Entrepreneurs need to make decisions fast, in an unknown environment, without knowing all the answers. This is a group exercise simulating a board meeting where students are forced to make decisions together. If the board doesn’t give clear guidelines, what will the management do?
By Øystein Widding, Professor, NTNU
About the exercise
This is a role-play exercise where students have to make decisions fast under uncertainty, on cases that could make or break a company. The students perform two complete board meetings based on real-world board matters, and need to come to an agreement. The exercise, along with reflective discussions in the class, help students understand good board work as well as the importance of leadership and decision-making in a company. Students reflect on how to acquire or keep resources within the company, make strategic choices to guide the management and doing it in an effective way. The amount of background information they get is limited and there are no correct answers, only their own strategic rationale.
Will the students understand that one of them is a mole instructed by the educator to create division and tension within the group? This helps emulating potential difficulties in a real-world board setting. Luckily, they will get to do a second board meeting on Lecture day 2, to improve upon the mistakes they did on the first Lecture day.
This exercise fits multidisciplinary groups of students at Master level or above, aiming at some sort of entrepreneurial or leadership career. The exercise would need 1-2 days for students to prepare, and students will benefit from previous knowledge within strategic management and some understanding of the role of a company board. However, the board meeting agenda can be adapted to fit the students’ previous experience.
The exercise has previously been used in MBA courses within Board Work and Board Management, with students from different backgrounds and disciplines.
- How to use the Board as a resource for the company
- Behaviour, roles and responsibilities in a Board meeting
- Leadership and decision-making
- Preparation of Board documents
- Mapping a company’s competence and resources
- Interaction with other professionals in a team setting
- Handling and negotiating different personalities and professional opinions
Materials list and physical space
Real board meeting agenda and board documents describing relevant background information (re-written to hide the identity of the company).
The agenda and background papers should rather include too many than too few tough matters to discuss. That means that it could be an idea to combine several real meeting agendas into a set of both difficult and easier matters.
Examples of relevant board matters for this exercise could be:
Defining ethical guidelines within the company, acquisition of another company, an offer to acquire the company, workplace accident or injury, poor economical situation, a failed innovation project within the company where further investments are needed.
Optimally, each group would have their separate “board room” where they can discuss without other groups present. Alternatively a space with large distances or adequate noise isolation between groups.
In addition to the educator, it could be beneficial to have facilitators / observers in each boardroom or going between the boardrooms, to note interesting situations and answer specific questions. These facilitators should have talked through the boardroom cases with the educator before the exercise starts.
Pre-work required by students
- Students are split into groups in advance (groups of around five students is recommended), and are given the board meeting agenda and background papers for the board meeting. Before the exercise, they need to prepare by reading through and noting their comments and opinions based on the agenda and background papers. This also includes finding more info on subjects that will be covered – for instance investigate laws or regulations for legal or workplace issues, information on relevant acquisitions or how they could impact the company, etc.
- One person in each group will be chosen by the educator as a “mole” – the role of this person will be to delay cases and create tension within the group
- Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
- Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of management Review, 26(2), 243-263.
- Forbes, D. (2005). The effects of strategic decision making on entrepreneurial self–efficacy. Entrepreneurship theory and practice, 29:5, 599-626
Step 1: Establish and elect the board members (10 minutes):
Before the board meeting begins, the group needs to establish the different roles. Examples of roles could be:
- Employee representative
- General Manager
- External (non-owner) representative
- Representatives of different investor groups with different ambitions for the company
Remember that the mole is unknown to the rest of the group, so that person could assume any of these roles, and possibly prefer some roles to create more tension within the group.
Step 2: Board meeting #1 (120 minutes):
Students go through the board meeting together. Tell the groups to conclude on all board cases, and that one person will have to write the minutes from the board.
For the educator (and any facilitators), it would be smart to walk between the “board rooms”, for two purposes;
- Pick up on any relevant discussions in the groups that could illustrate the plenary wrap-up – i.e. discussions where the members don’t quite conclude, there is big differences between board members’ opinions, etc.
- Sort out any misunderstandings related to their roles or “road blocks” from the case – where the board feel like they would want more information. (You can just say that this is the information the board gets, and they have to decide)
Step 3: Plenary reflection on the exercise (60 minutes):
First, ask the groups what conclusive decisions they have made during the board meeting, omitting or overlooking any good discussions they have had. What have they written in their board minutes? Often, the students will not have written down and concluded on more than a few cases, although they might have had fruitful discussions.
Then, dig into the reasons why the groups haven’t decided on how to solve the board cases.
- Why was it hard to come to decisive conclusions?
- Was there too little information?
- Were there large differences in opinions within the board?
- Do the decisions from the board help the company move forward?
- What would you do next if you worked in the management, having read the minutes from the board? Were they decisive and easy to follow? Did they point in a clear direction on behalf of the owners?
End of the session, day 1:
Give the students a new board case – with a new (even more challenging) meeting agenda and background information, for a new board meeting. Tell them to prepare for a new board meeting on day 2.
Step 4: Board meeting #2 (120 minutes):
This could be done with the same groups as on day 1, or new groups. If the groups are the same, tell the students to switch roles compared to their last board meeting.
Step 5: Optional wrap-up (15-30 minutes):
(This could also be done as part of written reflective assignments)
- Were the conclusions from the board more actionable? Why/why not?
- Did they employ new strategies to discuss and progress through the agenda to get better results? What did the students do differently today?
Did the students prepare for board meeting 2 in a different way than for board meeting 1? How? Did that improve their ability to conclude as a group? Why/why not?
Students will feel the pressure of making good decisions in a short space of time, having little personal experience in the company or industry. They experience the risk of not making good decisions, and they might see the necessity of making them to avoid ambiguity. In other words, they have to balance the need for thorough discussions and analysis, with the need for progression. The exercise also shows the importance of preparing good background documents for decisions – for the board and other decision-making groups in the company.
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