4 tips for a winning business game strategy
Have you ever played a business game or a business simulation? Have you felt overwhelmed by the amount of information to process?
As experts in business simulations, getting game participants to quickly understand how to use our interface and where to find information is fundamental. Yet, some students don’t know where to start from, and how they can deploy a strategy that can help them win the game.
Here are our 4 pieces of advice to help game participants win their next business game!
Make sure all team members understand the target customer
Our business simulation games all deal with offering a product (or a service) to a specific target population. Now, the decisions that you make, the customer profile and the type of product or service you offer vary substantially from one business simulation to the other.
As the saying goes, “you can lead a horse to water, but you can’t make him drink”. All successful entrepreneurs and companies will tell you the same: you can have the best product out there, if there is no need, or demand for it, you will end up spending lots of money with no yield.
Business is about offering an answer to people’s challenges, and making a profit, to be reinvested either in improving the solution, or broadening the range of solutions.
That’s why understanding who your target customers are is the first step in securing your victory: the better you know who you are bringing your solution to, the better you will calibrate your decisions related to this product, and the more sustainable your actions while playing the game.
For example, if your customer segments are well-off and ask for a car that is a social statement, you will want to invest a lot into the engineering and marketing aspects of the car you produce. If you decide instead to offer a low-cost car, with little to no specs but at a very competitive price, you are not answering your customer needs, and they will simply go buy their car somewhere else. You will have lost money, and customers.
During, or shortly before the first decision round, teams of participants should take some time to exchange about their understanding of the target customers and challenge one another about it. Basically, if you hear your teammate say something counterintuitive about a customer target, let them know!
Define a clear strategy with numbers
Once you have a thorough understanding of what your customers are expecting, and the conviction that you cannot change them – please don’t skip step one – you can move on to elaborating a general company strategy.
Your second essential step is to decide on a trajectory for your business, with your team. Goals and objectives are fundamental in driving decisions during the game, as in real life: if you expect to grow your company’s revenue threefold by next year, for example, you will be more inclined to taking risks than if you decide to keep a stable revenue but improve employee morale.
Yet if you don’t have any goal or objective, this is where the risk is the highest: no vision means that your team will react to changes, rather than being proactive, and reaching consensus when taking decisions will be almost impossible.
Another threat is that being passive to changes and adopting a reactive attitude to them blinds you from long-term trends, and you will be less mindful to deeper, slower changes such as a growing loss, negative cash-flows, increasing inventory, etc. And if you notice them too late, you won’t be able to go back on track and catch up on others.
Strategies only work when they are complemented by numbers: I want to reach a 100% operating margin by 2025, I want a 60% market share and a 6-digit profit by next year, etc. It is much easier to calibrate decisions when you know your target is to become market leader, or to increase your operating margin, for example. No numbers? Then your strategy is not tangible and will not fit the purpose of providing guidance while making decisions.
So, look at your customer profiles, decide on where you realistically want to be by the last decision of the game and commit with your team to a long-term strategy, with numbers!
Leverage team efficiency
In business simulation games, as in real life, decisions need to be made within a time and budget constraint.
Whether you are working on a team of 3 or 6 students – or any number in between – you will have the upper hand on other teams if you understand the following: up to a certain point, working individually is more efficient than working on a team. Likewise, under certain conditions, working on team helps increase efficiency and reach better decisions than individually.
Concretely, in most of our business simulations, your team oversees a product (or service) portfolio. In just under two hours, your team will have to make a lot of decisions for all these products from the portfolio, in a way that is consistent with the overall company strategy and fitting into the budget.
If all team members decide on all things together, you will lose efficiency, and therefore time – and money.
That’s why we recommend splitting the workload across team members: you could use the first half of the decision time for sub-teams (or individuals) to look after one product range in particular, as per their thorough understanding of the customer profile and of the strategy (steps 1 and 2!).
In the second half of the decision time, sub-teams could discuss conclusions they reached, decisions they deem relevant, and adapt where needed to fit into the overall company budget. Important is also to assign the role of team leader to one of your team members, because sometimes consensus cannot be reached, and someone needs to put a timely end to the debate.
If you like variety, you could also rotate responsibilities across decisions: for example, I am responsible for Product 1 in the first round, Product 2 in the second round, etc. The same goes for the team leader role.
And we hope by now that you understand better why a clear strategy with numbers is needed.
Forecast, benchmark, adapt
A business simulation game is per nature a learning process, and it’s okay to not make sound and successful decisions from the get-go.
During each round, before validating your decision, your team will have access to a forecasting tool that enables you to assess how your decisions could affect your business results.
Forecasts are however based on your own understanding of the market and product portfolio and are by no means telling what will happen after the simulation run.
Luckily – yes – you have competitors.
Observing how your competitors act from the very beginning will substantially help you increase your learning curve. If you see, for example, that another team gained market share for a specific product, you can easily observe their price, how they rank in terms of marketing and engineering-related expenses, etc.
This way, you will double-check whether your understanding of the customer profile is correct, and if the amplitude of your decision was simply too limited in comparison with that competitor. It could be that you decreased your price by €1, because you noticed your customer is price-sensitive, but your competitor decreased it by €2 and suddenly has 10% more market share than your team.
What you don’t know, though, is how your competitor is doing in terms of profitability for a given line. If we take again the example of the price drop, maybe their market share increased substantially, but maybe their profitability sunk!
So, use your competitors to readjust your hypotheses in terms of customer profiles, and to calibrate the amplitude and direction of your decisions. For the rest, leverage your team decision muscle, and keep your strategy (and numbers) in mind to establish yourself as the winner of the game!