Products: StratLab

  • What is StratLab?
  • Why simulation?
  • When is StratLab most useful?
  • What makes StratLab analytics believable?
  • How does it work?
  • What is StratLab?

    Trial and error is no way to run a business. But with the StratLab simulator, it’s the best way to develop a strategy. StratLab makes strategic trial-and-error safe, realistic, fast, and affordable. 

    StratLab applies advanced analytic technology to business-strategy formulation and execution. It allows managers to test and compare any number of strategic alternatives, seeing what results to expect from each, even under adverse market conditions or against uncertain competitive responses.

    StratLab simulations model complex business conditions, and project dependable results. This realism is accomplished by:

    • Carefully calibrating the simulation software to each business situation
    • Leveraging extensive empirical research on business strategy
    • Applying state-of-the-art financial theory

    Why Simulation?

    Computer simulation has proved its value and practicality in military strategy, medicine, engineering, architecture, the sciences, manufacturing, and operations management. Today, no one would think of deploying a new weapons system, performing a new operation, or building a new plant without first testing in simulation mode. Despite the need, business applications have lagged.

    Without simulation, business strategy evaluation usually means comparing two or three possible strategies in base-case, best-case, and worst-case environments. More than that is simply too complex and too time-consuming, even with the help of spreadsheets and other tools. Simulation is the only way to manage complexity and uncertainty before making a decision. Business is finally catching up with other areas.
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    When Is StratLab Most Useful?

    StratLab is most useful when:

    • Management needs to know what to expect from a high-risk move (e.g., major capacity expansion, acquisition, disposition, corporate restructuring) before making a commitment.
    • Management needs to plan the entry of its business into a new market.
    • A business is coming under competitive attack, and management needs to defend its position.
    • Market conditions are changing, and old rules for success no longer apply. This happens when:
      • New competitors enter a market or existing competitors exit
      • Competitors alter their behavior
      • Economic conditions (market growth, inflation, resource prices, regulations, etc.) change
      • Technology changes in a way that affects products or costs
    • Management is dissatisfied with current performance and willing to explore more than tactical responses or fine-tuning.
    • A new management team needs a crash course in its business.

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    What makes StratLab analytics believable?

    Here’s how StratLab reliably translates actions into expected performance:

    • Relevant descriptors. StratLab knows what factors are most important in determining outcomes. It builds these business variables into a logical structure to describe the starting business situation and the strategic moves by all competitors.
    • Empirical basis. StratLab’s predicted outcomes are based on empirical research on thousands of businesses. In other words, the predicted outcome of a simulated strategy is reflects what happened to other businesses that made similar moves in similar situations. These relationships are consistent across industries, geographies, and time periods. They are more reliable guides to the future than the limited history of your specific business or industry.
    • Customization. First, StratLab is calibrated to represent your particular business and market. Then a series of test runs confirms that StratLab has captured what makes our market tick.
    • Reality test. StratLab depicts the outcome of competitive actions and reactions in sufficient detail for a "Bayesian" interpretation of the results. In other words, StratLab's forecasts agree with both the relevant research findings and the judgments of knowledgeable observers of the business.
    • Performance metrics. StratLab measures business success in terms that really matter: each strategy’s total return. This is the sum of discounted net cash flows over five years plus the capital gain from an increase in the expected market value. StratLab also measures the risk of each strategy, and shows partial success measures like net cash flow, ROI, and sales volume.

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    How does it work?

    StratLab software combines extensive empirical research and complex simulation logic. It is a powerful model, and its use requires considerable skill and experience.

    Using StratLab is a joint effort between MANTIS and client companies. Clients bring their expertise (an in-depth knowledge of their business situation), and MANTIS supplies what it knows best (the principles of business simulation and a familiarity with the StratLab model).

    Most clients rely on MANTIS consultants to produce simulations. However, we provide a training program, and will license to the software to organizations that acquire the expertise to use StratLab effectively.

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