“The Data-Enabled CEO”- 5 Steps to Turn

“The Data-Enabled CEO”- 5 Steps to Turn Data Insights into Competitive Business Advantages – ChiefExecutive.net | Chief Executive magazine http://ow.ly/QJW2f

Scaling the Ivory Tower

For those that have not watched the terrific documentary The Ivory Tower I urge you to do so. It presents an important and compelling analysis of the rising costs of US based college education as a response to student debt which now exceeds $1 trillion. With many graduates unable to secure employment even with Masters degrees the value of their education is under increasingly intense scrutiny.  The film makes the case that incredible levels of investment in campus facilities has become the focus in order to attract out of state students with lowered academic expectations a common outcome. In extreme cases actual time spent studying is reported as less than one hour per day by some students.

Interestingly, for this viewer at least, was the implicit assumption that the role of education is to deliver work-ready individuals able to enter the world of business seamlessly. The suggestion that a college education exists to teach young people how to think – through a liberal arts perspective – was a point made by a few academics but without exploration or challenge. The parents, of course, had the strongest need for a tangible return on their investment measured as employability whereas the students, unsurprisingly, desire a life experience. I have sympathy for both. The parents have a right to expect $160k to mean more than an unbroken string of parties and access to incredible amenities, whilst young people have a right to behave as young people will in such circumstances. None of which addresses the question of what an education should mean in a world where businesses struggle to attract and retain talent.

As a Scot who lives in Glasgow I wish to tread lightly here. In my own city there are four fantastic universities and the oldest, where I teach MBA and MSc students, has a 500 year history – one of the ‘ancient’ universities in the UK – is ranked within the top 100 in the world and has an excellent research reputation. It is also free. From that vantage point arguments over the content of education can seem (if you’ll pardon the pun) academic. Yet whether the cost of university education is met by the taxpayer or privately by individuals the issue is of course pertinent to all. No one wishes to dedicate four years of their life to learning only to find that it has little sustainable value.

My own view accords with Sir Ken Robinson who brilliantly demonstrates why our obsession with a Greek model and system built for the industrial revolution are out of step with a modern world. The doctrine of critical analysis and reliance on memory, which we know from recent research to be generally diabolical, seems clumsy and archaic to me. Yet, as an academic I am drawn to research and the development of theory, a pivotal aspect of which is the need to critically appraise new data and findings in the context of what is already known about phenomena. And it is through experimentation and research that we make new discoveries which shape how we live and our understanding of the world around us. There is also a paradox at the heart of the debate surrounding college education in the US. The focus of institutions on research at the expense of teaching may negatively impact student experience and thus devalue an education which is increasingly expensive, yet at the level of corporate education it is research and scholars whom organisations turn to for guidance and support. The need for understanding, to learn from past experience in an effort to shape a response to an uncertain future, is frequently reliant on the work of academics. It is theory which helps business to understand itself.

What is probable is that the system of education which prevails is unsustainable. Just as parents and students balk at the cost of their degrees in the US universities in the rest of the UK have begun charging fees. Scotland is holding out but is increasingly isolated in its belief that university education is a right. I am ever hopeful that the nation which sparked the Enlightenment can continue its tradition. Which raises an important question. Should the tradition demand veneration of a system or should it instead demand that the system be transformed, that the spirit of the enlightenment which required new paradigms of learning be best invoked by universities who seek new ways of learning? Where measurement of narrow criterion in stratified disciplines in formal exams is rejected for a more fluent, creative and productive education experience. One that values imagination and enacted value creation over memory, where theory is not an end in itself but the beginning of something powerfully applicable. In every field we need the legacy of the scholars and theoreticians whose shoulders we stand on. But perhaps it is time to find ways for students to become the pioneers of their own learning experiences, the creators of knowledge rather than the vessels we attempt to fill with our circumscribed materials. Collaboration. That could be the key.

Simulation and Gen Y Recruitment

One of the more intriguing developments in our recent history is the burgeoning interest in simulations as a route to attracting millenials. The reported expectations of Generation Y – such as in the recent Deloitte report which credited them with desiring ‘experiences over careers’ –  has precipitated an urgent brand of soul-searching for many companies and it seems the ‘war’ for talent is entering a new strategic phase.

There are perhaps a handful of companies globally which have the luxury of hand-picking future employees but, even there, we have noticed a growing recognition that the fluidity and transience of the global talent market requires a distinctly different solution. The expense of hiring the wrong people, misplacing them or coping with churn have always been major challenges for companies but beginning from a perspective which acknowledges that you must accept this as a natural state of affairs whilst raising your game to ensure you are attractive enough even to feature in Gen Y’s short term outlook is an unnatural development. It feels wrong. The logic has always been that if they are well rewarded and progressing, in both skills and position, then longer tenures which begin to deliver real ROI for organisations is possible.

The elephant in the room, of course, is that the majority of new talent still require significant input and investment from the company before they begin to resemble the employee they thought they were hiring. This is a natural consequence of learning organisational culture and the decision rules which prevail there more than anything else, and it is not uncommon to find this is a blind spot for organisations who are surprised to find they have such rules in place, and that they dominate.

