Online Business Simulation Builds Virtual Teams

By Craig Watters, PhD, CEO of Capsim Management Simulations

Globalization has broadened our concept of teams and how teams operate over vast distances. As travel budgets contract and expenses tighten, the ability to function at the highest level, without ever meeting face-to-face, is a growing priority for business teams.

Business simulations are an effective tool for improving business acumen and building cross-functional skills in business.  Online business simulations can be just as effective at providing remote teams the opportunity to hone their skills in long distance decision making.

Linde, an international industrial and medical gases and engineering group, has been in business for more than 100 years.  You don’t survive that long without understanding how to meet the challenges of change – challenges such as managing a team of people with little or no face time together.

Linde uses Capstone® Business Simulation as part of its North America Talent Circle Program to train managers to meet that challenge.

According to Matthew Wells, Head of Learning and Development Linde North America, the program was designed for high potentials throughout North America, including employees with regional or global responsibilities.

Before selecting Capstone® Business Simulation, Mr Wells took the time to observe it in action at two other global companies, General Electric and Samsung, in their senior leadership development programs.

“Linde is on a journey to becoming a High Performance Organization,” Mr Wells said, “and we expect these program participants to help take us there by leading high-visibility projects, many global in scope.  We used this simulation as an opportunity for them to really think about what will be required to be successful.

“We wanted to provide a chance for them to demonstrate their ability to work in a virtual team.  When people are physically separated, whether they’re in China or Dallas, they need to be able to work together in a virtual environment.”

The program kicked off with a live meeting which covered the seven elements of high performing teams and included exercises and discussions.

“Then we carried that over into the online business simulation,” Mr Wells said. “You need to use the same tenets to build, develop and maintain a virtual team as a physical team. There may be some minor tweaks but the same elements are in play.  Your team has to decide where you’re going, how you’re going to make decisions – and stick to it. “Those who paid attention to the details wound up with the better results.”

Linde’s experience mirrors the work of several academics who have studied group behavior as a predictor of performance in the Capstone® simulation. The simulation was used by more than 80,000 students in business schools worldwide last year, including Harvard and Northwestern. Dr James Thomas from Penn State University, for example, applies the basic tenets of leadership and group theory to his observations of each of his Capstone® team’s behaviors.

“I found, for example, if the team was structured as a hub and spoke, they were either going to lose or win big,” he said. “Groupthink meant danger. Folks who brought a propensity for risk to the table (or were comfortable with ambiguity – those who acted, then learned) seemed destined to do better that those who froze, analyzing until it was too late.

“Socially adept teams did better (they talked to each other a lot, hence shared more information) than those with heads down analysis as a core behavior –they ended up debating their methods instead of actions. Politically motivated decision making (the "I'll show them who's in charge or who's the smartest" type) spelled disaster.”

Using his own observation of team behaviors, Dr Thomas was able to predict with remarkable accuracy the ranking of teams in the final round of the simulation.

“I was rarely off more than one or two rankings,” he said. “It was only the dictator-led group that was a coin toss –either they won or lost horribly!”

Dr Bill Ritchie from James Madison University also used Capstone® in a study that explored the relationship between team culture and effectiveness of strategic decision-making in a virtual environment.

“Both market and clan cultures were found to be significant predictors of team performance as measured by financial performance outcomes,” the study concluded. “Teams with strong market cultures significantly outperformed teams with clan, hierarchy, and adhocracy cultures. While teams with strong clan cultures demonstrated significantly lower overall performance outcomes.

“The research contributes to the growing literature on the link between organizational cultural types and performance. It is notable in focusing on both the team as a unit of analysis and the use of technology in decision-making.”

Mr Wells also found the financial results in the Linde  Capstone® simulation reflected his expectations based on team behavior.

“One team, for example, decided to make their decisions serially. One person saying “I’m doing marketing”, and another “I’m doing corporate finance.” Everyone had their role and made decisions in their own area.  In the end, those results were not as good as the teams who made their decisions collectively. We talked a lot about that and learned from it.”
One of the most important elements of team process is feedback. At Samsung’s Leadership Development Course, for example, Randy Mase, Director of Leadership Development Programs, Samsung North America makes team feedback a core activity.  He inserts a team process check half way through the simulation, and a full team debrief at the end to ensure each member of the course has ample opportunity to give and receive personal feedback on their management style.

Linde used the online “peer evaluation” tool in Capstone® for feedback. 

“Peer evaluations is a great tool but we need to use more of it,” Mr Wells said. “Next time we’ll increase it – we don’t have enough opportunities to give and receive genuine feedback in our lives. The more feedback, the better able to adjust your performance. The peer evaluation tool not only gave us flexibility, but meant we could offer qualitative and quantitative feedback.”

This was Linde’s first use of Capstone®.  “It was a real success,” Mr Wells said. “The group thought it was really great; it was hands on and they definitely learned a lot about how each element affects the bottom line. The simulation kept forcing them to look beyond the silo. For example, how marketing effects not just the bottom line but R&D and how everything is connected. It encouraged them to think of the whole business as a system.

“This year we are going to stress that idea of looking at the system more holistically. We'll talk a lot about that and use the simulation as a lever.”