Computer Simulations: Preparing Executives for the C-Suite
Who would think of using a computerized management simulation for preparing executives for being a member of a C-Suite team? Practically no one.
“Isn’t it just a computer game?”
“It would not work with experienced, senior executives!”
“How can it teach anyone how to run a real business?”
When a $17 billion manufacturing company was looking for a way to prepare 12 senior executives to be next in line for the C-Suite, they never considered using a computer simulation. It had never crossed their minds. Yet after experiencing one, they discovered that participants gained invaluable insights into what it takes to be part of their company’s C-Suite team. The participants and their bosses learned about the ways they were and were not prepared both as individuals and as a potential team. The simulation was not just an entertaining add-on (although they did have fun), but an essential part of their development.
How the simulation was used
The simulation was part of a developmental process that included a 5-day executive education program. The simulation, which occurred on the 4th day, was designed to:
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Give the participants an experience that would help them understand what it would be like to be part of the C-Suite team. |
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Integrate 3 previous days’ work on strategy, finance and influence skills. |
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Help participants apply new skills and knowledge to a fictitious company that was similar enough to their company to be relevant, yet different enough so that participants would feel free to experiment and not feel there were “right” political or operational answers. |
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Help participants understand the importance of senior team alignment on strategic issues by having participants make executive decisions in teams, with members playing different C-Suite roles. |
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Help participants and the company understand what further development the participants needed to be successful members of the C-Suite team. |
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How the simulation worked.
Participants worked in groups of four, acting as C-Suite teams. The teams made quarterly decisions for the simulated company, and the simulation ran for 20 quarters or five years. After each quarter, teams examined their results and revised their strategies and decisions as needed before running the next quarter. Results were provided in real time through numerous tables and graphs.
Below is a sample screen of what participants saw when making Operational Decisions in the simulated company (a manufacturer with three product lines and its own distribution system of trucks – similar to the client company). As you can see, they made quarterly decisions about production schedules, what kind of packaging to use, purchasing of more fuel-efficient hybrid trucks, and so on.
In addition to these operational decisions, teams also made decisions about marketing, finance, and human resources. All of the decisions had tradeoffs, and many of the decisions interacted with each other. For example, severe cutbacks in spending for training increased defect rates and had a negative effect on customer satisfaction. On the other hand, lavish spending on training provided little or no incremental benefit, but added cost and decreased profitability.
To be successful in making these complex decisions, participants needed a holistic perspective of the organization. Each participant was given a specific role (CFO, VP of Business Development, etc.), and each participant needed to make decisions involving trade-offs between what was best for their function and what was best for the company overall.
The teams competed against each other based on client-specific performance measures. Metrics included stock price, customer satisfaction, market share, and social responsibility. Yearly scorekeeping allowed all teams to compare their results to those of the other teams. The final results of the simulation were presented in front of all teams and key members of the client company’s C-Suite team.
Why it was not just a game.
The simulation was used as a way of integrating the knowledge of strategy, finance and influence that participants had gained over the previous three days work. It was customized to:
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Reflect the major strategic, financial and operational challenges the client was facing. |
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Include realistic financial statements, workforce issues, and resource tradeoffs. |
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Incorporate a realistic environmental shock that would have a strong impact on financial performance |
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Insure that to be successful participants had to use the knowledge gained in the previous work on strategy, finance and influence. |
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| In order to make sure that the simulation did not become a game, the simulation: |
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Contained a Board meeting midway through the simulation. Teams presented their interim results to the Board, and described their strategies going forward. The Board was composed of the client company’s CEO, CFO, CHRO, and Senior VP of Corporate Strategy. |
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Included a structured debrief immediately following the simulation. The various components of the debrief were tied directly to the topics of strategy, finance, and influence, and were led by the client company’s Senior VP of Corporate Strategy, CFO, and CHRO. |
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Was linked to other developmental initiatives such as individual coaching (their coaches observed the simulation workshop), and action learning projects that followed the workshop. The action learning teams were the same as the simulations teams. |
Several prototypes of the simulation were reviewed by executives of the client company before a “final” prototype was piloted by the client’s actual C-Suite members. Feedback from the client ensured that the simulation was relevant, and that it would meet their goals of presenting participants with a realistic C-Suite experience. In addition, early exposure to the simulation helped the C-Suite executives understand the simulation. As a result, they were better prepared to play the role of the Board of Directors during the simulation.
The outcomes.
The debrief of the simulation revealed that:
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Participants found the simulation very challenging and extremely helpful in giving them a feel for what it would be like to be a member of the C-Suite. They struggled with complex tradeoffs, information overload, business environment uncertainty, and complex interpersonal dynamics. |
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There were four teams, and there was a direct correlation between the teams’ performance in the simulation and the extent to which the teams applied the preceding work on strategy, finance and influence. The team that won the simulation based their decisions on the strategic, financial, and influence principles that they learned earlier in the week. The team that placed second did not start out using these principles, but incorporated them after a mid-course correction. The team that came in last admitted that they “blew it” by panicking and completely ignoring what they had learned. |
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All teams concluded that C-Suite members need to respond to time pressure, but also need to resist the temptation to make decisions too quickly without a systemic and well-thought out strategy. The winning team took time in the beginning to lay out a game plan and a set of values that they used to guide their decision making. The losing team just “winged it” and made ad hoc decisions. |
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Even though the simulation was a somewhat artificial decision making environment, people acted typically. Participants noted that their behaviors in the simulated environment were very similar to their behaviors in their day-to-day jobs. However, because of the somewhat artificial decision making environment in the simulation, participants were more open to looking at the impact of their behaviors, and they were more open to exchanging feedback with peers. They noted that under stress, they tend to revert to behaviors that ultimately interfere with team performance. |
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The learnings from the simulation were used to enhance participants’ action learning projects. Since the action learning teams were the same as the simulation teams, participants were able to use the lessons learned in the simulation in their action learning projects. |
Conclusion
Management simulations can be a powerful vehicle for preparing senior executives for a role in the C-Suite. Having participants practice making complex, realistic, strategic decisions in a team-based environment is an excellent way to give them the feel of being on an executive officer team.
Contact us for list of best practices in using computer simulations with executives.
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