Round Y1 — First-Mover Decisions in Early 2026#

Facilitator Note

FACILITATOR FILE. Sections marked "Participant Briefing" are read to or distributed to participants. Sections marked "Facilitator-Only" are not shown to participants.

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1. Round Overview (Facilitator-Only)#

Purpose#

Y1 is the opening round of the exercise. Participants make their first real strategic decision in the world of early 2026 — a world where AI is broadly capable but unevenly deployed, where retail media is the new strategic battleground, and where leadership in over half the room is in transition. Y1 establishes each participant's strategic direction, surfaces their reading of the AI moment, and creates the first set of cross-company impacts that the Resolution phase will resolve.

What Y1 Tests#

• Strategic conviction under genuine uncertainty. AI's near-term trajectory is contested. The right answer for any given company is not obvious.
• Reading the room. Each participant runs one company, but every company's choices ripple through the others.
• Discipline on archetype. The mandatory Strategic Archetype forces participants to commit to one mode of action rather than hedge across all five.

What Y1 Does NOT Telegraph#

The Y5 reveal (AI labs entering as direct competitors to consumer-facing companies) is held back. Y1 framing should treat AI labs as vendors / partners / hyperscalers — the current state — without hinting at the future competitive dynamic. Participants who internalize "vendor dependency is risky" will be better positioned in Y5; those who deepen vendor dependency will be more exposed. Neither posture is foreshadowed as "correct" in Y1 materials.

Calibration#

Y1 is a real round, not a warm-up. Decisions made here carry forward — they cannot be undone in later rounds, only extended or pivoted from. The Y1 outcome narration is the first signal that what happens here matters.

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2. Round Flow (Y1)#

Y1 follows the standard per-round flow with one simplification: no Continuity Note (this is the first round) and no Strategic Stance Card (that arrives in Y2).

Total: approximately 55–65 minutes.

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3. Facilitator Briefing Notes (Facilitator-Only)#

How to Open Y1#

Open with energy. The room has been briefed on rules and run a practice walkthrough; Y1 is where the real exercise starts. Treat it as such — set the scene briskly, distribute private cards, and let participants get to work. Don't over-explain; the company packets carry most of the strategic context, and the participant briefing (Section 4) carries the macro framing.

What to Convey in the Round-Opening Framing#

The briefing in Section 4 below is the canonical text. Read it aloud or distribute it as a handout. Two emphases worth adding verbally:

1. "It's early 2026. The world you're operating in is the world as it actually is right now, with one exception: your decisions matter more than they would in real life." Set the realism frame; this isn't a sci-fi exercise.
2. "You are making one decision this round. It must commit to one of the five Strategic Archetypes. The Cross-Company Impact field is what triggers the Resolution phase." Set the mechanic frame; remind participants that interaction is structural.

Private Card Distribution#

Each participant receives their Y1 private cards face-down at the start of solo prep. Cards are confidential. Card influence is noted on the worksheet (field 12).

The full Y1 card set lives in Private Cards (drafted separately). Each company has its own card or cards calibrated to surface a Y1 strategic tension specific to that company. Examples:

• Walmart: a private card might disclose that Walmart Connect Q1 revenue is materially ahead of plan, but CPG suppliers have begun shifting marketing dollars to off-Walmart networks at twice the projected rate.
• Kraft Heinz: a private card might disclose that two specific Accelerate platform brands (e.g., PowerMac and Capri Sun Hydrate) have stronger early consumer traction than projected, but Lunchables volume is in steeper decline than expected.
• Anthropic / OpenAI partnerships: NO private cards should disclose AI lab competitive plans toward retail/CPG. AI labs remain framed as vendors throughout Y1.

Facilitator Cluster Huddle Observation#

While participants are in cluster huddles (8–10 min), circulate. Listen for:

• Who is committing to which archetype and why
• Whether Retail is converging on a unified posture (Walmart-style aggressive vs. Costco-style restrained)
• Whether CPG is forming a defensive coalition or fragmenting
• Who is hinting at M&A or alliance moves (these will trigger Resolution phase)

You don't intervene in the huddle. You watch. You'll need this context to run the Resolution phase.

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4. Y1 Participant Briefing (READ ALOUD OR DISTRIBUTED)#

The text in this section is what participants see. Distribute as a handout at the start of Y1, or read aloud during the round-opening framing.

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The State of Play — Early 2026#

You are running your company at the start of 2026. Most leadership teams in the consumer-facing economy are dealing with a version of the same question: how aggressively to lean into AI now, when the technology is broadly capable but unevenly proven, and when the competitive consequences of getting it wrong cut both ways.