In our simulations recently we have built in aspects of hiring management teams based on diversity of skill sets, deliberately designed to surface a discussion of the skills and qualities which are necessary and desirable. What we find is that companies are used to hiring in their own image. A manager with an unfilled role in their team is delighted when any new candidate can hit the ground running with little or no input from them beyond standard on-boarding requirements. This is not to disparage hard pressed management who, until that point, have been accepting additional duties themselves or heading off mutiny from their increasingly burdened staff. But in the larger scheme of Strategic HRM it leads to regressive thinking. To give a specific example: when can you risk taking on the creative and innovative applicant at the expense of the veteran? When does a background in internet start-up suddenly become compelling to the insurance director? We are constantly told that innovation and entrepreneurship are qualities in high demand but the language and vocabulary used to define them – and so make them scaleable – does not exist.

Now we are being approached to build simulations purely for recruitment. Where companies dealing with literally thousands of applications from graduates need a filtering process which does more than simply manage the process but is multi-sided, particularly where it both promotes the company and simultaneously assesses candidate capability. In that context, simulation suddenly seems an obvious solution. In one example, a construction firm will have tens of thousands of college graduates in North America apply and be invited to progress through a multi-stage simulation which uses high-quality bespoke video content to introduce the company, sell the brand and challenge potential employees in a highly contextualised environment. The applicant will understand in a very short space of time precisely what the culture and values of the company are, though crucially not through a form of broadcast but because they have to resolve project dilemmas, both practical and ethical, which they could encounter in the real world. They literally have an opportunity to work there, and imagine themselves working there, at one of the earliest stages in the recruitment process.

Features such as live video feedback based on performance further personalise a process that can be typically remote at first. And, of course, we are gathering data. Masses of it. We can determine what the base level of knowledge in some categories will be. We can identify hotspots of behaviours which can be analysed in relation to demographics or even geographical information. The technology is even sophisticated enough to build profiles which can be matched to an ideal model prior to launch.

For a generation reared on technology and gaming it is an approach that has huge draw. As a differentiator from competitors it could be a game changer.

The Future of Learning: Reprise

As is often the case with blogging the narrative takes on a life of its own and solutions to problems you were only unconsciously aware of surface seemingly of their own volition. Such a happenstance occurred during the last blog The Future of Learning where I began to outline a possible future for education which drew naturally on intersecting themes around the requirements of business, online learning, MOOCs and the role of universities in a rapidly evolving sector.

It is generally accepted that business schools (which are a particular focus of this writer) are deficient in delivering the type of educational experience which produces potential employees with the range and depth of skill-sets which employers value. Yet since those same employers continue to confer value on the degrees which universities offer and, in particular, those from renowned institutions there is obvious inertia. For their part, the universities would rightly point to the need for individual disciplines to understand the fundamentals of any area which, in essence, guides the degree format at both undergrad and postgrad levels.

My solution, albeit hastily prepared and proposed, suggested that a greater role is required for organisations themselves and I feel that requires deeper exploration and explanation now that the idea has settled to some degree in my mind. What am I proposing? Well, essentially, an alternate route for employees to gain the skills required without the loss of status that a high-quality degree provides. This is set against a backdrop of the following emergent themes dominating the education discussion:

• Talent shortage: Employers are impatient for employees with the right ‘mix’ of ability. There is no doubt they’d happily forego a candidate’s ability to write 3,000 word essays citing extant literature for someone with demonstrable interpersonal skills, fluency in communication and creativity.
• Technology: The Internet has transformed education with the sheer scale, scope and variety of information available. MOOCs and online learning of all kinds are but the first attempts to make sense of how it should be channelled
• Game based learning: Regardless of definition, the employment of game mechanics – particularly as they apply to non-traditional game environments – is a powerful force. Simulations, immersive virtual worlds and gamification all leverage a natural desire to master challenges which are compellingly designed. Its beauty is that the learning takes place irrespective of conscious application.
• Learner autonomy: the sheer cost of education coupled with accessibility to information is driving individuals to question the value of traditional routes through education to employment. As soon as a viable alternative emerges they will leap in their thousands.

In a piece for Deloitte, Josh Bersin states:

“The war for talent is over, and the talent won.”

This sets the scene for a 66 page document which points to the need for business to create an ‘experience’ rather than a career in order to retain their talent. The thought which immediately came to me here was that firms need to go further back in the ‘value chain’ of education, to nurture a sense of belonging for employees which is synonymous with their development as individuals and the opportunities created for them. In accord with this theme, an HBR article by Monika Hamori and Burak Koyuncu points to the expectation gap between top young managers and their experience with companies where they receive less support, coaching and formal training – by some distance – than they expect. Most last less than 28 months. This creates a vicious cycle where employers do not invest in costly training and mentoring in case employees leave, only to force them out by failing to meet their expectations.

We then have both employers and universities in an increasingly precarious position as individuals exert control over the way they are educated and treated within the workplace. In reality they are two sides of the same coin. We intuitively recognise that our development transcends environments such as formal education and the workplace and, naturally, this materialises as a dissatisfaction with both when they fail to deliver. Actually, it has always been a common complaint of students that there is a palpable disconnect between education and the world of work. Paradoxically, this improves with seniority as companies become more reliant on Corporate Education to translate research insights which can help them make sense of their business. In my own experience, individuals who are selected for the type of high-level investment education programmes which accompany change initiatives are all too aware of the company’s investment in their personal development. For the rest, the willingness to trade jobs with little regard for the organisation will be followed by a more vociferous challenge to the universities to provide an experience which matches their expectations. Namely, flexibility and choice at a reasonable cost.

