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Creating a sustainable competitive advantage in the age of convergence

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Copyright © 2016 WholeWorks 1
Creating a Sustainable Competitive Advantage in the Age of Convergence:
How Simulation Accel...
Copyright © 2016 WholeWorks 2
I. The Age of Super-Convergence: Business + Technology + Sustainability
The convergence of c...
Copyright © 2016 WholeWorks 3
II. Strategic Capabilities
Companies hoping to stay competitive in this Age of Convergence w...
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Creating a sustainable competitive advantage in the age of convergence

  1. 1. Copyright © 2016 WholeWorks 1 Creating a Sustainable Competitive Advantage in the Age of Convergence: How Simulation Accelerates Strategic Leadership Development Matt Mayberry, WholeWorks “The ability to learn faster than your competitors may be the only sustainable competitive advantage.”1 Arie de Geus Executive Summary We are witnessing a highly disruptive and transitional era in business. With emerging technologies breaking down industry barriers at an accelerating pace, innovative business models are meeting customer needs in new ways while addressing some of our most pressing social and environmental challenges. This super-convergence – the coming together of business, emerging technologies, and sustainability – promises to accelerate our global transition to a renewables-based circular economy. At the same time, the Age of Convergence poses a serious threat to established firms that lack organizational agility or treat sustainability as optional. Such firms will be left behind unless they can equip managers across the organization to recognize emerging cross-boundary opportunities and act quickly on them despite uncertainty. For organizations in traditionally stable industries this will require a culture shift and new leadership competencies. Keeping up will require accelerating the pace of leadership development. In this paper we examine the strategic capabilities organizations will need to avoid being sidelined in today’s converging world: organizational agility and material sustainability. We then explore how full- immersion simulations promote the development of these capabilities by creating a safe environment where practice is accelerated. Simulations also enable companies to quickly explore alternative strategies, and because they can be rapidly deployed across organizations, they can serve as a catalyst for cultural change. Simulations as an integral part of talent development can drive financial performance, but programs must be carefully designed to deliver results. We outline the success factors needed to ensure that simulation-based programs deliver on their potential, so that accelerated learning in the virtual world gets translated into real-world competitive advantage. In the concluding section, we describe a new simulation platform recently developed by WholeWorks to meet the development needs of 21st century business leaders. 1 Peter Senge (1990). The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Currency Doubleday, p. 4.
  2. 2. Copyright © 2016 WholeWorks 2 I. The Age of Super-Convergence: Business + Technology + Sustainability The convergence of commerce and technology is reshaping the landscape of business competition. The combination of innovative business models with emerging smart technologies and interconnectivity is disrupting once stable industries that include automobiles, utilities, hospitality, banking, retail, and even higher education. In a recent survey by IBM, C-suite executives rated “industry convergence,” the mixing of competitors (and collaborators) across industries, as the most likely trend to impact their business in the next 3 – 5 years. The majority (54%) of these executives expect more competition to come from outside their industries than from inside their industries.2 Companies that once could compete based on strategic positioning within their industry are being knocked out by competitors with blows they didn’t see coming. In addition to this business-technology convergence, there is a second trend adding turbulence to the business landscape: sustainability. It wasn’t that long ago when sustainability in business was relegated to a few boutique firms like Ben & Jerry’s and The Body Shop. Today, sustainability has gone mainstream. Societies around the globe have reached consensus: business must play a leading role in addressing critical environmental and social challenges, such as climate change and global health.3 In this digitally connected and transparent world, sustainability has become part of a new value equation for consumers and supply chains. As a result, multinational giants like Nike, Unilever, Dow, GM, and Walmart are now treating sustainability as an innovation driver core to their strategy. Investors, previously