Author(s): Bruce Griffiths, President - Organizational Systems International, and Randall Gibson, Managing Principal - Diamond Head Associates, Inc.
Appeared In : Innovations Newsletter, Vol 3, Diamond Head Associates
These, and many other business dilemmas are what you might face as an executive at Paper Nation, Inc. – a unique simulation-based management training simulator and course.
While no sports team or film studio would expect their players or performers to operate at their peak without practice, companies often do not follow that approach, expecting leaders to “go live” with little preparation. The mistakes that often occur result in both hard and soft dollar losses. What would be ideal is if managers could practice in a “virtual business” world to understand the impact of their decisions on the dynamic operation and success of the entire enterprise.
In response to this situation OSI has developed the Paper Nation simulation. This unique interactive business training simulation program is built using “system dynamics” (see: Innovation Newsletter – Vol. 2 ) – a computer simulation modeling technique for framing, understanding, and discussing complex systems and problems.
Paper Nation was initially developed in conjunction with Dow Corning as a response to their need to develop strategy, business acumen and financial skills throughout the organization. Since then the Paper Nation simulation has gone on to receive the American Society for Training and Development’s Excellence in Practice Citation.
About Paper Nation
Paper Nation – the enterprise – is a fictional company, created for management training using the business training simulation program. It is a global paper manufacturing company owned by a multinational conglomerate. The state of the company when participants take it over is:
- Revenues of nearly $1 billion US. in the last fiscal year.
- Nearly 4000 employees worldwide.
- Production of a full range of packaging products and communication papers.
- Manufacturing and sales functions throughout the eastern hemisphere in India, Australia, New Zealand, Southeast Asia, China, and Japan, and in the western hemisphere in the Americas, Europe, Africa, and the Middle East
The expectation is that worldwide revenues should increase to $2 billion US. within 6 years while maintaining profitability and adding shareholder value.
The company is structured as a matrixed organization to reflect the complexity of its global reach. Participants are assigned one of 9 executive roles within the company.
The executives are given a mandate to grow the business. Along the way they must struggle with developing a strategy and implementing it. As they do this they practice:
- Identifying both strategic and tactical options within a complex business.
- Using business context to understand the upstream and downstream impact of their actions.
- Making informed financial decisions that will grow the business within specific criteria.
- Fully participating as a member of the senior leadership team to take action and meet objectives.
Paper nation – the computer simulation program – was built using systems dynamics simulation techniques to mimic the dynamic operation of the entire enterprise over a 6 year simulated period, with direct input from the training class participants. It includes elements that simulate engineering, marketing, product development, etc., and the interactions between these departments as they compete for internal resources, and as they compete as en entity in the broader marketplace. The program is customized for each new training client, to reflect the actual company structure, finances, and decision dynamics – a task that can take weeks to complete prior to rolling out for training classes in the new client firm.
Unlike other quantitative decision-making simulations which induce participants to respond to their last set of decisions, leading Paper Nation requires participants to think and act for the long run, often holding a course that defies the performance data that they see. This “systems thinking” approach requires practicing a higher order of leadership skills that is now a common requirement for successful business leaders.
How The Simulation Experience Unfolds
Prior to arriving at “company HQ” participants receive information that describes their role, the company background and a package of emails that describe the current issues that Paper Nation faces. Upon arrival at head office they receive a brief orientation to the company and its business practices.
Because leaders today must use both hard (quantitative) and soft (qualitative) leadership skills, time is allowed for the participants to structure how they will work together as a team before they feel pressured to make decisions.
Over the next few hours the executives set strategy, make decisions, communicate with the employees, and use high-level budgeting to project the impact of their operational initiatives. During this period they make quarterly decisions that are input into a highly sophisticated business model. Also, unlike other business simulations, the “soft” leadership decisions that they make are reflected in their results. After each quarter they receive extensive information about their company’s performance.
During the simulation participants are observed by trained facilitators who can also act as consultants to the company. These facilitators are experts in organizational leadership, business strategy, systems thinking and financial analysis. Once the first business year has been completed they lead the group in a debrief of the executive experience, which covers all aspects of executive leadership. Included in the debrief is an opportunity to plan for the next day which allows for team and individual feedback. These “just-in-time” discussions allow participants to practice for similar meetings they would have “back home”.
Because the program usually has several Paper Nation teams the last part of the first day includes a series of structured cross-team discussions combined with lecturettes on strategy, decision-making and systems thinking. The day closes with participants receiving a fresh set of emails containing new information that they will need to consider in preparation for the next few years of decisions.
During Day Two the executive teams continue to run the company for 2 more years, followed again by debriefs and cross-team discussions and lecturettes.
For Day Three participants run the company for the final 3 years. Afterwards the debrief includes robust peer feedback. The last part of the day focuses participants on applying their skills and knowledge to the leadership requirements they face back on the job.
Our experience has shown that leadership development traction is gained the most when the simulation is combined with a separate leadership assessment, and psychologically-based self-assessment. These are just a couple of customization options available to tailor this program to any organization’s needs.
Previous participants in the Paper Nation business simulator exercise include BC Ferries, Dow Corning, Nike, PETCO, Starwood, and Wendy’s.
Among the feedback heard from participants was “Unbelievable experience. The cross-company learning’s are invaluable (i.e. how each decision impacts the rest of the business)”, and “…intense, risk free environment to learn”. That’s a great summary of the value of this simulation-based business environment: a risk free “virtual world” in which to experiment, learn, and get it right before committing to decisions in the real world.