SimCEO: How Simulations Build Strategic Leadership Skills

SimCEO: How Simulations Build Strategic Leadership Skills

At First Round Review, New Relic’s CIO Yvonne Wassenaar shares how her company used simulations to navigate a challenging period of growth and change:

Wassenaar, then the SVP of Operations, set a goal: Drive understanding and alignment across the top 30 company leaders so they could all more effectively execute and support each other in the move to enterprise. To prepare the simulation, Wassenaar partnered with BTS consultants and asked for input from the finance team, with about 15 people who were interviewed in advance of the exercise. The process took about six weeks.

The setup of a simulation was simple: Teams competed against each other running the company over a three-year period. “Done right, it’s a lively and engaging process. We played three rounds, and each round of the game represented a year. In each round, teams made a set of trade-off decisions and investments that were run and scored against expected trends built into a premade forecast model kept secret from participants until the simulation. To keep it interesting, we threw unexpected events that required teams to react, like a competitor making a hot acquisition or a sudden security breach,” Wassenaar says. “After the simulation, the teams were scored and ranked by highest revenue, profitability and customer satisfaction. Then the teams debriefed and examined their performance. At the end of the ‘three years,’ the team with the highest weighted score won.

Simulations are great ways for companies to deal with controversy and change because they are a low-risk way to let someone be CEO for a day. “Who would say no to that?” Wassenaar asks. “And it’s incredible because people get to learn through play and practice in real time. The experience of wearing someone else’s hat is hugely empowering for people. With management simulations we are free to see the bigger playing field, test our ideas and learn in a lower-risk environment than real life.”

We’ve spoken to a number of executives whose organizations have used simulations successfully, particularly as part of change initiatives or leadership development programs. Our members tend to find them particularly useful in situations where mindsets need to change, since you can essentially “watch unintended consequences play out.”

One great example of how simulations and other techniques to help shift mindsets is GE’s Experienced Leaders Challenge. CEB Corporate Leadership Council members can read our case study on how GE uses this challenge to reset leaders’ assumptions and help them develop a new mindset of enterprise leadership.