skeptical about the financial benefits of sustainability, are also getting on board. A recent survey by PwC shows that 80% of investors considered sustainability when making investment decisions and this percentage is expected to rise in the next 3 years.4 Both consumers and investors are calling for increased transparency in reporting, and in the age of digital connectedness, this is separating greenwashers from authentic players. The turbulent mixing together of business + technology + sustainability creates a much less predictable future for companies. Gone are the days of static 5-year strategic plans and top-down orchestrated execution. Today nimble competitors are invading nearly every industry and taking on entrenched competitors with blinding speed. Companies that rely on old success formulas will be quickly outmaneuvered in this highly disruptive age. 2 IBM (2015). “Redefining Boundaries: Insights from the Global C-suite Study.” IBM Institute for Business Value. Available at www.ibm.com/services/c-suite/study/pdf/ibm_global_csuite_study-2015.pdf 3 2015 was a watershed year in this respect with the adoption of the U.N. Sustainable Development Goals, the publication of the Pope’s Encyclical, and the Paris climate agreement at COP 21. 4 PwC (2014). “Sustainability goes mainstream: Insights into investor views.” PwC Investor Resource Institute. Available at https://www.pwc.com/us/en/pwc-investor-resource-institute/publications/assets/pwc-sustainability- goes-mainstream-investor-views.pdf
  3. 3. Copyright © 2016 WholeWorks 3 II. Strategic Capabilities Companies hoping to stay competitive in this Age of Convergence will need to build two essential strategic capabilities: Organizational Agility and Material Sustainability. Organizational Agility According to McKinsey, “Agility is the ability of an organization to renew itself, adapt, change quickly, and succeed in a rapidly changing, ambiguous, turbulent environment.”5 Organizational agility explains why some firms like Fujifilm, Netflix, Apple, and Google have survived (or created!) industry disruptions, while other firms like Kodak, Blockbuster, Sony, and Motorola have not. The former set of companies anticipated future trends and quickly realigned themselves to seize new opportunities; the latter firms reacted defensively and relied too long on tried-and-true success formulas. Agility requires developing new collaborative partnerships, and adopting an experimental approach to exploring possible opportunities, all within an environment of deep uncertainty. David Teese has labeled the dynamic capabilities needed to read and shape the competitive environment as sensing, seizing, and transforming.6 Sensing refers to the assessment of technology opportunities and threats in relation to customer needs. Seizing refers to the mobilization of resources to capture value from opportunities. Transforming refers to execution: building agility into core processes and decision-making. Consider the example of Green Mountain Power, an electric utility in Vermont that has embraced the shift toward renewable energy and smart-grid distribution. Under the leadership of CEO Mary Powell, the company has transformed from a utility with hierarchical decision-making to a more entrepreneurial culture. By partnering with firms like Tesla and working closely with local communities, the utility has developed innovative “smart home” solutions that combine energy efficiency, solar power, local storage and smart controls. The combination reduces energy costs and improves service for customers. Moving towards a smart energy services model has required the organization to work outside of its comfort zone, take risks, and forge new partnerships. But it also diversifies GMP’s revenue stream and positions the utility to stay ahead of future disruptions as new grid technologies emerge. Agility blends speed with a stable foundation of “secondary” capabilities that provide organizational focus, flexibility and execution. These capabilities include the ability to fluidly form, manage, and dissolve cross-organizational teams as market conditions change; create governance structures that clarify how big and small decisions are to be made and delegate authority as far down the organization as possible; and build standardized processes in strategically relevant areas (e.g. supply chain, product development) that can be redeployed across different businesses. Clarity of purpose, a general vision for 5 W. Aghina, A. De Smet, M. Murarka and L. Collins (2015). “The keys to organizational agility,” McKinsey&Company, available at http://www.mckinsey.com/business-functions/organization/our-insights/the- keys-to-organizational-agility 6 D. Teese, M. Peteraf and S. Leih (2016). “Dynamic capabilities and organizational agility: Risk, uncertainty, and strategy in the innovation economy,” California Management Review 58 (4), 13-35.