I have always thought that the failure of online education can be explained by the fact that individuals also want the social experience of attending a university and the friendships they expect to make there. Fundamentally, all of us want to share our learning experiences with others. We are nothing if not social animals which is why online environment cannot compete even when they are highly personalised. But I’m also beginning to think it is simply because no alternative reasonably exists.

As much as 4 years ago PwC reported that failure to retain talent was costing businesses in the UK £42bn. That’s a staggering sum and unlikely to have dropped in the interim. Presuming that much of that talent was educated at university where students can now expect to pay a minimum of $58,000 the two have a reason to become more invested in a solution. As an experiment, I would like to see some top organisations across multiple disciplines partner with universities to offer a different route to employment operating somewhere between an intern programme and formal university course. A natural question – and desire no doubt – would be to try to rationalise where such a course would sit in relation to existing qualifications. This credit driven approach would be a mistake I believe. Instead, the outputs should be far more holistic. Almost a 360 assessment of the individual based on their abilities across multiple skills and intelligences, both cognitive and non-cognitive.

Let’s assume that Google offered a fast-track degree standard qualification which lasted 2 years instead of 4. Before even beginning to imagine the content or delivery channel just consider what you might think of an individual who has been selected and subsequently graduates. Would the qualification/experience have currency in the job market even without a full understanding of what it contained? Absolutely. And I would bet my house that the student would think so too. In such a world, paying for the course itself becomes as arbitrary as the decision to pay for a university education. It would just automatically make sense. Google’s investment could be mitigated to some degree by ensuring students complete a period of time in work beyond the end of the formal learning process. To be frank, I would expect this to be entirely unnecessary. Compared with friends attending lectures with 300 people crowded into a hall and an exam diet to look forward to (with 5 years of past papers demonstrating how little it has changed!) the Google student is likely to be as driven to remain with the company as they were to join. The content of the programme itself could reflect the real issues and projects which the organisation is constantly addressing. Its format could be revolutionary. The universities could still have a role, supplying some of the key theory which supports and underpins the learning process. The difference, of course, would be that it now has a context within which to excite the learner. My favourite example of this kind of thinking was a game design course where ten year olds were introduced to physics simply because they wanted their game to drop something on somebody’s head. The fact that it was physics, math and code that provided the solution was immaterial. They were the building blocks necessary to get the job done. Consider, also the scope for such an approach beyond the multinational. SMEs, through organisations such as Chartered bodies and business associations, could collaborate to offer their own version, built around their own needs. Arguably, it should attract the same funding from governments that formal education does where those systems persist, such as the UK.

In this model the student does not have to worry that they are not being prepared for work since everything they do will have a workplace focus, their investment is safe. Their future secure. The university finds a viable, long term outlet for its expertise where there must always be a place for our collective knowledge. The organisation steps back in the value chain of education and has an opportunity to build a real and tangible relationship with learners through the formative years of tertiary education. They will learn a huge amount about their motivations and their desires, their expectations, and use this to equip a new generation with the necessary tools for success. Rapid. Effective. A model for the future of learning.

The Future of Learning

In the last days I’ve read a host of perspectives on learning all of which have left a sense of unease. It’s borne of uncertainty. The impact of technology on learning is essentially the driver, and to listen to commentators such as aconventional or Stephen Downes the days of the university are numbered. I’m not so sure, but I’ll come back to it later. What’s certain is that our understanding of learning as a process in itself is ill-prepared for the shift in learning domains. What I liked most is where the two individuals diverge: for Nick the MOOC is already (in his words) a ‘zombie’ conversation and is incompatible with a real discussion on learning; for Downes he points to the extraordinary success of some very niche courses such as Norvig and Thrun’s artificial intelligence MOOC at Stanford which had 250,000+ subscribers and tens of thousands who finished. His point being that where there is demand for niche topics people will come in their droves.

The common thread, of course, is that learning is no longer synonymous with institutions and there is a very definite path toward a horizon where companies no longer hire on the strength of a piece of paper from a select group of universities. For someone who is affiliate faculty at two universities and teaches MBA and MSc students this is bound to lead to some disquiet. But then, in one of the courses I deliver its entire purpose is to demonstrate to MBAs that the findings from research (conducted with just about every leading corporation) cites ‘interpersonal skills’ as the most sought after quality. In fact, our discussion begins from an explicit acknowledgement that the theory on finance, marketing, strategy, HR and so forth will be no more than an expected baseline. To differentiate oneslef is to demonstrate skill with people. Does this mean the students are being duped? What should the course contain – if there is to be one at all – if not the theory, both current and historical, which shapes these disciplines? As an ex-MBA student I would happily admit that much of what I was taught and read endlessly over two years is long forgotten. And yet, there can be no doubt that I emerged from the course more equipped than I was. There have been countless occasions since in my consulting work where theory has suddenly leapt from a dark corner in the mind to illuminate some issue. To give me a framework for understanding which felt necessary at the time.