AI in Early 2026 — What's Actually Deployable#

Foundation models from Anthropic, OpenAI, Google, and Meta are widely available via API and consumer products. ChatGPT, Claude, and Gemini are mainstream consumer tools, used mainly for chat, search, drafting, and analysis. Personal AI agents that can autonomously execute multi-step tasks (book travel, place orders, manage schedules) exist as demos and limited products — reliability is still inconsistent for production consumer use.

What's working at scale in commercial deployment:

• Customer service deflection. AI handles roughly half of routine inquiries at major retailers and CPGs; quality is variable but improving.
• Marketing creative production. Generative AI is in production for ad creative, with significant human oversight. Cost reductions are real but quality control is still essential.
• Demand forecasting and supply chain optimization. Mature operational AI is contributing margin across both clusters.
• Software engineering productivity. AI assistants write material portions of code; engineering team sizes are starting to compress.
• Warehouse robotics. Mature in major fulfillment networks (Amazon, Walmart); spreading to mid-tier operators.
• AI-PC and AI-device retail. The consumer electronics replacement cycle is starting; AI laptops, AI smartphones, AI-enabled home appliances are real categories.

What's not yet at scale:

• Fully autonomous consumer shopping agents (exist as demos; not production)
• AI-generated video at quality-indistinguishable-from-human levels (improving fast; not there yet)
• AI healthcare beyond narrow FDA-approved domains
• Autonomous trucking outside pilot corridors
• General-purpose robotics

Macro Environment#

• Tariff regime is unstable. The Trump 2.0 administration has imposed selective tariffs and threatened more. Strategic planning timelines have compressed; supply chain agility is at a premium.
• Inflation moderating but consumer is fractured. Higher-income households are spending; lower-income households are pulling back, particularly in discretionary and premium categories. The "K-shaped consumer" is real and intensifying.
• Labor market. Tight in customer-service and trades; loosening in tech and white-collar. AI engineer compensation has not normalized.
• Energy grid stress. Data center power demand is straining grids in 8+ states. AI infrastructure capex is now politically contested at the state level.
• Capital markets. Equity multiples on AI exposure are elevated; multiples on "AI-vulnerable" categories (legacy media, traditional retail) are depressed. M&A activity is muted relative to 2021 peaks.

The Industry-Specific Battlegrounds#

Retail media is the most visible new battleground. Walmart Connect, Amazon Ads, Roundel, Kroger Precision Marketing, and smaller retailer networks collectively now command marketing dollars that used to flow to traditional media and to direct-to-consumer brand-building. CPG companies are reallocating spend toward retailer ad platforms at rates faster than projected. The dynamic creates structural tension: retailers gain a high-margin growth engine, but their CPG suppliers feel the squeeze.

Private label is structurally gaining share. Kirkland, Walmart Great Value, Amazon Basics, Target's owned brands, and Kroger Our Brands are all expanding. Consumers are increasingly accepting private label as quality-equivalent in mainstream categories. AI is making private label development faster and cheaper, which compounds the trend.

GLP-1 demand impact is real and category-specific. Salty snacks, sugary beverages, and some indulgent categories are seeing measurable demand softness in GLP-1-prescribed households. The magnitude is contested; the directionality is not.

Leadership transitions are widespread. Walmart (John Furner, since February), Target (Michael Fiddelke, since February), Kroger (Greg Foran, since February), P&G (Shailesh Jejurikar, since January), Kraft Heinz (Steve Cahillane, since January), Best Buy (Jason Bonfig succession announced for October 2026), and Unilever (Fernando Fernandez, since March 2025) have new or recently-installed CEOs. First-year credibility-building is a real strategic constraint for many in the room.

What Y1 Asks of You#

You are making one strategic decision this round, locked to one of five archetypes. The decision is your first-mover position — what direction you are committing your company to over the next year. Bear in mind:

• The world will react. Other companies in the room will make their own decisions in parallel. The Voice of God Resolution phase will work through what happens when decisions impact each other.
• Sunk costs are real. You cannot undo Y1 in Y2 — only extend, pivot, or shut down.
• There are no right answers. Aggressive growth, operational discipline, and strategic pivot can all work; the exercise is about whether your specific decision fits your specific company in the specific world of 2026.

Take your seat. Decide.