  4. 4. Copyright © 2016 WholeWorks 4 the future that still allows flexibility, and a high-performance culture are also essential to building organizational agility.7 Material Sustainability Agility requires seeing business opportunities beyond industry boundaries. Sustainability requires taking an even broader view – to see business opportunities that arise by addressing critical social and environmental challenges. These opportunities are expanding in the Age of Convergence as sustainability increasingly drives consumer behavior. A 2015 Neilsen survey found that 73% of millennial shoppers were willing to pay more for sustainable brands; similar results were found for Generation Z.8 Boomers were also more willing to pay extra for sustainable products (51% compared to 44% in 2014). These growing expectations don’t just apply to companies with consumer-facing brands. In this age of big data and social media, these trends are driving unprecedented transparency and accountability for the behavior of upstream suppliers. Suppliers, in turn, are finding that sustainability is increasingly a differentiator in B2B sales. Perhaps the biggest awakening taking place in the business world is the realization that sustainability can drive profitability and shareholder return. Reducing material, energy, and water consumption saves costs. Finding ways to create product lifecycles with lower footprints enhances brand reputation, boosts revenue, and stimulates innovation. Mitigating climate change through greenhouse gas reductions reduces financial risk. The secret to creating financial value is to make sure that sustainability initiatives are integrated with the core business. Dow Chemical provides a textbook example. Since 1995, the company has created ambitious sustainability targets that closely align with its chemistry-based business model. The $2 billion that the company has invested in energy efficiency in its plants has produced $9 billion in savings. In 2015, Dow derived 25 percent ($12.4 billion) of its revenues from products that were “highly advantaged” by green chemistry, exceeding the 10 percent target the company set in 2005.9 The company has also partnered with the Nature Conservancy in utilizing ecosystem services (e.g. marshland for waste treatment), reducing the cost of capital investments in its chemical plants. All of these efforts are consistent with the company’s core mission “to passionately create innovation for our stakeholders at the intersection of chemistry, biology and physics.” Adaptable and sustainable leaders like Dow are achieving a competitive advantage by fundamentally rethinking how they design products, employ materials, develop assets, engage partners, and appeal to consumers. They are viewing sustainability as a lens for innovation, not just as an obligation or risk- mitigating strategy. New research by Harvard University and Calvert Investments shows how this approach produces significant financial returns. In the clearest study to date investigating the link between sustainability and shareholder return, researchers found that firms with the highest ratings in material Environmental, Social and Governance (ESG) issues significantly outperformed those with the 7 W. Aghina, A. De Smet, and K. Weerda (2015). “Agility: It rhymes with stability,” McKinsey&Company, available at http://www.mckinsey.com/business-functions/organization/our-insights/agility-it-rhymes-with-stability 8 http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a- shopping-priority.html 9 http://media-library.dow.com/WebContent/www-dow-com/Documents/Dow_2015_SustainabilityReport.pdf
  5. 5. Copyright © 2016 WholeWorks 5 lowest ratings in terms of profitability and stock performance.10 Interestingly, differences in performance on non-material ESG issues did not produce differences in financial returns. This is why materiality assessment is such an essential part of formulating a viable sustainability strategy. The bottom line is this: companies that choose to deny the relevance of sustainability to their business strategy will be outmaneuvered by their more alert and nimble competitors. Companies that are able to exploit the synergies between organizational agility and material sustainability will be best positioned to seize emerging opportunities to contribute social value while achieving a sustainable competitive advantage. III. New Leadership for the Age of Convergence The super-convergence of business + technology + sustainability provides unprecedented opportunities for innovation and growth and creating social value. It also presents a significant adaptive challenge for business leaders used to a stable, hierarchical, and tightly bounded world. The Age of Convergence requires a broader view and the ability to act in the face of uncertainty. The new competencies required to perform well in this environment will push previously successful managers outside of their comfort zones. Leadership Competencies Fortunately, the foundational competencies needed for organizational agility and material sustainability are remarkably similar. In combination with traditional leadership competencies such as communicativeness, emotional intelligence, drive/energy, and business acumen,11 the following competency areas will be critical for competing in today’s convergent environment.12 1. Business Ecosystems Thinking. Given the expanded scope that business leaders must now consider, the ability to detangle larger, more complex systems, recognize patterns, see connections, explore scenarios, anticipate possible outcomes, and avoid unintended consequences becomes even more critical. Leaders must be able to recognize the interconnections between their business and larger environmental and social systems. Business ecosystems thinking includes competencies such as systems thinking, strategic thinking, global mindset, industry knowledge, and technology savvy. 2. Collaboration. In the Age of Convergence, companies will continue to work closely with suppliers and customers, but they will also need to expand collaborative relationships beyond industry boundaries, and across sectors (government, private, social). New partnerships will need to be forged with cross- technology partners and with a broader group of stakeholders (e.g. NGO’s, governments, communities). Effective leaders will recognize the value of diverse perspectives in creating win-win solutions. 10 G. Serafeim, J. Huang, J. Linder, P. Faul and J. Streur (2016). “The financial and societal benefits of ESG integration: Focus on materiality.” Calvert Investments. Available at http://www.calvert.com/perspective/research/calvert-serafeim-series-report-materiality 11 B. Griffiths and E. Washington (2015). Competencies at work: Providing a common language for talent management. New York: Business Expert Press. 12 Recognizing the need to align competencies with the rapidly changing world, Organization Systems International (OSI) is updating its Polaris® competency model to reflect these new capabilities. These clusters were identified in collaboration with Steve Schein, founder of Leaders for Sustainability, and Bruce Griffiths, President of OSI.
