Round Y2 — Reactive Decisions and the Stance Card for Y3–Y4#

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#

Y2 advances the exercise by one year. The world has moved — AI capabilities are sharper, macro conditions have evolved, and (critically) Y1 outcomes have shaped the competitive field. Participants now make their second strategic decision against this evolved landscape AND commit to a Strategic Stance Card for the Y3–Y4 gap that bridges to Y5.

Y2 is the round where participants begin to live with the consequences of Y1 — but they should not be told that's what's happening. They should engage Y2 as a full strategic round with real decisions, real stakes, and a forward commitment. The "I made big bets in Y1 and now I'm dealing with their diffusion" feeling is the takeaway, not the framing.

What Y2 Tests#

• Pattern recognition and willingness to reverse course. Participants who got Y1 right may want to double down; participants who got Y1 wrong have to decide whether to pivot or commit harder.
• Forward conviction without information. The Stance Card forces a Y3–Y4 commitment before Y2 outcomes are revealed.
• Continuity discipline. The Continuity Note field forces explicit reckoning with what Y1 produced.
• The room's first M&A and alliance moments. Y2 is when bigger moves typically happen — participants now have Y1 behavior to react to and counter.

What Y2 Does NOT Telegraph#

Still no AI labs as direct competitors. Still no Y5 reveal. The Y2 world state intensifies the AI-diffusion frame from Y1 (more capable, more deployed, more politically contested) but does not hint at the next-phase competitive entry. Voice of God should narrate Y2 outcomes within the existing frame.

The Y2 → Y5 Bridge#

End of Y2 is where the exercise transitions from "near-term decisions" to "long-jump consequences." After Y2 outcome resolution and cross-company discussion, the facilitator publicly announces each company's Company Health Signal (cumulative Y1+Y2 score → Surge/Tailwind/Steady/Headwind/Crisis). This is the participants' first explicit signal of their relative position going into Y5. Crisis-status participants will be briefed privately during the inter-round break on their Y5 reassignment to an emergent company.

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2. Round Flow (Y2)#

Y2 follows the standard per-round flow with two additions: Y1 outcome narration at round open, and end-of-round Health Signal announcement after cross-company discussion.

Total: approximately 70–80 minutes (longer than Y1 due to outcome narration and Health Signal reveal).

After Y2, a break of 15–20 minutes before Y5. During the break, the facilitator privately briefs any Crisis-status participants on their Y5 reassignment to an emergent company.

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3. Facilitator Briefing Notes (Facilitator-Only)#

Y1 Outcome Narration — The Critical Round-Opening Move#

The Y1 outcome narration sets the tone for Y2. Each company gets 30–45 seconds of narration that:

1. Names their Y1 decision in 1 sentence
2. Describes the visible early-2027 consequence
3. Sets up where they stand going into Y2

Template#

"[Company]: your [archetype] decision in Y1 [worked / partially worked / backfired]. [Specific consequence — what's visible by early 2027]. Going into Y2, you are [positioned for / facing / managing] [specific situation]."

Examples (illustrative — actual narration depends on Y1 decisions)#

"Walmart: your aggressive Walmart Connect expansion in Y1 hit its revenue target ahead of plan. But two of your top CPG suppliers — names you'll hear in this room — diverted a meaningful share of their 2027 marketing spend away from your network, and Amazon's matching DSP launch closed the data-advantage gap faster than expected. Going into Y2, you are profitable on retail media but the long-term moat thesis is now contested."

"Kraft Heinz: your $600M brand reinvestment push in Y1 produced Q3 volume green shoots in Heinz and Philadelphia, but Lunchables continued to decline and Berkshire's stake-disposition filing kept pressure on the stock. Going into Y2, you have early validation but the patience window is narrower than it was a year ago."

"Sprouts: your decision to stay focused and accelerate the attribute-based personalization platform produced strong app engagement and comp sales acceleration. Two regional grocery chains have approached you about acquisition. Going into Y2, you are quietly winning and have optionality you didn't have a year ago."

What Y1 Outcome Narration Should Do#

• Honor the decision. Don't gratuitously punish or reward; the consequence should follow plausibly from the decision in the world we're playing.
• Surface cross-company impact. When Walmart raises take-rates and CPGs reacted, the narration should name both sides of that dynamic.
• Set up Y2 strategic tension for that company. Each narration should end with "going into Y2, you are X" so the participant knows what they're facing.
• Stay within the AI-diffusion frame. Do NOT reveal anything about AI labs as future competitors, emergent companies, or Y5 conditions.

