John Horn, professor of economics at Washington University's Olin Business School and former McKinsey strategist, shares a disciplined framework for understanding competitive behavior by applying game theory and structured simulations. In this episode, he explains how companies can elevate competitor analysis from basic intelligence gathering to actionable strategic insight.
Horn begins by debunking the common misconception that many competitors behave irrationally. As he puts it:
“Every single time a client said the competitor is irrational, I could ask them... two, three questions which would explain... why the company was being rational in what they were doing.”
He outlines a four-step framework leaders can use to model likely competitive behavior:
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Observe what competitors say and do, including press releases, earnings calls, and other public data.
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Assess their assets, resources, and capabilities, and imagine what you'd do in their position.
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Identify the decision-maker and their background to infer how they think:
“If you grew up as a marketer and you became a CEO, you’re going to look at the world from a marketing perspective.”
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Make a short-term prediction, write it down, and revisit it:
“It becomes a virtuous cycle of getting a better insight into how that competitor thinks.”
Horn emphasizes that many firms fall short because they stop at step one or lack mechanisms to feed deeper insights into decision-making. He also stresses the role of empathy—not sympathy—in strategy:
“I do have to empathize, understand why they’re making the choices they make.”
War gaming, in Horn's view, is a powerful simulation tool, not theater.
“It’s a chance to practice business choices in a risk-free way... and just a much more realistic discussion.”
For entrepreneurs or under-resourced teams, Horn offers a lighter-weight version called "War Gaming Lite," which enables rapid, structured thinking about competitive responses using only internal knowledge and role-playing.
He also discusses how human biases, short-term incentives, and lack of time make both your firm and your rivals more predictable than you might think:
“People really are predictable... It’s not rocket science—it’s about being disciplined.”
Whether you're a startup founder or a Fortune 500 executive, this episode offers practical steps to improve your strategic foresight and competitive positioning, grounded in empathy, behavioral realism, and iterative prediction.
Get John’s book here: https://shorturl.at/6DOyh
Inside the Competitor's Mindset: How to Predict Their Next Move and Position Yourself for Success.
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