Business Simulations for Leadership Development

Business Simulations for Leadership Development

When Nelson Mandela was a young boy, he would attend tribal meetings with his father. They would always sit in a circle and his father, the tribal chief, was always the last to speak.

There are three important lessons about leadership here:

1. Sitting in a circle implies that leadership is about equity, giving everyone equal opportunities. 
2. Being the last to speak implies that being a great leader is about bringing out the best in others. 
3. Lastly, and most importantly, the fact that Mandela “learned” how to lead implies that leadership can be taught. 

The last point reveals a common misconception — that leadership is something you are born with. It is not.

Leadership is not a set of qualities, it is a process.

Sure, many leaders are charismatic, energetic, inspirational…but the essence of their leadership is not about who they are but how they do things. Which is great for instructional designers, because that’s what we do, right? Teach people how to do things!

Does that mean we can just develop a course on leadership and be done with it? Unfortunately, no.

When it comes to leadership training, one size doesn’t fit all

A major issue with developing leadership courses is that, while there are fundamental similarities in leaders — such as empathy for team members, a sense of responsibility, and a willingness to learn — there are also fundamental differences in the way people learn. Nowhere does it matter more than in developing leadership training programs. In fact, any leadership program that doesn’t take differences in learning styles, based on personality assessments, is on a slippery slope.

There are many approaches to personality assessment, though each one has its own advantages and limitations.

One among the more commonly known assessments is the Myers Briggs Type Indicator. Based on Carl Jung’s theories, this evaluates four dimensions:

1. Introversion/Extraversion 
2. Sensing/Intuition 
3. Thinking/Feeling 
4. Judging/Perceiving 

Another approach is based on the OCEAN model (sometimes called CANOE), which considers five factors:

1. Openness to experience (inventive/curious v. consistent/cautious) 
2. Conscientiousness (efficient/organized v. extravagant/careless) 
3. Extraversion (outgoing/energetic v. solitary/reserved) 
4. Agreeableness (friendly/compassionate v. critical/rational) 
5. Neuroticism (sensitive/nervous v. resilient/confident) 

Yet another approach uses the HEXACO model, based on six dimensions:

1. Honesty/Humility  
2. Emotionality  
3. eXtraversion 
4. Agreeableness  
5. Conscientiousness  
6. Openness to experience  

The major drawback, from a leadership training perspective, is that all these approaches take a very generalized view of the human personality. Delivering an appropriate leadership training intervention requires a somewhat more precise insight into the learner’s personality in order to be meaningful.

Developing a customized personality assessment works best.

The best solution would be to use such personality models as a guide to developing a more customized personality assessment that gauges the personality of the learner to determine the specific learning intervention that would work best. Which brings us to the next, and final, challenge in developing a leadership training program — what is it for? What is the expected behavioral transformation?

Defining the leadership goals

It would be naïve to expect any leadership program to churn out “leaders” in the sense it is commonly understood. A more reasonable expectation would be to provide a focused intervention that aims to transform specific aspects of the learner’s behavior. 

What does “leadership” mean for your organization?

This requires a very clear definition of the parameters on which leadership is “measured” — for instance, the expectations from a leader in the Quick Service Restaurant industry may be vastly different from someone in the same position in the Banking and Finance domain. So, defining what leadership is going to mean in a particular organization is a key step before we get into actual learning development.

Why business simulations?

Of all the types of training, leadership programs are among the most experiential. Next to “life’s lessons,” business simulations offer an optimal and viable option for leadership development. Given the specific learning goals of an organization, the next step would be to define the theme or “flavor” of the simulations. It is unlikely that a single simulation can achieve the overall leadership goals of any organization, and hence what works best is a set of sims, each associated with a specific behavior or leadership characteristic.

Business sims for leadership development

The “flavor” of the simulations forms the basis of a framework within which the simulations need to be developed. One of the recurring themes — if it can be called that — in recent times is uncertainty. Let us consider the process of developing a set of simulations around uncertainty. So we need a framework for our theme.