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5. Resolution Phase Guidance (Y1) (Facilitator-Only)#

What to Expect in Y1 Resolution#

Y1 is the room's first experience of the Resolution phase mechanic. Expect:

• Most cross-company impacts to come from a small number of Move types
• A handful of decisions to be solo / internal and resolve without consultation
• One or two participants to make explicitly targeted moves that require multi-party consultation
• The first-round-of-this-game-ever effect: participants will be calibrating in real time

Common Y1 Move Types and Who They Impact#

How to Run the Resolution Phase in Y1#

1. Read the decisions privately first. Take 2–3 minutes to absorb all submitted worksheets. Note which decisions name specific competitors in the Cross-Company Impact field. Note which decisions are large enough to be impactful even if they don't name competitors.

2. Triage to high-impact first. Start with the decisions that most clearly affect the most participants. (In Y1 this is typically a retail-media or private-label move from one of the heavyweights.) Build narrative momentum.

3. Be specific in your consultation. "Walmart is raising retail media take-rate by 20% effective Q2. P&G — how do you respond? Do you absorb? Push back? Shift spend elsewhere?" Don't ask abstract questions; ask concrete tactical ones.

4. Hold respondents to 30–60 seconds. This keeps the Resolution phase moving. If a respondent wants to escalate (negotiate, threaten, ally), let them do so briefly but resolve the substance in your narration.

5. Resolve with conviction. When you narrate the outcome, don't hedge. Did the take-rate hold or was it forced down? Did the alliance form? Did the M&A close? Participants need to feel that decisions have consequences.

6. Leave time for solo / internal decisions. Some decisions don't trigger consultation. Narrate those briefly at the end ("Sprouts deepens its loyalty-app personalization; AI deployment is internal, no cross-company impact this round.")

What Voice of God is NOT Allowed to Do in Y1#

• Reveal anything about AI labs as future competitors. They are vendors. Period.
• Reveal anything about emergent companies that will appear in Y5.
• Reveal any Health Signal calculations or thresholds before the end-of-Y2 reveal.
• Resolve in ways that pre-determine Y5 outcomes. Y1 outcomes are real; Y5 is the next chapter.

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6. Peer Ranking Guidance (Y1) (Facilitator-Only)#

After the Resolution phase, run the Peer Ranking step.

How to Run It#

1. Each participant privately writes their rankings on two axes:

   • Most likely to succeed — who has the best decision for the world we're playing in
   • Greatest impact — whose decision will most reshape the competitive landscape
   • Cannot rank own company. Use 1 = best down to N = worst.

2. Facilitator polls publicly for Most aggressive — show of hands or quick verbal vote.

3. Facilitator aggregates rankings (parallel with the public Aggressiveness poll). Identify top and bottom on each axis.

4. Move into cross-company discussion. Open with:

   • "Top of Most likely to succeed — why?"
   • "Bottom of Most likely to succeed — why?"
   • "Top of Greatest impact — why?"
   • "Most aggressive — and was that right?"

5. Score adjustments are applied during facilitator scoring (not announced live):

   • Top of Success = +1; Bottom = -1; Middle = 0
   • Top of Impact = +1; Bottom = -1; Middle = 0
   • Aggressiveness is read-only — no score effect

Why Aggressiveness Is Public#

Aggressiveness is public on purpose. The peer pressure to defend bold moves is productive — it forces participants to articulate why they went aggressive (or why they didn't). It also reveals the room's calibration: a unanimous "Most aggressive" vote on one player tells the room that they are an outlier, which is itself information.

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7. Scoring Guidance (Y1) (Facilitator-Only)#

Standard Two-Layer Scoring#

For each decision:

Layer 1 — Facilitator scoring:

• Strategic Fit ({-2, 0, +2}): Does the decision fit this company's specific position in early 2026? Captures core opportunity vs. misaligned with scenario.
• Execution Risk ({-2, 0, +2}): Can this company actually execute? Feasibility, capacity, talent, capital alignment.

Layer 2 — Peer Ranking:

• Top of Most likely to succeed: +1; Bottom: -1; Middle: 0
• Top of Greatest impact: +1; Bottom: -1; Middle: 0

Round total: -6 to +6 (or -8 to +8 with red-flag exceptions on either Layer 1 dimension)

Y1-Specific Scoring Notes#

• No Continuity Note penalty in Y1. This is the first round; there is nothing to build on.
• No Stance Card scoring. Stance cards arrive in Y2.
• Red-flag triggers in Y1 should be rare. A red flag is for decisions that are either extraordinarily well-positioned (+3 Strategic Fit) or extraordinarily mismatched (-3). Most Y1 decisions will land at -2 / 0 / +2 levels.

