Leadership development has long been heavily shaped by academic theories, guru-led methodologies and philosophical ideas, ultimately delivered in corporate speak rather than plain language. Thus, leaders are often on their own to translate what they are “supposed” to do into new behaviors and mindsets. The lack of connection to what’s actually needed to lead an organization is why so many leadership development tools, programs and resources languish unused in corporate learning libraries.
What’s missing from many leadership development efforts is the opportunity to practice in new roles, test drive new ways of working, and problem solve with peers and teams on how to grow the business, manage clients, inspire employees and steer through turmoil more effectively. But there is a game-changing way to make leadership development real and valuable — through the use of business simulations.
Take the example highlighted in a 2023 study of KPMG employees. Harvard Business School researchers set out to determine if running KPMG’s client-facing employees through simulation-based training sessions would improve individual and team performance. After 29 months, the data indicated upticks in improvement in several key areas, such as number of clients served and fees collected. However, the outcomes revealed an interesting anomaly: When leaders participated in the simulated experiences, overall performance rates leapt. For instance, offices with high leader involvement collected 19% more fees and served 7% more clients than offices without leader participation.
How Simulations Can Make Leadership Development Real
Simulations model complex realities and can be designed to focus on the specific moments, scenarios, and challenges that leaders are likely to face as they execute their organizations’ strategies. Leaders have the opportunity to pull levers, test decisions, see what an action could lead to, and compare alternatives. They can face a challenge in a low-risk way, not live as the problem is happening. A mistake in a simulation is a chance to learn; it doesn’t hurt the company or taint the leader’s reputation.
Simulations can also institutionalize the way leaders do things within the corporate culture. Too often, culture-based expectations get lost in meaningless bureaucratic language instead of taking hold as concrete approaches that guide business decisions. Take the notion of “courage,” for example. If you are told that, as a leader, you need to be courageous, it’s not obvious what this looks or feels like. Using simulations to make this visible, you can model what courageous decisions might look like in the specific context of the company — its industry, strategy and circumstances. You can test whether you’re taking too much risk or playing it too safe or whether you need to think bigger when it comes to investments or cut more when it comes to efficiencies. These tests help make courage clearer as a leadership strategy.
Simulations can assist leaders in becoming more connected with their teams. When leaders role-play alongside their people, they foster collaboration by coming together to figure out how to change and grow in a safe environment. As they stretch their mental muscles, they work together in a way they’ve never worked before. It’s an intervention that strengthens the sense of community and brings clarity around what high performance looks and feels like. That’s invigorating and exciting — both qualities that could help mitigate the low worker engagement rates still present across industries.
Leveraging Simulations for Transformative Leadership Development
A core objective of the leadership development function is to institutionalize the company’s set of leadership expectations and ensure they are in service of its unique strategy and culture. Over time, this will create the best leaders in the industry, because the best leaders will create the best returns and the most engaged employees. There is no better way to crystallize and get leaders to practice what great leadership looks like at your company than through simulations.
With so many upsides, simulations can become key differentiators for organizations that want to source, grow and retain the highest-performing leaders. Yet, you may be unsure how to make the most of simulations. The following recommendations can help you transform your organization’s leadership acumen and your talent function’s impact on the business.
- Embrace the power of a future-forward approach to learning.
Traditional leadership development training tends to involve a look backward at skills and performance and what is needed to change them. Simulations shift the focus to what people need to do next and how to run the company of the future. They help people see what the future would hold if leaders did “this” or “that.”
For instance, with simulations, your leaders can start thinking about the 2030 strategy today and prepare to roll out several possible scenarios. Understanding the options, opportunities, and possible moves of the future gives leaders more confidence to make difficult decisions and take calculated risks because they understand the outcome probabilities of each choice. And you can more clearly identify development gaps that emerge in the course of practice, well ahead of when leaders need to move into their new roles, ramping up the value of the development time.
- Experiment your way to leadership simulations.
Some of the world’s best companies use simulations for individual contributors all the way up to their executive teams. At the same time, it’s not necessarily a common approach for leadership training across the board. A great way to get started is to simply try it somewhere in the organization. You will find that you create pull demand as the power and results speak for themselves with the participating leaders.
Start with an area of the business with a big challenge or a willingness to experiment. Have your leadership team deploy a simulation as they move to update the strategy. Or bring together your senior sales leaders trying to grow their team’s consultative selling skills as your clients’ needs change. You will find that it will start to shift your leadership development principles, which will, in turn, show the organization the value of a simulation approach to building business acumen.
- Measure the results.
As the Harvard Business School research shows, the best way to know if your simulations are improving leadership performance is to measure the outcomes. There are a number of factors you can track. One is increased or improved time to productivity for new hires or newly promoted employees. Another is speed to behavior change, such as improved decision-making by the team. Specific improvements in culture or employee engagement surveys offer a useful lens, as do retention rates of top performers. Finally, consider company- or initiative-specific financial metrics tied to the new ways of working to show the results.
The data and insights provided by the Harvard researchers advocate for the integration of simulations into leadership development programs, highlighting their potential to dramatically enhance organizational performance and leader engagement. By adopting a forward-thinking approach that emphasizes practical, scenario-based learning, organizations can foster a culture of innovation and adaptability among their leaders.
Ultimately, the commitment to adopting and measuring the impact of simulations can serve as a cornerstone for developing resilient, proactive leaders who are well-prepared to navigate the complexities of tomorrow’s business environment.
