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Organizational leadership can draw on 3 Strategic Thinking Games to master Business Strategy and apply in varied scenarios and organizational structures. The Strategic Thinking Games provide Decision Making models for senior executives to choose from and use as per the situation.
The Strategic Thinking Games are based on mathematics and statistics, particularly Probability Theory, and exhaustive research into the Business Strategy realm. Probability Theory is actually a branch of mathematics that deals with analysis of random phenomena. The basic element of Probability Theory is an experiment that can be at least hypothetically repeated under identical conditions, but may lead to different outcomes on different trials.
Each of the Strategic Thinking Games warrants employing a different mindset and decision-making approach to confront the challenges presented by a particular problem. Executives can apply these Strategic Thinking Models to control their future:
- Planning as Positioning
- Organization Learning
- Constructive Transformation
Let’s discuss these Strategic Thinking Models in detail.
Planning as Positioning
The 1st Strategy game allows the players to make 40 blind draws from a pot holding 25 black and 75 red balls. It costs $10 per draw—which has to be paid beforehand—and it allows the players the opportunity to win $20 on drawing a red ball but naught on drawing a black ball. The game imitates a scenario where managers make informed bets about the future based on data and insights into the level of uncertainty encountered.
The Planning as Positioning Model enables the executives to learn about their industry and competition, gauge ambiguities and uncertainties, and select markets that have the potential to generate a positive Return on Investment (ROI).
A classic example of a company operating on the Planning & Positioning Model was the International Telephone and Telegraph Corporation (ITT). For 17 years, the company was led by Harold Geneen (from 1960 to 1977). Harold Geneen was unrestricted by any company mission. He expanded in multiple industries, acquired around 350 enterprises from varied industries, including auto parts, cosmetics, hospitality, insurance, and technology. As a formal accountant, Harold considered facts as indisputable, final, and a foundation for making strategic decisions. He would travel to far-flung regions to meet his business unit managers, who were free to make their own strategic decisions but were responsible for their unit’s performance and objectives’ achievement.
Organization Learning
The 2nd Strategy game allows the players to blind draw from a pot containing an unknown mix of red and black balls. This time it costs $5 per draw. Players have to bet on either color before each draw. They can draw up to 50 times, or stop whenever they want, and win $20 if they draw the right ball. This game imitates a scenario for training managers to dynamically respond to upcoming events with unpredictable degree of uncertainty.
Through the pot filled with balls experiment, it was revealed that when people are given complicated choices, they behave in manners conflicting with their beliefs. In his famous Ellsberg Paradox, Ellsberg hypothesized that people make illogical preferences in order to avoid ambiguity. The Organizational Learning Model underlines that in a world full of uncertainties instead of spending too much time predicting the future, planning and positioning, organizations should devise and implement an evolving strategy, take one step at a time, search for viable patterns, and then adjust the course based on results.
An example of successful implementation of the 2nd Strategic Thinking Model is Corning Inc. that embraced Organizational Learning to develop a healthy product pipeline. The company developed Pyrex, TV tubes…..
Interested in learning more about the 3 Strategic Thinking Games? You can download an editable PowerPoint on Strategic Thinking Games here on the Flevy documents marketplace.
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– Roderick Cameron, Founding Partner at SGFE Ltd
The concept of Return on Investment (ROI) was formed as part of the concept of Value Creation. The origins of ROI were in the Manufacturing sector, where it’s simple to measure time and output. Next, to adopt the concept was the Banking industry where intense competition necessitated Innovation Management and with that the need to calculate ROI. ROI calculation is now a common feature in every industry and business function.
Employee Training is part and parcel of workforce development. It necessitates spending a lot of effort and resources. Deliberating if the Training Program is going to be worth all the costs is a valid concern.
Return on Training Investment (ROTI) is the comparison between financial benefits obtained from a training program and the total cost of running that training program. The objective of ROTI analysis is to see whether the benefits outweigh the costs i.e., to establish if the investment was worthwhile.
ROTI calculation and analysis is significant when:
- Investment in a training program is viewed as a substantial outlay.
- Attainment of explicit strategic or operational objectives is associated with the training program.
- Financial benefits and their amount from the training program is ambiguous.
ROTI can be calculated dependably so long as:
- Measurement data on changes in business performance, pertinent to training, is reliable or can be rationally estimated by those who matter.
- Financial values can be assigned to the applicable performance measures.
- Cost related to developing, delivering, and handling the training program can be classified.
ROTI calculation involves selecting performance measures, gathering data on those measures as well as data on costs—both direct and indirect—related to training, and lastly calculating the Return On Training Investments.
Key steps in the ROTI calculation are:
- Choose the performance measures to use.
- Gather data on changes.
- Gather data on costs.
- Calculate ROTI.
There are 3 types of calculations that are relevant in ROTI analysis.
- ROTI as a percentage
- Benefit to Cost Ratio (BCR)
- Payback Period
Let us delve a little deeper into the calculation methods.
1. ROTI as a percentage
This calculation shows Net Training Benefits as a percentage of Training Cost. An outcome of 100% or more denotes that the Program has a Net Benefit after accounting for all the costs connected with running the program.
2. Benefit : Cost Ratio (BCR)
This ratio divides Total Training Benefits by Total Training Costs. When BCR is greater than 1, the benefits exceed the costs and the program is judged a success. When BCR is less than 1, the costs surpass the benefits and signify that enhancements or alterations are needed to warrant the continuation of the program.
3. Payback Period
This calculation exhibits the time in which the Training Investment will be paid back i.e., when the costs equal the benefits. The calculation is usually done in terms of months.
Monthly Training Benefits are calculated by dividing Total Training Benefits over 12 months.
It is pertinent to note that although ROTI analysis is important in evaluating a training program, merely a ROTI calculation will not typically be adequate to make the business case for a Training Program or influence top management to act. Sometimes we have to consider non-monetary benefits of training, such as a change in attitude. When monetary and non-monetary benefits are combined, these supplement Performance Management resulting in benefits such as reduced absenteeism, lower turnover rates, and more promotions from within.
Interested in learning more about Return on Training Investment? You can download an editable PowerPoint on Return On Training Investment (ROTI) here on the Flevy documents marketplace.
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The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.
This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization’s Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage.
This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.
Learn about our Human Resource Management (HRM) Best Practice Frameworks here.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
