Sunday, July 29, 2012

Loading the dice in the game of business

Last week, together with around 100 others I rolled the dice as part of Leverage: The Game of Business, a facilitated business fundamentals board game.  Yes, a board game.  I'd never heard of this product before, and it struck me as a novel way of educating small business operators about key concepts like conversion, average sales value, turnover and margin as well as expanding thinking about what strategies are possible.

Game time
Tables of 5-6 people sat around a board game that resembled many others in that we moved our pieces in a clockwise direction according to our roll of the dice.  When we passed the square called "Profit" we collected money from the bank, and our objective was to invest in business strategies that would increase this amount.  Our other objective was to invest in business leverage strategies that enabled the business to function without our involvement, such as developing a recruitment strategy to ensure attraction and retention of talent and securing a robust and accurate bank transfer system to optimise cash flow.

Yours to own
Each player was randomly given a business to run, for instance mine was a menswear retailer, another was an engineering firm.  This is a great idea because it taps into what is know as the "endowment effect" - in other words, we try harder if we feel we are invested in something.  Sure, they could make this more effective by getting each player to write a slogan or choose their business rather than having it assigned, but it is much better than not characterising what you were playing for.

By the way, if you've ever been frustrated that no one, staff included, is as passionate about your business as you are, get over it.  You can't expect others to feel like you do unless they have been deeply involved in developing the character of the business and feel they have skin in the game.

Distorted reality

The game's chief objective is to educate business people about key business concepts, getting used to the language and mathematics involved, so my next point might be a little harsh.  A shortcoming of the game is that is predicated in the positive, so every strategy - from an advertising catalogue to product line extension - resulted in either an increase (1-10% gains), or at worst, status quo.  You couldn't fail.  

This is far removed from the reality faced by every business owner, where it’s our fear of what we stand to lose that holds us back.  Where does this fear come from? Uncertainty about what our customers, our suppliers and our staff will do in response to our decisions. Yes, I can run a campaign to existing customers to grow sales but what if I stuff it up and annoy them so much they churn?  What if I raise my prices and my customers turn to my cheaper competitor?  How do I find the time to document every system and process when my major concern is keeping the lights on?

Behavioural strategy to load the dice
Running a business is undeniably challenging, and like the board game illustrated, you have to keep dozens of plates spinning in the air.  The good news is that by using behavioural science in your business, you can reduce your uncertainty about what people will do in response to your choice, increasing your odds of success no matter what you do. In a way, you can make your life more like the game's distorted reality.  Every choice you make - an ad campaign, recruitment strategy, customer service policy, pricing decision - can be tweaked in your favour simply by using behavioural economics. Time you loaded the dice in your favour?

More information about Leverage: The Game of Business is available

PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

No comments:

Post a Comment