  6. 6. Copyright © 2016 WholeWorks 6 Collaboration includes interpersonal competencies such collaborative mindset, assertiveness, conflict management, diplomacy, sensitivity/relationship building, and team player. 3. Leading Change. Closely connected with agility, the ability to lead organizational change is critical to staying ahead of competitors. Effective leaders can step back from daily work to challenge their assumptions, recognize emerging trends in the environment, envision new opportunities to leverage organizational capabilities in pursuit of innovation, and move forward with options despite ambiguity. Effective leaders determine which environmental and social trends are most material to the organization’s strategy. They craft experiments to test options for addressing those trends in innovative ways. Leading change includes competencies such as creativity, change agility, learning agility, risk- taking, vision, drive/energy, influence, and sustainability acumen. The latter competency, missing from most competency models, includes applying tools and frameworks to reveal opportunities for creating social and environmental benefits, as well as economic value. 4. Agile Execution. This cluster includes the competencies needed to turn strategic opportunities into tangible results. Business managers today must deal with an explosion of data and analytics, the increasing expectations of a diverse network of stakeholders, and the accelerating pace of innovation. In this age of increasing intelligence and interconnectedness, the ability of leaders across the organization to make good decisions and realign resources quickly in the face of uncertainty becomes critical. Important competencies in this cluster include problem solving and decision making, financial acumen, organization knowledge, project management, and team management. Exhibit 1. Leadership Competencies for the Age of Convergence.
  7. 7. Copyright © 2016 WholeWorks 7 Cultural Alignment In addition to skills and knowledge, behavior within organizations also depends on the culture of the organization: the shared basic assumptions that get reinforced socially as the correct way to do things. Culture is so powerful because it affects peoples’ predispositions to perceive, think, feel and behave in certain ways.13 In the heat of battle, it is the culture determines how managers respond to challenges much more so than written value statements. Studies also show that culture is a strong driver of financial performance.14 While there is no one prescription for the culture of a particular firm, there are common elements that support the strategic capabilities of agility and sustainability. For example the cultures of adaptable organizations emphasize innovation, risk-taking, fast decision-making and execution, willingness to experiment, personal initiative, and the ability to spot unique opportunities.15 They de-value behaviors such as “being careful, predictable, avoiding conflict, and making your numbers.”16 Adaptive cultures tend to be messy, frugal, nimble, and decentralized. They also tend to be more transparent and collaborative since information sharing is critical to agility. Cultures of sustainable organizations also share many of these qualities. In a forthcoming paper, Bill Throop and I have outlined the required culture shift for sustainability in terms of virtues (predispositions to behave, think, and fell in ways that produce better performance). We argue that a shift to sustainability requires a stronger emphasis on: a broader systems view, collaboration, adaptability, humility, and frugality.17 Companies well known for being sustainable echo similar themes. For example, Patagonia emphasizes core values such as “do no harm” (to the environment), quality (durability), responsibility to communities, profit (“without giving its achievement primacy”), proactive stances (internally and externally), and transparency and open communications.18 We see the core cultural elements of agility and sustainability to be fully compatible. Adaptive values such as willingness to experiment are critical to accelerating the shift to a circular economy. Sustainability values such as collaboration and a systems view are key to building new partnerships and achieving a competitive advantage. Transparency promotes information sharing, whether for engaging stakeholders, or cross-industry partnerships. The challenge that many organizations face today is realigning the values they follow (not just espouse) with the fast-evolving environment of super-convergence. Culture change takes time because it requires behaving in new ways that conflict with current beliefs – and doing so for long enough period that 13 E. H. Schein (1992). Organizational culture and leadership (2nd ed.). San Francisco: Jossey-Bass. 14 A. B. Boyce, L. R. G. Nieminen, M.A. Gillespie, A. M. Ryan and D. R. Denison (2015). “Which comes first, organizational culture or performance? A longitudinal study of causal priority with automobile dealerships.” J. Organiz. Behav. 36, 339-359. 15 J. A. Chatman, D. F. Caldwell, C. A. O’Reilly, and B. Doerr (2014). “Parsing organizational culture: How the norm for adaptability influences the relationship between culture consensus and financial performance in high- technology firms.” J. Organiz. Behav. 35, 785-808. 16 L. Holton (2014). “Charles O’Reilly: Finding a corporate culture that drives growth,” Insights by Stanford Business. Available at https://www.gsb.stanford.edu/insights/charles-oreilly-finding-corporate-culture-drives-growth . 17 W. Throop and M. Mayberry (2016). “Leadership for the Sustainability Transition,” forthcoming in Business and Society Review. 18 Y. Chouinard (2006). Let my people go surfing: The education of a reluctant business. New York: Penguin Books.
