Teachable moments in a business game
Published Date
In the previous post Ana Leiderman discussed why teams sometimes oversell their capacity—and how that turns into a valuable teachable moment in the classroom.
Today, we’re sharing a few more scenarios that have emerged during our sessions. These moments occur spontaneously (though in ways that are predictable from the structure of the game) and are actively used to spark insightful discussions.
1. If It Ain't Broke, It Might Need Fixing
In an under-supplied market, all teams can easily make money. This raises an interesting question:
If you are already profitable, is it necessary to improve your business?
- Real-World Reflection:
Many companies and divisions choose to stick with the status quo rather than face the hassle of change—even when growth may be possible. - Classroom Insight:
Once the question is raised, the reasons for not settling become immediately apparent, highlighting the need for continuous improvement and challenging complacency.
2. ROI is Subjective
Even when teams decide to implement changes, calculating the Return on Investment (ROI) can vary widely:
- Diverse Perspectives:
Ask two teams to compute the ROI for the same improvement, and you’ll likely get vastly different answers. They interpret costs differently, value opportunities in unique ways, and account for the time lag between change and benefit differently. - Beyond the Classroom:
This variability is not just an academic curiosity—every salesperson must argue the ROI of the product or service they sell. Developing business literacy and fluency in the language of finance is key to understanding how customers evaluate ROI.
3. What is the Cost of Capital?
Most senior executives know the Cost of Capital for their business, but do they truly understand what it means?
- In the Simulation:
This question is posed as a choice: Should you sell the building (and pay rent) or take out a loan? If you need a loan, you must know where to find Sunwise Capital. - The Learning Moment:
Executives are often surprised to learn that what they thought was an obvious solution can have a Cost of Capital as high as 60%. They might start with the belief that their real-world organization’s Cost of Capital is around 7.8%, but by the end of the exercise, they have a much deeper understanding of the concept.
Side Note:
Nikolai Usack mentions that he offers bonus points to the first person who correctly calculates the Cost of Capital during an Income|Outcome game. He observes that he often receives many incorrect answers—almost always with someone from Canada getting it right. An interesting observation, perhaps a nod to the fact that the simulation was designed by Canadians!