Nick from aconventional will point to the immediacy of learning. The instantaneous nature of how we actually learn the things that matter, and our tremendous deficiencies with memory which make a mockery of the system of education most of us have experienced throughout our lives. As Sir Ken Robinson has wonderfully reminded us it is part of a system made for an era that is now a memory. To illustrate my own thoughts I’ll use a local example: the Scottish Government introduced their Curriculum for Excellence to revamp education from early years through to the final stage of high school. In its own right the document produced was laudable. Brimming with precisely the kind of aspirations we’d all hope school could deliver. The problem unfortunately, is that the universities expect students to attain a specific level of qualification (Highers) which they are reluctant to change. This was not unexpected since the system had been working perfectly well for decades, producing students capable of completing the degrees which are designed from the same principles of learning. To shift from this dynamic will take something spectacular. In short, until the currency of a degree is no longer valued by firms the status quo will persevere. And since companies have very little alternative when they want some insight into the abilities of future employees then we become locked in self-fulfilling circle.

Yet technology offers a way out. The democratisation of learning offered by MOOCs and the efficiency of the Internet to deliver instantaneous answers and instruction on just about any topic are powerful levers which have yet to find an organising principle. If people access MOOCs to gain entrance to the type of courses at Stanford they could never afford they, in essence, simply reinforce the value of the paper which graduates attain having paid for the privilege. Even here in Scotland, where university education is free, there is an implicit acceptance that a degree conferred from one of our ancient universities is a necessity for a professional career. The counterpoint has to be the firm. Imagine a world where companies develop their own content, driven by their own practitioners, and directed toward recruiting and retaining potential talent. A pipeline of workers as skilled an any graduate in a fraction of the time. And for the student, rather than investing in a four year degree which will traverse a host of disciplines they will rarely encounter again, their education comes instead from the practice associated with the field they want to enter. The context is defined by the organisation’s work. From a starting point where they imagine the general field they want to enter – pharma, banking, software, engineering – they are introduced to projects where more compelling areas emerge. Their interest honed as the nuance and specialisms become clear. The benefit to the organisation is clear. In a world where talent is difficult to find but even harder to retain companies must become more invested in the process of learning which delivers them graduates. They must assume some control of the output.

As an educator I imagine a system where the need to learn the underpinning theory, the math, the code, is a requirement for accomplishing an activity, not merely to pass an exam. The evidence is overwhelming that we learn through necessity. I imagine a life where I could have spent a year with a Marketing firm contributing to real-world projects in a programme where my time would be equally allocated to the subject before moving on to something else. Where video lectures, animations, talks from specialists and project materials form the basis of my everyday learning, accessible 24/7, to be completed in my own time and at my own pace. Where I gravitate toward the colleagues and associates who, though globally dispersed, are in tune with my own experience. Imagine the student who completes four years in four areas of interest in such a system. Would they be more equipped for a new economy? I believe so.

With resources hosted in the cloud and a syllabus which is collaboratively designed, foregoing the need for mammoth lecture theatres which only limit capacity and create administrative burden, a new form of learning and training could be imagined. Social media could be a catalyst for new communities of support, dismantling traditional structures which are inevitably under-resourced. In a country such as Scotland a portion of fees could be redirected toward the organisations willing to meet this challenge. The universities would adapt or perish. Not every discipline could operate in this way, of course. Some areas of academia require protection. They are our history and define our culture as resolutely as any symbol or flag. But if the new frontier is to be built on the “good learning” of Howard Gardner, where empathy, kindness and imaginativeness are as important as the cognitive intelligences then our system needs re-animated. It needs to be re-born.

The Pedagogy of Simulation Games

Not everyone is familiar with the relatively arcane term pedagogy though it remains much beloved of learning practitioners. Since it refers simply to the method and practice of teaching subjects or theoretical content, it describes well enough what we need it to when we discuss any aspect of learning.

Research prompted by learning in virtual environments has led to a framework (de Freitas and Oliver, 2006) which is useful for evaluating the pedagogical characteristics of online simulation games and it was employed by Ranchhod et al (2014) in the review of one such game. I have summarised some of the findings here as part of a discussion.

The four domains suggested by de Freitas and Oliver are: Context, Learner Specification, Pedagogic Considerations and Mode of Representation.

Context

Unsurprisingly business simulation games are more prevalent in academic institutions within Business Schools and are typically employed at a post-graduate level. This is to be expected since they frequently involve strategic level decisions which undergraduate students find more challenging to contextualise. However, this does not mean that they are not valuable exercises, even for High school business class students. On the contrary they can bring theoretical concepts to life in a practical context which supplants the need for actual experience. In their article Ranchhod and colleagues acknowledge their use in Marketing Management, Strategic Marketing, Bachelor, Master and MBA curricula but do not mention in detail a corporate learning context which actually defines the majority of my work in simulation.

There the nuance of strategic levers takes on an even more powerful resonance as companies explore and extrapolate the impact of decision making to their own competitive environments. As an example, I worked recently with a client exploring strategies of transformative growth where the need to be a ‘disrupter’ rather than the ‘disrupted’ was very much to the fore. With a specific KPI included for the simulation measuring Risk Propensity it was compelling to watch the participants grapple with the outcomes of their decisions as the market developed. The following (paraphrased) question was put to the Chief Strategy Officer for the company from a team member in the debrief which followed the simulation:

“We’ve just been involved in a market where we attempted to follow a strategy we set as closely as we could but then, so did our competitors. The market changed dramatically over the four years. What contingencies do we have in place as an organisation for the moves our competitors make?”