  8. 8. Copyright © 2016 WholeWorks 8 successes can be achieved, rewarded, and reinforced. Moving quickly to an agile culture is particularly challenging for cultures that are hierarchical and slow to act. A misaligned culture also makes it difficult to develop the new competencies needed to improve performance. For these reasons, it is essential that organizations seeking to become (or stay) competitive in today’s super-convergent environment find ways to accelerate both cultural change and competency development. IV. Using Simulations to Accelerate Change Simulations provide an essential tool for accelerating organizational learning and culture change. Full immersion simulations provide a “practice field” in a virtual environment where teams of managers can experiment collaborating together in creative and practical ways. This approach accelerates the cycle of experimentation, feedback, and reflection that is at the core of experiential learning.19 Full-immersion simulations: How they work In a full-immersion business simulation, participants assume roles in a fictional organization (based on a real business) and work together as a team to achieve challenging objectives. By combining computer simulation with behavioral elements, the experience brings together “hard” and “soft” skills on the practice field: leaders learn about how they impact each other as well as how the system responds to their decisions. The use of a fictional business (modeled after a business similar to their own) helps participants let go of their agendas, open their minds, and take more risks. Placing participants in roles different from their regular job can also help foster empathy for other disciplines and provide a new perspective about the business. Running the simulation over multiple days provides opportunities to “hit the cosmic pause button” and help participants receive feedback and reflect on their performance. It also allows for mental percolation to occur overnight, which often generates new insights. How simulations accelerate change Full-immersion simulations accelerate a deep level of learning and catalyze culture change in a number of ways: • Create a safe environment for practicing and experimenting. One of the biggest barriers to developing new competencies is the fear and anxiety of making mistakes.20 Well-managed simulations reduce this fear since “mistakes” in the virtual world don’t affect the real business. Learning from missteps becomes the new norm in a virtual world where aggressive experimentation is encouraged. • Accelerate the pace of practice. In the virtual business, where the system is simplified and time is accelerated, it becomes possible to make years’ worth of strategic business decisions in a 19 D. Kolb (1990). Experiential Learning: 20 E. Schein (1992). “How Can Organizations Learn Faster? The Challenge of Entering the Green Room.”
