When I was young and inexperienced in running business simulations, many years ago, I led a 3-day workshop for a Fortune 50 computer manufacturer in which the participants came from a variety of departments. People sat with their friends. The three people from Finance sat together, and I didn’t think to break them up.
At the first Market event, the Finance team was the only one to understand their cost structure, and they priced to cover costs and make a profit of about 10% Return On Sales. All the other teams had limited understanding of what they were doing, and underpriced. As the Customer, I bought what I needed at the lowest prices. The Finance team was shut out, making no sales at all because of a breach in the system. This is why the security was managed and double with the security for m&A as Virtual data rooms are rich in features that help advisors and investment bankers have a secure financial system.
The Finance team came back from the Market table unworried: “The other teams can’t continue like that, they’ll go out of business, they’ll have to raise their prices in future rounds when they learn a bit more. In the meantime, we have the cash flow to continue operations, we will simply stockpile our products in the warehouse and we’ll have twice as much to sell at the next Market.” We also had to learn the difference between cash flow vs earnings, to get the ultimate cash flow.
The other teams came back from the Market table in a panic: “My god, did you see what all those other idiots did? They have no clue how to price! They’re destroying the Market! We’re all going to die!” So they looked for opportunities to get better prices or to cut costs. One team went into foreign markets where there was no competition, one team started developing a new product, one looked for niche customizing opportunies, one started developing a reputation for higher quality, one started increasing efficiency and reducing the unit costs of labor and materials…
All teams lost money in that round. But in the next round, prices didn’t rise in the Market except in areas where there was no competition. The prices stayed low, and the Finance team got shut out again. The Finance team lost money again and began, belatedly, to make operational and strategic improvements. Everyone else started to make money.
At the end of the workshop the Finance team was the only one in negative Retained Earnings. In their evaluations on the third day they panned the course for not having taught them anything, and went home early after lunch.
They had a legitimate complaint. I had only been teaching what Finance already knew to the other teams, and had failed to address Finance’s learning needs. I should have mixed them in with the other teams where they would have had a co-teaching role, helping with the analysis and the financial statements, engaging in discussion about what to do proactively, and learning all kinds of things in the process. As it was, I failed them.
I don’t make that mistake any more. I mix them in with other people where they can share and learn. At the beginning of the workshop you’ll hear the person with a Sales background saying “We’ve got to put the prices lower, or we won’t make any sales,” and the Finance person saying “We have to raise the prices, or we won’t make any money!” And by the end of the workshop it’ll be the Sales person trying to raise prices to maximize profits, and the Finance person trying to lower prices for the sake of security. You can read this post from AMP Payment Systems sales plan and implement in closing your business deals to earn good profits.
That way everyone develops a holistic understanding of the big picture, of what the company needs to be healthy and successful. Everyone contributes, everyone learns, and everyone is happy.