Stance Card Handling#

The Strategic Stance Card is new in Y2 and easy for participants to under-weight. Be deliberate about it:

1. Remind them during the round-opening framing. "On your Y2 worksheet there is a new field — the Strategic Stance Card. You must commit to one of three stances for the Y3–Y4 period. The stance is locked along with your Y2 decision. You commit without knowing how Y2 played out."
2. Emphasize that any stance can succeed. "Aggressive growth, Operational discipline, Strategic pivot — these are all real strategic postures. None is right or wrong in advance. The stance shapes how I narrate your Y5 starting position; it does not modify your score."
3. Don't help them decide. If asked "which stance should I pick?" the answer is "the one that fits your company's situation and your conviction about the next two years."

The stance card adds about 1–2 minutes to solo prep. Budget accordingly.

Reading Y2 Submissions#

When participants submit Y2 worksheets, they will have completed:

• Strategic Archetype (mandatory)
• Decision statement and bands
• Cross-Company Impact (informs Resolution phase)
• Private Card Influence
• Continuity Note (new — how Y2 builds on or pivots from Y1)
• Strategic Stance for Y3–Y4 (new — Aggressive growth / Operational discipline / Strategic pivot)

Pay attention to the Continuity Note. It tells you whether the participant is doubling down, pivoting, or harvesting. This information shapes how the Resolution phase plays out and how Y5 narration is framed.

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4. Y2 Participant Briefing (READ ALOUD OR DISTRIBUTED)#

The text in this section is what participants see. Distribute as a handout at the start of Y2 (after Y1 outcome narration), or read aloud during the round-opening framing.

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The State of Play — Early 2027#

A year has passed. The world is recognizably the same world but materially further along. AI capabilities that were uneven in early 2026 are now production-grade in narrow domains. The political and consumer reaction to that diffusion is no longer theoretical — it's happening.

AI in Early 2027 — What Has Changed#

The headline difference between 2026 and 2027 is reliability. Capabilities that were demoable but not deployable last year are now production-ready in scoped applications:

• Agentic AI is reliable for narrow workflows. Personal AI agents can complete bounded multi-step tasks (book travel, manage a shopping list across retailers, schedule services, summarize and act on email). They still fail at open-ended planning, complex value trade-offs, and tasks requiring physical presence.
• AI customer service is indistinguishable from senior humans for routine. The major retailers and CPGs that aggressively deployed AI customer service have collapsed their contact center headcount by 40–60%. Quality concerns from 2026 have largely resolved; political concerns have intensified.
• Generative video is nearly indistinguishable for commercial production. Marketing creative cost has dropped 50%+ at companies that have leaned in. The first real "AI marketing creative scandal" (a major brand pulled an AI-generated campaign mid-flight after consumer backlash on authenticity) happened in Q3 2026.
• AI software engineering is the default at AI-forward companies. New code is majority AI-written with human review. Junior engineering pipelines have collapsed at multiple Big Tech firms. The wage premium for senior engineers who can orchestrate AI teams has widened.
• Robotics in warehouses has compounded. Amazon's most automated fulfillment centers are operating with materially fewer humans per package than a year ago; Walmart and Costco are scaling their own deployments.
• Autonomous trucking has expanded. Long-haul corridors (I-10, I-80) are now around 50% autonomous in favorable weather. The Teamsters have made AV-driver displacement a central political issue.

What's still not at scale:

• Fully autonomous consumer shopping agents (improving fast; still not consumer-mainstream)
• AI-mediated commerce at the household level (the next-horizon capability)
• AI healthcare beyond narrow FDA-approved domains
• General-purpose robotics
• AGI

Macro Environment in Early 2027#

• Tariff regime has more shape, less surprise — but is structurally higher. Selective tariff increases through 2026 have raised input costs across many imported categories. Supply chain agility remains a strategic asset.
• Consumer is now visibly K-shaped. Higher-income households have absorbed AI productivity gains; lower-income households are increasingly squeezed. Discretionary spending bifurcation is the dominant consumer dynamic.
• Labor: tech displacement is the political story. Junior software, customer service, basic marketing, and content moderation roles have been visibly compressed at major firms. Two states have passed early "AI displacement notification" laws.
• Energy and grid politics have hardened. Three states have imposed moratoria on new data center construction; water rights disputes in Arizona and Nevada have intensified.
• Capital markets remain bifurcated. AI-exposed equities at premium multiples; "AI-vulnerable" categories trade at discounts. M&A activity has picked up but selectively.

The Industry-Specific Battlegrounds — Where Y1 Left Things#

The decisions made in Y1 have visibly reshaped the field. The Voice of God narration at round-open just walked through what happened to each company. In aggregate:

• Retail media has consolidated. The leading retail media networks (whichever they are in your room's version of the story) have widened their lead. CPG suppliers have begun forming counter-coalitions or shifting spend to off-platform DSPs.
• Private label has continued its march. Categories where private label was vulnerable a year ago are now contested or won.
• Some companies have visibly diverged. Y1 winners are positioning to extend; Y1 losers are facing strategic pressure.
• The first real M&A and alliance moves are reshaping the competitive structure. (Specifics depend on what happened in Y1.)

