There are many things that can mess up a strategy or new product. The hardest one to prepare for is the behavior of rivals. Big discounts, imitation, and a variety of other unexpected tactics can throw off even the best idea.

Behavioral biases, including the tendency to overlook competitors, overconfidence, and overoptimism mean that companies often don't effectively prepare for what others might do. 

An article in the McKinsey Quarterly outlines a new strategy companies are starting to take  running "war games" to simulate "the thoughts, plans, and actions of competitors," so they can better seize opportunities and be prepared to respond to what competitors do.




This exercise had a sobering effect on the executives, who began to recognize that overconfidence and excessive optimism had clouded their thinking. The company has since gone back to the drawing board and is using many of the observations gathered from the war game to help improve the new service and its market positioning."



Read the full article at the McKinsey Quarterly

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