I will return to this example again as it has significance for the learning experience as a whole. But in relation to context, it should be apparent just how naturally simulation games align with the needs of business education at a strategic level.

Learner Specification

This element refers to the type and level of individual simulation games can be used with. In accordance with the contextual element Ranchhod and colleagues suggest the levels of qualification mentioned already but highlight specifically the ‘internal flexibility’ of the simulation game which is particularly valuable for team work. They go further and argue that the need for decisions which require complex data analysis and departmental specialisation (marketing, finance, operations,…) make it particularly appropriate for accommodating various learning styles. Moreover, the ability to manipulate the number of decision periods allows “repeated application of the Kolb cycle of learning, leading to a progressive improvement of individual and team knowledge and skills”. In my experience this is very much the case. Individuals of all levels, particularly, those with functional expertise but limited generalist business knowledge revert initially to the comfort of their domain but increasingly become involved in discussing the wider implications of decisions which impact the whole organisation.

Pedagogic Considerations

Ranchhod and colleagues describe simulation games as a practical application of the Kolb theory of experiential learning, a topic I have covered in detail elsewhere in this blog. In terms of Learning Outcomes they state that the participation of team members in the game leads to cognitive, affective and behavioural learning outcomes. This relates specifically to the conceptual understanding of various business models and theories. In addition, the inherent team-work required for the activity and the demand for excellent interpersonal communication and collaboration is a critical feature of the games. They contend that this leads to the application of theoretical concepts and models in a practical setting which would be difficult, if not impossible, to replicate elsewhere. A function of the learning activity is that the student learns as a consequence of interaction with the game and their team members, though particular emphasis must be reserved for the influence of tutors who lead briefing and de-briefing sessions in both preparation for the task and for post-activity reflection and consideration.

In my own view, it is the latter which is singularly the most important aspect of the event. And here a reality of simulation activity must be acknowledged: not all participants are pre-disposed to extrapolate relevance to their working lives. For many, simulation games can be enjoyable, competitive and compelling environments, they can appreciate the quality of the technology and even be rich in their praise for the engagement they elicit only to suggest that it is no more than a game. This view is in many cases the default perspective. Even where case studies are used which broadly map to the reality of an industry or, even more granularly, a functional perspective participants can often be heard explaining why it is ’not like that in the real world’. Such views are to be expected in any learning environment and whilst not every learner can be a convert to every learning experience, much can be achieved with a well-designed and executed debrief. Returning to the question posed by my participant to his CSO earlier it is the best example I could provide of this instance. Not only had they engaged with the simulation experience and attempted to execute a strategy which was in line with the current needs of their organisation, the very fact that they were forced to deal with competitor moves and market developments demanded a response. Strategy moved in one instance from being a concept which could be defined in language and debated as such, to a practical, dynamic issue for which there was considerable uncertainty. And, of course, it was a difficult question for the CSO to answer! For Ranchhod and colleagues they emphasise that individuals and teams need different levels of attention, feedback and support from the tutor at different stages of the learning experience and this is advice I wholly endorse.

Mode of Representation

This aspect was designed to explain the components of the tool in use. For simulation games this refers to the interactivity of the simulation interface and the progressive experiential learning process derived from data analysis and team decisions taken during several periods. Typically, business simulation games have algorithms (literally hundreds in the models I work with) which calculate the outputs in real time. The presentation and intuitive nature of the interface is therefore critical and it is always revealing to me that participants’ initial response to the environment is one of great trepidation as they survey they sheer quantity of data available to them (a design element which mirrors the reality of the work space) only to become incredibly adept at navigating to the information they require within an incredibly short space of time. In brief, they learn to get to the heart of the matter quickly as a matter of need.

Taken together the framework and its application present a compelling picture of the pedagogical components which make simulation games the tremendous learning tool that they are.

Business Acumen Reclaimed

Recently, I was reflecting on the dissimilarities of working with MBA learners and employees brought together for a simulation activity as part of a wider development initiative in a $12bn firm. In many respects, there was much to favourably compare. On an individual level participants were committed, bright and capable. They attacked the activity with gusto and were unfailingly interrogative, both with respect to the technology and the underpinning concepts it sought to elucidate. Yet, the absence of context – the specifics of the organisation – make for two very different experiences. In an MBA there is the luxury of time removed from the structured bedlam of organisational life, albeit replaced by an assault course of assessments and reading which can be equally demanding. But any learning taking place within the auspices of a firm immediately demands an anchoring, a fundamental requirement that everything be considered in relation to the context of the company. This is as it should be. The wider application of concepts to multiple contexts in an MBA warrants an appreciation of the generalisability of much research work, whereas, the specificity of encountering concepts in the crucible of a particular market demands focus on their application.

In many respects, both sets of learners are expected to discern the same ultimate goal: the acquisition of (improved) business acumen. Before beginning to look at the term in more detail here are a couple of definitions:

Oxford defines acumen as: The ability to make good judgements and take quick decisions. From Latin, ‘sharpness, point’, from acuere ‘sharpen’.

The Financial Times defines it as: Business acumen is keenness and speed in understanding and deciding on a business situation.

Interestingly the FT goes into considerable depth regarding the use of business acumen in practice with a notable observation:

Business acumen is learned, not innate.  A person develops business acumen through some combination of business experience and formal training.  Such personal development requires an understanding and application of the management processes to ensure a disciplined and consistent approach to analysis and decision making.

