Wednesday, November 30, 2011

Business simulation and strategy implementation

This week’s topic is strategy implementation. When I first think about it, I remembered a simulation game I played in my healthcare marketing class. In that simulation game, four people formed a group and act as VP of branding, market research, advertisement and finance. We compete with other teams in a simulated global computer market for 8 quarters. Every quarter, we can adjust our business strategy according to the competitor performance, our market share, our customer satisfaction and so on. We also launch different products into different segments, design and invest new advertisement, release survey to customers, make financial investments and so on. All of these activities are very realistic and all the market reports we get after each quarter contain a large amount of data for us to analyze. During the past summer when I worked in Bayer, I also heard of their global management simulation game that last for over one year. Company invests in quite a lot of money and formed their group and it aims at training their employees. Now, I started to think that whether this simulation game can be designed scientific enough so that it can help with the strategy implementation process? I believe it’ll have several advantages:

· Because of short market response period, company can see the effect of the strategy very quickly.

· Company can change strategies at different phases and make comparison.

· It’ll be served as a pilot test in order for company to see the risks of the strategy and establish mitigation plan.

I then started to check whether such method has been used in real world. Within my expectation, I found an organization called BTS[i] which engages in helping their clients with building strategy alignment, confidence and result and the tool they use is customized business simulations that create opportunities for meaningful practice. In their blog[ii], they listed the reasons why custom-made simulations are effective:

· Are highly realistic.

· Reflect real-world competition.

· Catalyze critical issue discussion and feedback to senior leaders.

· Drive innovative thinking.

· Can be custom designed for every level in the organization.

· Lead to concrete actions to drive strategy and results.

Coca-Cola is a successful example. They used simulation that is closely modeled on the company’s internal (organization structure) and external (Market, competitive landscape) for their strategy alignment and successfully strengthened leadership[iii].

However, I believe a successful strategy implementation is also associated with the company’s culture. For example, Fedex’s strategy is implemented by establishing the culture as every employee helps in the achievement of FedEx’s reputation of reliable overnight delivery. A strong culture will definitely help with the strategy implementation process. My question is: How can a business simulation simulate the corporate culture?

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