor reactions is not just lost revenue—it’s wasted time, credibility, and momentum. By contrast, companies that incorporate wargaming into their strategy enjoy three lasting benefits:

• Lower risk of surprises – fewer costly missteps

• More resilient strategies – tested against likely competitive countermoves

• Greater organizational confidence – a leadership team aligned on how to act

Or as another client, a global pharma executive, put it:

“Wargames forced us to think like our competitors—and in doing so, we became far better at thinking like ourselves.”

Conclusion: Don’t Pay the Price of Ignoring Competitors

Markets are not static. Every move you make triggers a countermove. The question is whether you anticipate it—or pay the price for ignoring it

Wargames give you a disciplined, practical way to anticipate competitor reactions before committing resources. They help you avoid the costliest mistake in strategy: assuming your competitors will stand still

If you suspect your strategy may be overlooking how rivals will respond, it’s time to talk. At Midas Consulting, we help leaders across Latin America and beyond transform uncertainty into foresight—and foresight into competitive advantage

Understanding how wargames work is one thing—executing them successfully is another. That’s where we come in

We’re with you at every step to run a successful wargame!

With over 70 wargames completed, we have a proven approach to help companies like yours test and refine your strategy. We’ll ensure your team is aligned and that you’ve eliminated your blind spots, so you’re ready for any competitive moves

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