Strategy simulation process

With over 20 years' experience of applying strategy simulation, Cognitus has experience in many industries and public services - including retail, logistics, energy, utilities, telecommunications, chemicals, pharmaceuticals, healthcare, defense and justice.

Read about some of our success stories and see our client list.

Here is an overview of our strategy simulation process.  As you will see, it is both definitive and flexible.

The Cognitus strategy simulation process: resource-based strategy

The Cognitus approach focuses on the interconnected structure and behaviour of the key resources that drive your business. We use simulations as the means to explore potential resource management strategies - to meet both short-term issues and longer-term business objectives.

We provide the tools and processes that you need to address complex strategic issues - engaging key team managers in knowledge capture, analysis, strategy development - and communication.

Overview: a clear and progressive process structure

Cognitus has a proven, flexible engagement process that levers your own business and industry knowledge with our simulation experience and our extensive simulation bank. The engagement process is illustrated here - it is both progressive and iterative.  Stages 1 (Issue Identification) and 2 (Management Engagement) are universal; other stages depend on these outcomes - and on your own circumstances, priorities and budget.

Stage 1: Issue identification - asking the RIGHT resource questions

The first stage is careful issue identification and definition, to frame your strategy issues in specific resource management questions.

• Markets.  Is your target market sufficiently attractive? What demand is really driving the market?  Why?  And is it sustainable?
• Products. Can you continuously create new products to replace products that are becoming obsolete - or constantly refresh your base product to stay ahead of the competition? Can you license or acquire new products - and at what cost/benefit?
• Customers. Can you gain more customers in region X than you will (maybe inevitably?) lose to new competitors in region Y? How?
• Pricing. How do you price?  E.g. cost plus, market-based or competitor-driven?
• Branding. How will you create and sustain your brand? What value does the brand add - and what resources go into its makeup?
• People and talent. Can you physically recruit and train enough scientists/doctors/salesmen to maintain and improve your products and services? How will you attract and retain them?  How do you promote/move/remove them?  How do you ensure they are productive?
• Production and distribution capacity.  How do you balance capacity with demand, ensuring that you can expand without over-spending on fixed capital assets?
• Infrastructure assets. How can you balance short-term operating efficiency and asset utilisation with long-term asset serviceability? And if you are a regulated utility, how can you demonstrate a balanced strategy to shareholders, regulators and other stakeholders?

...and of course....

• Measurement and scorecards. How do you measure success?  Are balanced scorecards the ultimate answer to measurement - do they really link to strategy, and is your scorecard transparent and dynamic?
• Finance.  How can you access the cash you need - from shareholders, lenders and internal cash flow?  At what price?
• Value. Can you really grow the business at x%pa and actually create value at the same time?  Are your short-term and long-term objectives realistic and consistent?

Of course, all these questions are ultimately interconnected. BUT that is not necessarily transparent to you if you are a resource manager, nor even a CFO or CEO having to address the next year's business plan.

To succeed in strategy you must address both your long-term business objectives and your short-term action plans.  And that's where strategy simulation is vital.

So asking the right, difficult questions is the first step in Cognitus' approach - and it is notable how often the issues and the focus changes in the process! Very occasionally, sufficient knowledge is gained in this stage that a detailed simulation study is unnecessary - or the focus changes so substantially that a different issue must be engaged first.

Stage 2: Management team engagement - getting the right people on board

Usually the only people who truly understand how resource-based issues work are your own managers. So bringing together the right mix of people is critical - and managing the project team is also a critical role. Cognitus provides the simulation skills and drives the process; but the knowledge and impetus always comes from the client.

Further stages - ideals and realities

The diagram indicates a full range of process stages.  Each stage provides specific insights and benefits, so you decide at every point whether and how you wish to progress - it's not always necessary to undertake every stage.

The reality is that as each stage unfolds, prior assumptions often change or even fall away. The object of the process is purely to address the defined issue(s) - not necessarily to build a sophisticated simulation (but see below).

Using simulations for communication

As the purpose of the strategy simulation process is no more and no less than to support better management decisions, a simulation may be regarded as simply a means to an end - and might be discarded at the end of the process.

Nevertheless, a simulation is the condensed knowledge of the managers who created it and that knowledge is usually better (more concisely and precisely) expressed in the simulation than in other forms.  As such, it is often useful to use the simulation itself to explain the strategy to other managers and third parties.

Strategy simulations may readily be "packaged" for communication, or even for distribution to third parties.  For example, iThink and STELLA models may be packaged for direct communication, or web-based communication, with "management flight interfaces" and scripted stories.

Ultimately, strategy simulations are often packaged as management "games", so that managers (individually or in games) can experiment with different strategies.

Issue-based simulation modules and strategy discovery programmes

Every client implementation is of course unique. 

However, because we have an unrivalled bank of simulation templates built over decades of prior client work, we will almost certainly have a 'fast start' to your strategic issue.  This approach to 'recycling' our knowledge - without ever divulging prior client details - is a distinguishing feature of the Cognitus approach.

As a fast start, and to build management team engagement, we often adapt one of our strategy discovery programmes.

For more details please contact Cognitus directly.