  9. 9. Copyright © 2016 WholeWorks 9 matter of days. This time-compression allows multiple rounds of strategic decision making in quick succession with immediate feedback about the consequences. • Create a line of sight to business performance. By bringing the entire business ecosystem into the same virtual “room,” simulations make the interconnections within the system more tangible and understandable. This helps leaders grasp how their real-life role-based decisions contribute to financial, social and environmental results. • Explore alternative scenarios and strategies. Simulations allow alternative futures to be explored by changing the competitive environment and introducing a range of challenges across teams. Within a given scenario, alternative strategies can also be quickly tested and compared across teams. • Build trust. Mixed teams that go through an intense multi-day experience together quickly develop bonds that enable them to collaborate in new ways. This helps build deeply trustful partnerships needed to overcome long-held biases between functions, disciplines, and sectors. • Catalyze cultural alignment. Full-immersion simulations allow participants to experience success by applying new cultural norms and behaving differently. The emotional memory of this virtual experience increases the likelihood in the real world that leaders will pause and reflect before reverting to old organizational habits. Exhibit 2. The causal chain linking simulation to sustainable competitive advantage. Integrating learning from a simulation with the business Leadership capabilities are strongly connected with financial performance, which helps to explain why companies are investing significant resources in leadership and talent development (estimated $40 billion annually). According to one recent study, so-called “talent magnets” – companies that rated
  10. 10. Copyright © 2016 WholeWorks 10 themselves highest on 20 leadership and talent management capabilities – grew revenues 2.2 times faster and profits 1.5 times faster than “talent laggards.”21 Talent development pays, but as these results indicate, not all programs are created equal. While some companies are leveraging talent development to create a competitive advantage, the majority are not. In terms of leadership development programs, reasons for programs failing to deliver results include: lack of executive involvement, not connecting programs to strategic context, decoupling learning from real work, underestimating the need to change mindsets and behavior, and failing to measure results.22 Based on research and our own experience over the past 20 years in developing simulation-based programs for Fortune 500 companies, we have identified a number of critical factors that determine the impact of leadership programs on the business. These include: • Executive participation. Leadership development cannot be outsourced by the C-suite. Executive leaders must stay involved in the design, delivery, and evaluation of leadership programs to ensure that they are closely integrated with the strategic priorities of the business. When executives play active roles as co-learners, teachers, role models, and facilitators, they send a powerful message to the organization that change is mandatory and experimentation and risk-taking are the new norms. • Focusing on key learning outcomes. Programs lacking a strategic focus usually attempt to address too many competencies and wind up impacting none. Connecting leadership development to strategic imperatives helps organizations boil down learning objectives to the critical few. • Customizing the simulation. Simulations have the greatest impact when participants can easily translate insights from the virtual world to the real world. At the same time, creating too literal a translation of the real world prevents the kind of playful experimentation that opens up new thinking. The trick is to find the right balance between realism, simplicity, and creative fiction. • Connecting with personal development. Each participant in a leadership program has unique learning needs. Helping participants identify learning objectives that tie to their ongoing personal development work (e.g. 360 feedback surveys) increases their engagement and personalizes their learning. • Follow-up with applied projects. To ensure that virtual learning is transferred back to the real world, effective organizations use follow-up projects to mobilize crosscutting teams and accelerate high-priority exploratory initiatives. These projects need to be sponsored by executives and rewarded for innovation and risk-taking, not just for success or failure. • Assess the impact on individuals and the organization. Effective organizations evaluate leadership programs at multiple levels, including individual behavior change and business results. Isolating the financial impact is always challenging, but it can be made easier by tying 21 V. Bhalla et al (2015). “The Global Leadership and Talent Index.” The Boston Consulting Group. Available at https://www.bcgperspectives.com/Images/The_Global_Leadership_and_Talent_Index_Mar_2015_tcm80- 184765.pdf 22 P. Gurdjian, T. Halbeisen, and K. Lane (2014). “Why leadership-development programs fail.” McKinsey&Company, available at http://www.mckinsey.com/global-themes/leadership/why-leadership- development-programs-fail