Of course, from the standpoint of an educator I am bound to endorse the premise that business acumen is a learned phenomena. Yet that is not always how it is represented. And it has led me to the belief that not only is ‘business acumen’ as a phrase misunderstood, it also appears in contexts which completely confuse the currency of the term as I understand it. To the extent that I would now argue the term needs not only redefined, but also reclaimed. For it has come to be synonymous with a range of perspectives which are unhelpfully taken as one. Confused, and just as often misinterpreted.

Let me cover them here.

Functional Perspective

In many cases this is the most common of all perspectives. Business acumen training and development is largely concerned with introducing the main principles associated with different functional disciplines that individuals may not have explored previously. This encompasses programmes such as ‘Finance for Non-finance Managers’, introduction to marketing concepts such as segmentation or the four ‘P’s’, and economic principles of demand and supply curves, price elasticities and more. In each case the goal is to ensure the individual gains critical insight into the workings of the organisation and is therefore better placed to interact with colleagues in multi-functional teams.

Industry Perspective

In other cases business acumen is taken to mean a deep appreciation and understanding of the workings of a particular industry, the competitive behaviours which shape it and the trends which define both its history but also its present and near future. Here the emphasis is on data analytics and competitor analysis, typically.

Business Perspective

This can be contrasted with a focus on the business itself where it is the ability to demonstrate superior product and/or technical knowledge which is viewed as evidence of business acumen. In an applied sense it translates as the capacity to leverage core competence and identifying the unique value proposition which distinguishes a business from its rivals.

Behavioural Aspects

For others, business acumen refers to an intangible ability which can be decoupled from knowledge driven approaches which emphasise specific functions, industries or technical expertise. Instead, business acumen is described as an intuitive ability to make decisions which are superior and which variously demonstrate a capacity across functional disciplines, product knowledge and industry awareness. It is the ability to focus on the necessary, to eliminate valueless activity and interrogate data with precision. Where the manager is able to cope with ambiguity and display courage in their decision making. This perspective values the manager’s singularity above all.

Process Perspective

The final approach views business acumen from a process perspective rather than being content based. It highlights the managerial role as that of the individual who must link objectives and deliver on strategic objectives through the effective alignment of people, products and resources. Their skill in this domain is demonstrable by their ability to make the organisation function harmoniously.

These five approaches are distinct and each, undoubtedly, has their own value. Yet they fail in numerous ways to explain what managers actually require within their job roles. It is increasingly clear to me that these perspectives do not help managers fully understand how their organisations work, the culture which drives performance and defines how the company secures success in the marketplace. A fundamental principle of business acumen when applied to any business must include the capacity to identify how it operates on both a macro and micro level.

Moreover, even the totality of these perspectives neglect at least three vital components:

1. The need to understand how your own company works
2. The need to view creativity and innovation as inherent to this collective ideal
3. The need for empathy with customers

Let me expand. A functional approach can certainly help managers recognise the activities and pressures which influence the organisation at a functional level but this is distinct from grasping how exactly the company operates, how it captures value and leverages its capacities. There is a holistic, business model aspect to this which is frequently ignored where business acumen development is concerned. More obviously there is no room in any of these approaches for creativity or innovation, the ability to become a conduit for these value-based  activities rather than just the source. And, finally, where is the customer in these approaches? It would no doubt be argued that they are present in all – most typically in the industry and business perspectives – but this usually translates as a conflation between the mechanics of the organisation’s activities versus a genuine customer orientation. Here business acumen is proxy for knowing what makes a business a success in a particular industry which presumes a detailed knowledge of customer needs. How else would anyone have been successful? Although there is some unavoidable truth in this statement you have to look for it. The reality is that it is not ‘front and centre’.

Business Acumen Redefined

A new approach to business acumen would encompass each of the three components which I’ve outlined. No doubt there will be sound arguments for others but I introduced the ones which seemed immediately pressing to me. Which leads to an alternative perspective on business acumen. A (hopefully) more dynamic and purposive explication of its true meaning, founded on three descriptive principles from which the concept can be progressed.

In my view, business acumen develops individuals who are:

1. Master Curators: the organisers of accumulated knowledge across numerous distinct yet inter-related fields; they are collectors, inquisitive, dynamic, perceptive and knowledgeable.

2. Active Practitioners: business acumen is only ever acknowledged by action; intervention and subsequent outcomes define the level of acumen any individual displays; they make active use of the material they curate.

3. Social Collaborators: marshalling expertise in a business context is fundamentally linked to behaviours in groups, either formal or informal, and equally as participants or leaders; creating and nurturing networks is their hallmark.

These qualities need exploration and, as with the majority of work in any discipline, we stand on the shoulders of those who have brought us to this point. To paraphrase Sugata Mitra, it is not that the concept of business acumen is broken, just that it is no longer needed in its current form. It is time for it to evolve.

Do Business Simulation Games Work: The Evidence Case Pt 2

Conceptual Understanding in Simulation Games

In the second article in a series drawn from the research work of Ranchhod et al (2014), available here, I will focus on the use of an online simulation environment to develop conceptual understanding of business concepts, predominantly strategic marketing based decisions, all under the watchful gaze of my countryman Hume.

