October 19, 1998

Simulations of the real thing

One day last year Eric Nilsson found himself serving as the chief operating officer of Food Corp., a failing company in dire need of direction and ideas. With only a dim idea of the company gleaned from correspondence and other information, Nilsson and a dozen or so other managers went to work, passionately arguing over the best strategy for lifting Food Corp. out of the doldrums and onto a path toward prosperity.

Within a day, the group had a business plan ready to deliver to stock analysts. They shared a drink or two in celebration of their efforts after a long day of brainstorming and then went to bed around the same time Food Corp. went out of existence.

You see, Food Corp. is fictitious and Nilsson, like his cohorts, had never run a food firm. Nilsson and the group actually work for Norwest Corp., and operating Food Corp. was a "simulation" to test just how they would approach the difficult problem of turning around a fledgling company during a three-day leadership development seminar held at IDS's Oak Ridge Conference Center. The simulation was conducted by Edina-based DRI Consulting Inc., which has used the Food Corp. model on other clients to give their managers an opportunity to think on their feet, augmented by executive coaching.

"Some of these exercises are so theoretical and impractical and are operated by people who have limited real-world, real-time experience," said Nilsson, vice-president and manager of corporate and customized fiduciary services at Norwest. "This was a compressed experience that lasted less than 10 hours, but it felt like the real world or kind of like a scrimmage before a real game ... You can't believe how emotional it got, it was amazing. People would say `we can't do that, we should do this' even though the company didn't exist and it wasn't our money."

Simulations have been around for years to test business people against real situations. According to industrial psychologists, the trend may have begun in World War II when the U.S. government used simulations to determine who had the guts and coolness under fire to be a spy. John Fennig, who started DRI, recalls that before he left Personnel Decisions, Inc. (PDI), the huge human-resource consultancy in Minneapolis, he participated in a $1 million simulation for the San Francisco Police Department to train recruits to deal with crime scenes and other procedures.

The elaborate (and exorbitant) San Francisco simulation is hardly the norm. Fennig suggests companies can use even simple simulations to determine how, say, a job applicant will go about his work. An administrator could be asked before an interview to prepare a presentation on an operating plan for the next 12 months, for example. Most applicants have a set of behaviors at the job that reveal themselves during a simulation and studies show, he claims, that the second greatest predictor of job success is past performance (the first is intelligence).

Fennig uses simulations as part of a multiple-day process revolving around 360-degree feedback to managers, executive coaching during and after the simulation and debate and discussion of real problems drawn from the client company. Nilsson, in fact, cringed a bit after hearing feedback from colleagues and cohorts during the 360-degree session with an executive coach. He learned a few things about his personality that he didn't expect and didn't particularly enjoy hearing.

Simulation hurts

A good simulation can sometimes be painful to the participants. Just ask Lon Clemensen, a senior vice-president of human resources for Norwest South Dakota, who took part in the Food Corp. simulation this summer and found the experience "frustrating."

As CEO of the fake company, he worked with a team of executives who failed to communicate well with their own staffs and got less done than most other managers who had taken part in the exercise, a situation "much to my discredit," he confessed.

Clemensen learned in the process that his consensus-building strategy, highly laudable in most circumstances, could actually work against him. "I had to ask myself afterward `How can I be a better action planner and deliverer and not take into account as much consensus?' " he said. "I also learned I have to take more risks ... it was a very worthwhile experience."