We recently developed leadership scenarios for a client based on VUCA, which is a framework for leadership that was first used by the U.S. military for their training programs. VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity, and together it forms an all-encompassing model that covers all aspects of leadership that a soldier is likely to face on the battlefield. It was later adopted by business management schools as a basis for leadership development.

To develop business sims around VUCA, we need to define the parameters that differentiate the possible scenarios within the framework. To measure these parameters, we can use two dimensions:

1. Knowledge — how much the learner knows about the situation 
2. Predictability — how certain she can be about the consequences of her actions 

Using these two dimensions, we can start building out scenarios for the simulations. These can be:

• Volatility scenario — high knowledge, high predictability  
• Uncertainty scenario — high knowledge, low predictability
• Complexity scenario — low knowledge, high predictability 
• Ambiguity scenario — low knowledge, low predictability 

Volatility  

This is a scenario where unexpected events occur and the time duration of each event is unpredictable. However, the events themselves are “known” and the responses to them are well defined. The situation is unstable but not necessarily hard to understand and knowledge about the situation is available.  

Example: A natural disaster occurs, knocking out your entire supply chain and disrupting your operations. Customer experience has gone for a toss. What is the leader supposed to do? 

Uncertainty 

This is a scenario where unexpected events occur and the time duration of each event is unpredictable. However, the events themselves are “known” and the responses to them are well defined. The situation is unstable but not necessarily hard to understand and knowledge about the situation is available.

Example: A natural disaster occurs, knocking out your entire supply chain and disrupting your operations. Customer experience has gone for a toss. What is the leader supposed to do?

Complexity 

In the complexity scenario, there is a network of interconnected issues, all of which have an impact on your situation. Here the problem is too much information, and you are inundated by the sheer volume of data. Depending on the specific nature of the business, consider a situation where a multitude of factors goes wrong.

Example: The environmental laws change, tax laws are modified, there is a surprise quality audit by an inspection agency, half the staff reports sick, and there is a massive power cut in the city. What is the leader supposed to do?

Ambiguity 

The ambiguity scenario involves a situation where there is no knowledge at all about a situation and there are no precedents to be followed either. There is no clarity about the possible results of your actions.

Example: You are appointed to a leadership position in a new country and have little knowledge about business and cultural norms. The organization has an aggressive growth plan and you have been tasked with seemingly impossible targets. What are you supposed to do?

The business sims also need to define the ideal or optimal solutions for each scenario. For each aspect of VUCA, there is a counterbalance that holds the answer.

• Volatility -> Vision
  Vision enables leaders to remain focused on the business goals of the organization. By developing a vision, leaders can motivate and align their teams in the right direction. 

• Uncertainty -> Understanding
  Understanding a situation calls for analysis of information to interpret facts and arrive at a meaningful plan of action.  

• Complexity -> Clarity
  To gain clarity, leaders need to break down information into manageable chunks and determine a simplified game plan that leads the team out of chaos. 

• Ambiguity -> Agility
  Since there is no precedent for action, leaders need to develop agile responses to quickly determine cause-and-effect and adapt to their new learnings.  

The learning objective of the leadership sims is to provide opportunities to develop these characteristics. At the end of the sim, the learner should have the competence and capability to adapt and innovate in the given scenario. The risk-free environment helps develop the learner’s confidence by trial and error.

Summary

Business sims can enable leaders to develop the capacity to respond effectively to the unexpected and turn challenges into opportunities. Such sims can have varying levels of complexity, ranging from simple scenarios with a set of predetermined responses to multiple branched scenarios with complex data analytics and real-time result tracking. Ultimately, it depends on the time available, the desired level of competence that is expected, and of course, the organization’s learning budget.

We hope you found this article interesting and helpful. Please feel free to share your feedback at marketing@mpsinteractive.com.

– By Vivek Achary, Director – Instructional Design and Content at MPS Interactive