What Y2 Asks of You#

Y2 is your second strategic decision, and it carries a new component.

Your Y2 worksheet has three new fields beyond Y1:

1. Cross-Company Impact — the same field as Y1; informs the Resolution phase
2. Continuity Note — how this decision builds on, extends, or pivots from your Y1 decision. Reference the outcome narration.
3. Strategic Stance for Y3–Y4 (the Stance Card) — choose one of three forward postures for the next two years:
   • Aggressive growth — spend capital, take share, ride the cycle. Accept margin pressure for position.
   • Operational discipline — productivity, efficiency, return capital. Defend what's working.
   • Strategic pivot — reshape portfolio, enter new categories or exit old ones. Use the moment to change the company.

The Stance Card is mandatory on the Y2 worksheet. It is locked along with your Y2 decision — you commit to your Y3–Y4 posture without knowing how Y2 played out. The stance does not modify your score. Any stance can succeed or fail depending on what 2030 brings. The stance shapes how the Voice of God narrates your Y5 starting position.

A Note on the Stance Card#

Think of the stance card as a forward bet on which strategic posture your company should run for the next two years. It is not a course-correction in response to Y2 — you commit before knowing Y2 outcomes. It is also not a synonym for your Y2 archetype: you might play a "Process Reinvention" Y2 decision while committing to an "Operational discipline" stance for Y3–Y4. The two are related but independent commitments.

Choose the stance you would commit to in your real-world role given the company's specific situation.

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5. Resolution Phase Guidance (Y2) (Facilitator-Only)#

What's Different in Y2 vs. Y1#

Y2 Resolution has more sophisticated cross-company dynamics than Y1. Expect:

• Counter-moves. Participants who watched Y1 confrontations now have intuition for how to respond. Look for explicit counter-strategies (e.g., a CPG that absorbed a Y1 take-rate hike now forming a coalition with peers to push back in Y2).
• M&A and alliance moves. Y2 is where bigger structural plays often happen. Participants have seen Y1 winners and losers and may move to consolidate (acquire a stumbling peer) or counter-position (ally against a dominant player).
• Renegotiation of Y1 commitments. If a Y1 alliance or M&A approach was conditional, Y2 is where it gets revisited.
• Cross-cluster moves. Y2 is more likely to feature deliberate cross-cluster targeting (CPG action explicitly aimed at retailer; retailer action explicitly aimed at CPG) than Y1.

Y2-Specific Move Types#

In addition to all Y1 Move types, watch for:

Running the Y2 Resolution Phase#

The mechanics are the same as Y1, but pace and ambition should be higher:

1. Triage decisions by impact, then by drama. Lead with the largest cross-company impact; build narrative arc.
2. Surface the cross-round connection. When a Y2 move responds to a Y1 outcome, name that explicitly. "P&G — last year you accepted Walmart's take-rate increase. This year you're leading a coalition with Unilever and PepsiCo to launch a shared DSP. Walmart — how do you respond?"
3. Resolve with sharper consequences. Y2 outcomes are real and they cascade to Y5. A poorly-resolved Y2 move can put a player in Crisis condition; a brilliantly-executed one can put them in Surge.
4. Watch for alliance fragility. Alliances that form in Y2 are tested immediately. Don't let coalitions glide; ask whether each member is actually committed.

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6. Peer Ranking Guidance (Y2) (Facilitator-Only)#

Run Peer Ranking as in Y1. By Y2, participants have a baseline calibration from Y1 and rankings tend to be more decisive.

Notable Y2 dynamics:

• The "Most aggressive" vote often shifts from Y1 (the obvious-aggressive player) to whoever made the biggest counter-move in Y2
• Most likely to succeed begins to track Y1 outcomes more tightly — winners get the benefit of the doubt
• Greatest impact rewards visible cross-company moves over solo internal moves

Open the post-ranking discussion with the same prompts as Y1, plus one Y2-specific: "Has anyone changed their view of who has the strongest position from Y1 to Y2?" This surfaces the room's read on cross-round trajectory.

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7. Scoring Guidance (Y2) (Facilitator-Only)#

Standard Two-Layer Scoring#

Same framework as Y1:

Layer 1 — Facilitator: Strategic Fit (±2) + Execution Risk (±2), with ±3 red-flag exceptions. Layer 2 — Peer Ranking: Top of Success (+1) / Bottom (-1); Top of Impact (+1) / Bottom (-1). Round total: -6 to +6 (or -8 to +8 with red-flag exceptions).

