January 2015Senior Leadership

Want Improved Performance? Theories Alone Won’t Get You There

improved performance

As Tim Aelen, director of relationship and asset management (SVP) at ABN AMRO Bank in The Netherlands, prepared to move from functional to general management, he knew he needed broader skills to excel in his new role. After considering five executive education options, he chose Wharton’s Executive Development Program, and it was, he says, a good decision.

“The Executive Development Program [EDP] was the only one that had ‘double-loop learning.’ You first get the theory in the classroom, and then you learn it by practicing in a simulation. You get to put the content into action, and it forces you to use the information you just received. In my opinion, this is one of the best methods for really internalizing all of the information you get. Normally you only remember about 4 to 5 percent of what you learn. In EDP that number is significantly higher.”

Laura Harrison Ward, senior managing director and portfolio manager at First Republic Securities Company, agrees. “I loved the balance between lectures and applying what you learned in the simulation, which was really well done. It didn’t feel like a game, and we all took it very seriously. My team had some really great discussions about our group dynamics and were able to make changes to our process that made us more effective.”

For Aelen and Ward, the combination of theory and practice was a powerful one that offered lessons that don’t come from classroom learning alone. During the simulation, small teams run their own “companies,” doing business and even merging with or acquiring each other. Throughout the process, observers take notes on both individual and team performance. Daily debriefings offer participating executives a chance to reflect on where their strengths lie and how to improve performance.

Aelen notes, “The simulation closely followed the content we got in the classroom. For instance, after a session on mergers and acquisitions, the simulation model allowed us to take over other teams. To know for sure if a takeover or merger would add value to your company, you really had to prepare. I went over my notes carefully, and so did the rest of the team. What did we learn? What value could be added through a merger or acquisition? We were able to build an Excel model to look at what would happen if we took over another team.”

“The ratios you use to decide whether to acquire another company are the same ones you use in real life,” he continues. “For me, that was really helpful because from an asset-based lending perspective, we have to judge to what extent the M&A activities of our clients impact our relation with that client. My work will be easier because I have gone through the whole process in the simulation. It’s less complicated to do something in real life after you have practiced it, as opposed to book learning or theory.”

EDP helped Ward gain insight into issues she brought with her to the program. “I knew before I went to EDP that I needed to listen to people better and give them a chance to talk. It was good to see how that played out in the simulation. And in the classroom, I got an important takeaway about communication. I need to be sure I am presenting my ideas in a way that will resonate with who I am presenting them to. That takes real attention — you have to understand the kind of language that they speak.”

Those takeaways are even more valuable when you have had the chance to try them out. Aelen recalls that his team’s observer suggested some new behaviors, which he and his team members practiced. “This is how you make changes,” he says. “If you learn and don’t practice, you go back to work and when the going gets tough, you revert to the old behavior. But if you have a strong memory of doing something differently, and it worked for you, you are going to keep doing it.”

What are some of those new, more effective behaviors? For Aelen they include relying more on the skills of those on his team and, on an interpersonal level, preparing better for negotiations — two changes that can have a significant impact both strategically and financially. “In the simulation, our company had a long-term contract with another one. We could see they were not happy with it, but they had no way out. We approached them and said, ‘Let’s talk about how we can help you.’ It was something we learned in the negotiation workshop. We eventually sold them a more expensive product that they could use. Asking them what they wanted eventually made us a winning team. That is not something I am going to forget.”