What "Good" Looks Like in Y1 — General Principles#

These are heuristics, not formulas. Each company's "good" decision is specific to their situation.

• A decision that leans into a clearly capable AI use case (operational AI, customer-service deflection, marketing creative production) with disciplined scope and a credible payback path → likely +1 Strategic Fit and +1 Execution Risk.
• A decision that bets the company on speculative AI capability that isn't production-ready (full autonomous shopping agent, AI-mediated DTC platform) → red-flag candidate; could be -2 or -3 Execution Risk.
• A decision that does nothing ("we'll watch what happens") → likely 0 / 0; defensible but not bold.
• A decision that harvests existing AI productivity for capital return → likely positive on Execution Risk, mixed on Strategic Fit depending on company.
• A decision that picks a fight with another player in the room (price war, retail media take-rate hike, M&A overture) → strong on Greatest Impact, variable on Strategic Fit, real on Execution Risk.

Tracking for Y2#

At the end of Y1 scoring, note for each participant:

• Their Y1 total (carries to Y2 for cumulative Health Signal)
• Their archetype and direction (informs Y2 continuity)
• Any cross-company commitments they made (alliances, M&A overtures, contractual moves) that other participants will react to in Y2

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8. Cross-Round Integration Notes (Facilitator-Only)#

What to Watch For#

Y1 decisions seed Y2 and Y5 dynamics. Track:

1. Who leaned into AI vendor dependency most aggressively? They are most exposed when Y5 arrives. (Examples: heavy Anthropic/OpenAI partnerships, deep agentic-AI bets, AI-mediated customer interfaces.)
2. Who built distinctive moats that AI can't easily commoditize? Physical density (Costco warehouses, PepsiCo DSD), verified-human craftsmanship, brand authenticity, member relationships. These pay off in Y5.
3. Who is pursuing aggressive M&A? Successful M&A in Y1 increases Y2 capability; failed M&A creates strategic overhang.
4. Who is forming coalitions vs. acting solo? Coalitions are visible commitments that have follow-on dynamics.
5. Who is restructuring labor aggressively? They face mounting political exposure as white-collar displacement builds across the plan period.

Likely Y1 Outcomes That Feed Y2 Inputs#

The Y2 round file will incorporate the actual Y1 outcomes (via Voice of God narration at Y2 open). In general, expect Y1 outcomes to:

• Establish a "leader" — typically Walmart, Amazon, or Costco — with strong Y1 score and Surge-trajectory positioning
• Establish 1–2 "stumblers" — typically a struggling player who picked a bad archetype or overcommitted to a hard-to-execute bet
• Create at least one explicit competitive standoff (retailer vs. CPG, two retailers fighting for share, etc.) that carries into Y2
• Surface the first tension between aggressive AI adopters and "operational discipline" players

These dynamics are inputs to Y2, not Y1 outputs you announce.

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9. Adaptations for Practice Walkthrough (If Used) (Facilitator-Only)#

If a practice walkthrough is run (typically dinner the night before or extended morning warm-up), it can use a stripped-down Y1:

• Pick 1 company (Walmart or P&G work well as worked examples — high strategic surface)
• Walk through the worksheet fields aloud
• Walk through one possible decision and what the Resolution phase consultation would look like
• Skip the actual scoring; this is rules orientation, not real play

The practice should NOT include any private cards, any Y1 actual content, or any commitment carryover. Practice is non-scored and isolated.

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10. Y1 Checklist (Facilitator-Only)#

Before Y1 starts, confirm:

• All 12 (or N, if smaller roster) company packets distributed and read
• Rules of Play distributed and reviewed
• Decision Worksheets printed (one per participant)
• Y1 Private Cards prepared face-down, one or two per participant
• Participant Briefing (Section 4) ready to read or hand out
• Resolution phase guidance (Section 5) reviewed by facilitator
• Score tracking sheet ready (12 companies × 2 layers × 4 rounds = 96 cells, plus running cumulative)
• Y1 World State (this document) is the canonical reference for Voice of God

During Y1, capture:

• Each participant's archetype + direction (1-line summary)
• Each participant's Cross-Company Impact targets
• Resolution phase consultations and resolutions
• Peer Ranking results
• Facilitator score deltas
• Cumulative score per company (for Health Signal at end of Y2)
• Standout moments for Y2 outcome narration

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Document Version: Project Threshold V8.1 — Y1 Round File (Facilitator Reference) Last Updated: May 2026