Y2-Specific Scoring Notes#

• Continuity matters. Penalize decisions that ignore Y1 consequences ("I'm just doing more of the same thing that demonstrably failed last year" → likely -1 to -2 Strategic Fit). Reward decisions that explicitly grapple with Y1 reality.
• Stance Card does NOT modify score. Confirmed in design. Note the stance privately for Y5 narration but do not let it shift Y2 score.
• M&A and alliance moves often warrant red-flag scoring. A successful transformative M&A might earn +3 Strategic Fit; a failed M&A approach (rejected by target, blocked by antitrust in the narration) might earn -3 Execution Risk.

End-of-Y2 Cumulative Calculation#

After all Y2 scores are finalized, calculate cumulative Y1+Y2 for each company:

Health Signal Announcement (End of Y2)#

After cross-company discussion ends, announce each company's Health Signal publicly. Brief format:

"At the end of Y2, the cumulative position is:

• Walmart: Tailwind
• Amazon: Surge
• Costco: Tailwind
• Target: Steady
• Kroger: Steady
• Best Buy: Headwind
• Sprouts: Tailwind
• P&G: Steady
• PepsiCo: Steady
• Unilever: Headwind
• Kraft Heinz: Crisis
• Edgewell: Steady"

Do not announce the underlying scores; only the Health Signal condition. Participants in Crisis or Headwind should not have access to the exact margin — preserves some uncertainty about how close they are to the next band.

Note for the room (verbal): "These conditions shape your Y5 starting position. You'll see what that means when we open Y5."

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8. Inter-Round Break and Crisis Reassignment (Facilitator-Only)#

The Break#

Schedule a 15–20 minute break after the Y2 Health Signal announcement. Use this time for:

• Logistics (restroom, refreshment, energy reset)
• Facilitator preparation for Y5 (review Y5 World State doc, lock down the Y5 reveal beats)
• Private reassignment briefings for any Crisis-status participants

Reassignment Briefing#

If 1–2 participants are in Crisis, brief them privately during the break. The briefing should:

1. Frame the reassignment as structural, not punitive. "Your Y1–Y2 trajectory put your company in Crisis condition. As we move into Y5, your original company has failed or been acquired. You will be running an emergent company that has appeared in the competitive landscape over the last few years."
2. Distribute the new packet. Anthropic Shopping (confirmed) and TrueGoods (placeholder for second emergent) are the candidate emergent companies. Hand the participant their new packet and give them time to read it.
3. Note what carries forward. Strategic learning, room familiarity, peer relationships all carry forward. The participant is not starting over from scratch — they are stepping into a new strategic seat for Y5.
4. Acknowledge the dramatic moment. The room will see them in their new role at Y5 open. This is part of the exercise design.

The reassignment is the biggest narrative moment of Y5. Handle it with intent.

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

What to Carry into Y5#

By end of Y2, you should have captured:

1. Each company's cumulative score and Health Signal — drives Y5 fate trajectory
2. Each company's strategic stance — drives Y5 narrative framing (how their Y3–Y4 posture played out)
3. Each company's archetype trajectory across Y1 and Y2 — informs Y5 "what they've become"
4. Cross-company commitments still active at end of Y2 — alliances, M&A in progress, partnerships
5. Standout Y1+Y2 moments — confrontations, surprises, room-shaping events — to reference in Y5 outcome narration
6. Crisis assignments — which participants are getting reassigned and to which emergent company

What NOT to Carry into Y5#

• Any pre-determination of Y5 winners or losers beyond what Health Signal already encodes
• Any commitment to AI lab competitive entry framing that goes beyond what's in the Y5 World State doc
• Any softening of the Y5 reveal — the Y5 round should land as a strategic shock

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10. Y2 Checklist (Facilitator-Only)#

Before Y2 starts:

• Y1 outcome narration prepared — 30–45 seconds per company
• Y2 Participant Briefing (Section 4) ready to read or hand out
• Updated Decision Worksheets distributed (Y2 versions include Stance Card field)
• Y2 private cards prepared (drafted separately)
• Score sheet has cumulative tracking from Y1
• Health Signal thresholds confirmed (Surge +8+, Tailwind +3 to +7, Steady -2 to +2, Headwind -3 to -7, Crisis -8 or worse)
• Emergent company packets ready in case of Crisis assignments (Anthropic Shopping confirmed; TrueGoods or replacement)

During Y2, capture:

• Each participant's Y2 archetype + direction
• Each participant's Cross-Company Impact targets
• Each participant's Strategic Stance choice (drives Y5 narration)
• Each participant's Continuity Note (how they responded to Y1)
• Resolution phase consultations and resolutions
• Peer Ranking results
• Facilitator score deltas
• Cumulative Y1+Y2 score per company
• Health Signal condition per company

After Y2:

• Announce Health Signals publicly
• Trigger inter-round break (15–20 min)
• Brief any Crisis-status participants on reassignment
• Prepare Y5 opening (Y5 World State, capability briefing, emergent company introductions)

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Document Version: Project Threshold V8.1 — Y2 Round File (Facilitator Reference) Last Updated: May 2026