Learning to Recognize and React to Disaster: The CI/Wargame Approach to Strategic Management

Business results are dominated by "Black Swans" (low-probability/high-impact events) both positive and negative. Black Swans cannot be predicted although they look predictable in retrospect. This paper focuses on the negative Black Swans, the disasters. Since disasters cannot be predicted, the ability to quickly recognize and react to them is the key. This paper recommends the processural strategic paradigm as the correct approach to strategic management in the face of the disaster. Specifically, it is recommended that top management improve their ability to recognized and react to disasters by playing wargames designed to incorporate what is learned via competitiive intelligence (CI). The wargame represent situations that could, but not necessarily will, happen; they are not intended to be accurate forecasts. This recommendation is called the "CI/Wargame Approach.