The scholars set an inventory of learning goals which also included experience generation, skills development and affective evaluation each of which will be covered separately in more detail. However, the focus on ‘experience generation’ is particularly noteworthy as the researchers sought to test for a phenomena that is in many ways the raison d’être of business simulation use, namely the ability of participants to experiment with business ideas and use the simulated environment to take risks that cannot be taken in a real business environment. That is almost precisely how the learning goal was described. If confirmed, it offered credible empirical evidence that supports one of the main claims business simulation specialists make in support of their work.

Conceptual understanding was also to be tested and related specifically to cognitive ability (from Bloom) where the emphasis is on “understanding and retention at conceptual, procedural and strategic level”, further disaggregated by the scholars to include aspects such as terminology, concepts, and principles as well as the interdependence between business functions. The crux being that these concepts require application in complex situations which are, crucially, realistic for the participant. In this vein it was noted from the research that the simulation provides a simplified representation of the business world, yet is also an accurate one. The experience is one of a dynamic system which requires analysis, decision making and implementation of strategy over multiple phases. As such, it is a ‘concrete experience’ to use experiential learning terminology. This then means that it allows for a Lewinian learning cycle where concrete experience is followed by reflection and observation and the formation of abstract concepts and generalisations. Essentially, the ability of participants to be able to formulate their own conceptual models and explanations for the learning experience. In this particular study a main hypothesis was that there would be a causal relationship between the environment of the simulated business world and conceptual understanding of business issues.

In sum, the conceptual understanding learning goals were:

• Understand the theoretical foundations of market competition
• Understand the concept of the strategic perspective
• Understand the theoretical foundations of market behaviour
• Understand the concepts and theory of marketing communications
• Understand the concepts and theory of distribution
• Understand the concepts and theory of pricing
• Understand the theoretical foundations of product management
• Understand the theories and models of information management
• Understand the theoretical foundation of business finance

From experience as an educator working with MBA and MSc Management cohorts I would say this list is pretty intimidating. Even taking relatively experienced and well-educated employees into a simulation with an expectation that they will assimilate this type of knowledge is a considerable challenge. How many senior managers or L&D professionals would be thrilled if they could describe their employees’ acumen in such terms? Many I would warrant.

So what did they find?

Since I’ve taken the time to report this study in such detail it may not surprise you to know that the hypotheses were confirmed with moderate to high value in terms of conceptual understanding from a  single simulation experience. The statistical data demonstrated that the experience value generated by the simulation had “a very strong impact on conceptual understanding” and so reinforced the cognitive outcomes from the pedagogical process. Significantly, the authors highlighted the ability of the simulation to engender effective decision making skills in complex and dynamic situations despite the “simplification and abstraction of the simulated environment”.

Herein lies the single most salient finding from my perspective. Simulation games are inevitably judged in relation to the real world and it is the authors who make a tremendous contribution here by describing the world of the managers working in medium and large sized firms. They are characterised as taking decisions following a process of analysis and interpretation of the available data, working with specialists usually without direct contact with the actual products they sell. They may have tremendous technical knowledge of the commercial offer and value proposition, but it is the value of interpersonal communication and the capacity to analyse abstract information in a market context which affords them success. They operate with high flexibility in unexpected competitive situations and are charged with continuously advancing the organisation’s objectives through the balancing of tactical decisions with long-term strategic goals. Phew. According to the authors this is precisely the process which occurs in a well organised and effective simulation experience.

Empirical evidence. Proof.

And whilst this is only one study I would ask that you take a second to think about the research process. This was no short course with a hastily derived set of learning goals scribbled in bullet point. It was a scientifically designed study which specified in detail not only the method but the precise meaning of every learning goal under scrutiny. It is the antithesis of the generic ‘business acumen’ programme.

Next we will hear what the study had to say about skills development and the affective domain.

Do Business Simulations work? The Evidence Case Pt 1

In a previous article I discussed the most common dilemma in business education, that of ‘external validity’ and the need to prove that investment in training (of any type) requires justification on a typically quantitative level. Most usually that it impacts the organisation positively. In this series of articles I’ll present the findings from scientific research published in peer reviewed journals which details the value of business simulation across multiple domains.

A study conducted recently by Ranchod et al. (2014) built on previous simulation research by testing the use of a high-quality computer-based business simulation. In particular, their focus was on three main categories of learning outcomes built on Bloom’s taxonomy with associated learning goals defined as:

i. Cognitive (understanding and retention at conceptual, procedural and strategic level):

• teach students the terminology, concepts and principles of business in general or of a specific discipline;
• help students understand the interdependence between various business functions (marketing, finance, production, sales
• demonstrate the procedural difficulty of applying business concepts in complex realistic situations; knowledge retention.

ii. Behavioural (skill practice and development):

• enable students to implement course concepts, by taking decisions and experiencing the consequences of their actions in an interactive environment;
• improve students’ team work and relational skills;
• generate practical experience in taking and implementing business decisions;
• improve students’ analysis and decision skills.

iii. Affective:

• improve student attitudes towards the discipline;
• enhance students’ motivation and engagement;
• increase students’ satisfaction regarding the learning experience.

