As the global downturn kicked in, a high-tech company’s senior executives decided to run a war game to prepare themselves for the uncertainties of the post-crisis landscape. After two days of simulations—when teams representing competitors and stakeholders role-played against a “company” team—the executives understood that a strong competitor on the sidelines was likely to enter the market aggressively. The executives also realized that the low end of the product range would face more price pressure than they had been anticipating. Moreover, while there would probably be industry mergers and acquisitions, as the company had expected, the deals were unlikely to kick off a wave of M&A or to have a material impact on the company’s share of any market.

These insights made a difference. When actual deal making began and the player on the sidelines announced its intention to become a market leader, the high-tech company didn’t leap into the M&A fray or otherwise lose focus. Instead, it concentrated on protecting its core business, minimizing low-end losses, and investing in a major growth opportunity that required new technology and a long incubation period—and has since proved valuable.