  11. 11. Copyright © 2016 WholeWorks 11 results to specific projects or comparing different parts of the organization (with and without leadership development). V. SCALE: The Sustainable Competitive Advantage Leadership Experience For nearly 20 years, WholeWorks has been developing full-immersion leadership practice fields for Fortune 500 companies such as Dow Corning, Nike, Wendy’s, and Starwood. Our custom simulations have helped thousands of mid- and senior-level leaders build a core set of competencies in business acumen, strategic thinking, financial acumen, cross-functional teamwork, and decision-making. While these capabilities are still essential, they are not sufficient to succeed in today’s shifting environment. Preparing leaders in the Age of Convergence calls for a more complex, challenging experience that incorporates a larger business ecosystem and includes diverse stakeholders as players. Accelerating leadership development also requires deploying learning experiences more rapidly across the organization, in months rather than years. For these reasons we have recently launched a new leadership simulation platform: SCALE (Sustainable Competitive Advantage Leadership Experience). Distinguishing features of SCALE simulations As with our previous award-winning simulations23 , our SCALE simulations are full-immersion experiences that combine behavioral simulation (role-playing) with computer simulation. While still building core leadership competencies (e.g. business acumen), SCALE simulations are designed to prepare leaders in the Age of Convergence by incorporating these advanced elements: • Expanded business eco-system. We’ve expanded the boundary of the systems model beyond the enterprise to include the natural environment and communities impacted by the business. Rather than treating environmental and social conditions as exogenous (independent) variables, the model includes feedback loops that link business decisions to larger system impacts. Participants develop systems thinking skills by experiencing the long-term impacts of their decisions on these systems and on their business. • Active stakeholder roles. In addition to functional manager roles, the simulation includes several roles for key stakeholders. These stakeholder roles are designed to encourage leaders to explore tri-sector (private, public, social) partnerships that advance sustainability initiatives. They are also used to build cross-industry partnerships that drive innovation. By interacting with outside stakeholders, leaders are pushed to challenge conventional business thinking. They also gain valuable experience collaborating with others that have worldviews different from their own. • Disruptive innovation. Most simulations today rely on product extensions or market expansions to build strategic thinking skills. SCALE simulations go further by challenging participants to transform their business model in a converging environment. We build industry disruption into the experience, requiring leaders to recognize early signs of emerging innovation opportunities. We also challenge them to experiment with crosscutting technologies, collaborate with partners 23 WholeWorks has participated on teams that have been awarded two ASTD (Now Association for Training and Development) Best in Practice Citations. These programs were developed for Dow Corning Corporation and Nike.
  12. 12. Copyright © 2016 WholeWorks 12 outside their industry, manage risk, and move forward with new business models despite uncertainty. • Authentic sustainability. In SCALE simulations, sustainability is treated in depth and integrated with the core business model. We present participants with a range of plausible initiatives, including material and energy efficiency, responsible supply chain partnerships, community investments, labor practices, and innovative products that incorporate closed-loop material cycles. Leaders must then decide which issues are most material to the business and to stakeholders and invest appropriately over time. In the process they gain experience applying analytical tools such as Life Cycle Assessment (LCA) and Sustainability-Return on Investment (SROI). • Integrated reporting. SCALE simulations use integrated reporting that blends financial/ operational data from the business with environmental and social metrics. The reports include a navigable set of dashboards that use visual presentation of data to help participants make sense of complex data and accelerate decision-making. The experience helps leaders learn how to incorporate non-financial data into core business decision-making. • SCALEability. SCALE simulations are cloud-based and can be rapidly deployed across the organization. Live multi-day workshops can be delivered as well as virtual or mixed-mode sessions spread over days or weeks. SCALE simulations can also be integrated with learning management systems to blend online content, simulation, facilitated discussions, and evaluations. WholeWorks specializes in bespoke leadership programs designed to meet each client’s strategic objectives. Our SCALE simulations can be fully customized to model the business ecosystem and stakeholder dynamics of any industry. Our network of collaborators24 also has the deep expertise in strategy, sustainability and leadership development needed to develop and deliver exceptional programs. 24 http://www.wholeworks.com/partners/
  13. 13. Copyright © 2016 WholeWorks 13 20 years of experience in 4 days: Exhibit 3. Typical Program Agenda for a full-Immersion Strategic Leadership Experience
  14. 14. Copyright © 2016 WholeWorks 14 VI. Conclusion The Age of Convergence offers unprecedented opportunities for businesses to meet customer needs in innovative ways and create value both for investors and for society. To compete in this turbulent environment, organizations will need to strengthen their capabilities in both agility and sustainability. This requires strong leadership across the organization, not just at the top. Developing the required competencies and supporting culture fast enough to stay ahead of potential disruptors will require a new approach to leadership development – one that promotes rapid experimentation and that can be scaled quickly across the organization. Full-immersion simulations provide a powerful tool for catalyzing change in this convergent era. WholeWorks’ newest generation of SCALE simulations are designed to accelerate leadership development and exercise the competencies needed to stay ahead in today’s shifting world. These include business eco-systems thinking, collaboration, leading change, and agile execution. Organizations that learn to build these capabilities faster than their competitors will be the ones that achieve a decisive and sustainable competitive advantage in today’s uncertain environment.

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