In essence this relates to simulation games as experiential learning (discussed in this blog here) where a Lewinian learning cycle is followed. This means:

0. “the interaction with ‘concrete experience’ leads, through ‘reflection and observation’, to the ‘formation of abstract concepts and generalisations’”

In their study of the literature the researchers noted that there was significant evidence from earlier research in each of the three domains and they stated:

• Students can develop a deeper understanding of fundamental business concepts and procedures, as well as of their strategic significance, during their interaction with the generated experiential situation.

• Previous studies report a positive impact of experiential learning methodologies on students’ skill acquisition. Proposing an engaging, dynamic and interactive learning environment, business simulation games put students in a situation of ‘learning-by-doing’, while the realistic representation of the simulated business systems ensure the transferability of the acquired skills in real-life situation

• Besides cognitive and skill-related outcomes, simulation games research indicates the existence of affective outcomes, expressed through increased motivation, positive attitudes towards the simulation game experience, engagement, general satisfaction, and enjoyment

A critical aspect of the research indicated the dynamic nature of learning outcomes where a causal relationship exists between them. This means individuals are able to formulate their own concepts and generalisations having tested the implications of their knowledge in new situations within the simulations – the basis for skills development.

In fact, the article cites evidence of ‘adaptive expertise’ which is distinct from ‘routine experts’ who solve familiar problems quickly and accurately in that adaptive experts can “innovate and create new procedures to adapted to novel problems and situations”.

The next article in this series will look at the first of the learning goal domains: Cognitive and Conceptual Understanding.

Source:  A. Ranchhod et al. / Information Sciences 264 (2014) 75–90

 

External Validity and Sense-making

Despite the growth in business simulation use they remain a relatively sparsely utilised resource. In my experience, an encounter with them leads participants fairly rapidly from positions of scepticism to one of positive engagement. Not only do they enjoy them, but they typically feel tested and so enlightened in some regard. 

 

Yet, as with all learning experiences there is a desire to focus on what the scholars and researchers call ‘external validity’  which, in the case of simulations, typically translates as “have they learned anything they can actually use in their day-to-day work lives?”. This question is an important one, of course. But it is inherently devilish to answer and so leads to skittishness on the parts of those who have to justify its appearance. In many ways this issue is present in just about every learning instance you can think of yet the same rules do not always apply.

 

How many lengthy presentations or densely packed reports does the typical executive encounter in a working week? How much of that information is retained and, more critically, how much of it is actionable? Precious little we can presume. As humans we are selective when it comes to processing information and we have an in-built tendency to prioritise the data which means something to us or which we already value. This is unique to us all. My values will differ to yours, as they will in turn to those you work with. In such an environment how can any of us be sure what we ‘learn’, in whatever circumstance, is of value? 

 

Business Schools and MBA programmes place a premium on mixed method deliveries where case studies exemplify theory and theory is explained in context. The abstract made tangible and the tangible explained. But how can we be sure that any of this leads to improved decision making? To strategies which are informed by past events and which offer rational, deliberate actions responsible for value creation in organisations? The fact is we don’t. At least not in the sense that scholars would call valid. In many ways this accounts for what Mintzberg called ‘emergent’ strategy in his seminal work, where strategy becomes something dynamic and malleable. An unending process where what was intended is rarely achieved and where results validate a successful managerial intervention regardless of how dissimilar it is to its original form. Failure, conversely, is typically the result of external environments.  

 

The brilliant Karl Weick has built a prodigious body of work which exposes our natural tendency for what he terms ‘sensemaking’: our retrospective accounts for what has occurred which gives meaning to experience. One of its most intriguing elements is the observation that we favour plausibility over accuracy. We are literally guilty of explaining events away because our version seems more likely. This is a form of cognitive bias that has been proven many times by psychologists. In the context of change and its design Weick describes it beautifully:

 

“There was not a transition from imagination, through intention, into execution. Rather, there was an imaginative interpretation of execution that imputed sufficient coherence to the execution that it could easily be mistaken for an intention.”* 

 

His point is that the change may occur before the decision to instigate change became explicit. But our desire to make sense of our current environment leads us to view the world through the lens of rational intent. A dangerous assumption. When faced with scarce resources and multiple alternative learning opportunities HR professionals are driven to rationalise decisions by applying the same tools that exist elsewhere in the organisation such as ROI or other quantitative measures. Yet, as we know intuitively, training an employee to use an IT system or to acquire a skillset is fundamentally different to leadership or business acumen development .

 

It is possible to disarm this argument over external validity by recognising first that we do not learn in a vacuum and what is available to you now, in this minute, may be the most useful of all things you need to remember and use. At what point you acquired the knowledge you used to make sense of it, the medium it arrived in, and the circumstance which situated the learning is largely unimportant. You make sense of business scenarios which require a decision by marshalling the sum of your experience and actions to date. At all times. 

 

In that context, the point must surely be: keep learning. Keep exposing your mind and body to the broadest possible range of scenarios for you  cannot know what is around the next curve. If you want your high-potentials to grasp some of the issues and decisions which a senior leader makes without handing over the reins to the company there has to be an alternative.

 

Simulations are contextual. They situate you in a place and time and ask you to make sense of it. They provide you with data and are usually charged with emotive potential. All of the opportunities to learn are contained within them if you are open to the experience. And, perhaps, there will come a time when a decision is reached and the will that you drew on came from somewhere you could not place. No doubt you’ll have an imaginative interpretation to hand…

 

*(Weick, 2001, p. 62)