Pfizer War Games

Pfizer, War Games: Testing Business Strategy Through Simulations

For this project, the central question was:  Would joint ventures with diagnostic companies be a more viable strategy for the next decade than acquisitions?

Evolving Business Models via War Games

Pfizer had a history of using futures methodologies to successfully envision and act upon high value business strategies. In the later half of 2000, many in the pharmaceutical industry were beginning to acquire diagnostics companies believing this would be the best practice to serve the emerging personalization of medicine. Before following suit, Pfizer wanted to have a way of visioning and testing whether acquisitions, or some other business strategy would be more viable.  It recognized that it needed to use a leading edge approach which moved beyond the more traditional, and ‘safe’ practices engaged in by consulting firms. Therefore, it turned to AFA because of their ability to explore issues that are more complex and less obvious than traditional business analysis methods could comprehend.

Leveraging its expertise in military futures, AFA organized a series of “war games,” that is business design simulations tailored for pharmaceuticals. These simulations would incorporate forecasts and alternative scenarios that would be used to set the context for future decisions. Unlike some competitors, Pfizer did not have a diagnostic capability so the company needed to assess whether strategic alliances could fill future needs rather than an acquisition. Knowing AFA had already designed and conducted corporate war games to test Pfizer strategies in Europe, senior executives at the company had AFA design and run a two-day simulation that both validated and accelerated the joint-venture strategy.

The process involved bringing together Pfizer scientists with representatives from six diagnostic companies to engage in a series of mock business negotiations and deals that tested whether forming strategic alliances could be successful. Simultaneously, AFA facilitated a group of internal stakeholders to create a set of scenarios that looked five to seven years in the future in order to explore how these business alliances could be tested for the U.S. marketplace. A group of senior managers from within Pfizer then assumed the role of a governing board, whose responsibility was to evaluate the mock business strategies. Surprisingly, and somewhat unexpectedly, Pfizer was able to learn which of these potential alliances aligned most closely to their own culture, which could be most trusted, and which deals would carry lasting value. As a result, Pfizer was “highly successful” at addressing the complex challenges emerging at the time (Williams, 2010, p. 272)[1] and recognized that acquiring a diagnostic company, or forming these capabilities internally would be costly and less successful than if they formed strategic alliances with those diagnostics companies they found best aligned with the Pfizer culture. According to Stephen Williams, then V.P., Clinical Technology at Pfizer: “The game prevented us from making a large investment that most likely would have been futile, that we would have ended up divesting from within a few years. The real value was that by engaging in the game we knew that forming alliances was really right. It enabled us to feel comfortable with this strategy and to resist pressure to acquire something.

This turned out to be absolutely right for our company.

Steve Williams, former V.P. of Clinical Technology

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[1] Williams, S. (2010). Decision-ability: The skill to make your decisions productive, practical and painless. Decisionability, LLC. Boulder, CO.