Engineering Leadership Development Program

J&J Engineering Leadership Development Program Management Development Simulation

AGENDA I. Introduction II. Draft: Learning Objectives III. Setting up the Simulation IV. Example: Team Structure & Roles V. General Simulation steps for each team VI. NEXT STEPS Appendix: Biographical Summary of the Author of the Simulation

I. Introduction Gold Simulation’s core business is the development of simulations to meet training and educational challenges necessary to achieve outstanding employee results. Business simulations are among the most effective learning experiences, driving real and enduring behavioral change. Dynamic, realistic experiences allow the participants to apply knowledge and learn from their mistakes before costing your company a fortune. What better way to learn management & leadership skills than being given the opportunity to run a company in a competitive environment.

It will be motivating, effective and fun!

II. Draft Learning Objectives: 1. Learn & apply management skills by being on a firm’s “board of directors” in a simulated marketplace & economy. 2. Understanding the “big picture” of managing a firm & how all functional areas must work together to deliver outstanding business results. 3. Learn the difficulty of making short and long term decisions in view of uncertainty and the importance of prudent risk taking. 4. Effectively using financial information to make key decisions for capital and expense spending to improve revenue & costs. 5. Enable the future leaders of J&J to: -Apply Leadership Skills -Build an effective team -Understand the Strategic Management Process -Apply negotiation skills -Improve planning & coordinating for success 6. Have fun competing against your peers and learn from your “mistakes”.

III. Setting up the Simulation Experience 1. Number of firms. Can have any number of JNJ managed firms competing only against each other or in a marketplace with computer managed firms as well (i.e. 10 JNJ managed firms, 15 computer managed firms for a total of 25 firms in the marketplace).

2. Number of JNJ people per firm. You can have any number from 1 or more. Typically the teams range from 3 to 5.

3. Number of decisions Can select up to 8 major decisions impacting demand, supply and costs for several functional areas including: -Marketing/Sales: -Customer Service: -Research & Dev: -Finance & Eng’g: -Operations: -Quality: -Human Resources:

Price, Advertising E-commerce improvements such as an on-line services, web marketing, electronic payment & shipping. Investment level Capital investment impacting capacity & efficiency Production level Process improvements impacting efficiency & quality Training investment

4. SET Overall objective for team competition -Maximize cumulative profits, Market Share, Capital Efficiency, other

III. Setting up the Simulation Experience - continued 4. External environment You can set the economy to make the game more complex or less complex such as: -Growing economy, Business Cycles, Unknown economy

5. Duration of the simulation game. Typically runs from 4 to 8 periods of “play” where each is considering three months in time but any number is possible. The decisions for each period can take as little as 15 minutes with minimal analysis to an hour per set of decisions. Options to reduce conference time requirements: 1. Have a few periods played by teams remotely in advance of the conference & leave the final one or two periods to play when they are at the conference. 2. Introduce the simulation at the conference, play 1 or 2 periods and the balance after the conference. 3. Have the entire simulation played before or after the conference.

6. Team Structure & Roles The roles and responsibilities can be combined to accommodate various team sizes from 2 to 8 members with anywhere from 4 to 8 decisions. Typical roles played may include: President & Board Members: -VP of Operations – VP of Finance – VP of Marketing/Sales -VP of R&D – VP of Quality – VP of Customer Service

IV. EXAMPLE : TEAM STRUCTURE AND ROLES 4 members per team with 8 decisions PRESIDENT 1. Chair board meetings & lead the management board. 2. Ensure development of company mission and strategic plans. 3. Ensures all decisions are made on time. 4. Spokesperson for the company and gives summary presentation of lessons learned at the final overall ELDP meeting on behalf of the team. 5. Responsible for Research & Development investment (since no VP R&D)

V.P. of FINANCE & Management Board . 1. Recommendation & achievement of financial objectives. 2. Assessment & impact of General Economy and Industry. 3. Evaluation and forecast of cash flow and profitability. 4. Support other team members with financial analysis 5. Recommend tactical “simulation decisions” for capital investment (plant size).

V.P. of OPERATIONS & Management Board 1. Recommendation and achievement of Operations Objectives. 2. Assessment of plant capacity utilization, productivity, and cost efficiency. 3. Recommends tactical “simulation decisions” for production level, process improvements/quality and training investments.

V.P. of MARKETING/SALES & Management Board 1. Recommendation and achievement of sales objectives. 2. Forecasting of sales both short and long term (1 to 3 years). 3. Evaluation of company and competitor pricing, advertising. 4. Recommends tactical decisions for price, advertising and e-commerce.

V. General Simulation Steps for Each Team 1. Evaluate internal & external environment. 2. Forecast market demand and supply. 3. Formulate strategic objectives 4. Develop short and long term strategies (short term is next 1-2 quarters and long term is next 2-3 years). 5. Enter simulation decisions on line. 6. Obtain results, and repeat steps 1-5. General Group Discussion: Can occur after each session or wait till the wrap up session indicated below.

Wrap Up Session– Lessons Learned Presentation by Each Team or Selected Teams *How they dealt with risk and uncertainty in decision making *Utilization & importance of financial analysis to make decisions. *How the key strategies and tactical decisions were negotiated. *Collaboration and teamwork issues *Impact of forecasts on company performance

VI. NEXT STEPS for

APPENDIX Biographical Summary of the Author of the Simulation Dr. Steven Gold, President of Gold Simulations is a professor of economics in the College of Business at the Rochester Institute of Technology, and department chair of Accounting and Finance. He has been active in the development of economic and business simulations for use in the classroom and in industry. He is the author of 4 computerized simulation games and has published over 24 referred journal articles and proceedings in the field of simulation and gaming. The first commercially available microeconomic simulation in the nation, MICROSIM, was published with Macmillan Publishing Company in 1984. His other published simulation games include: Decide-POM: Decision Exercises in Computer Instructor Designed Environments in Production and Operations Management (with McGraw-Hill); Astute Business Policy (with SHR Associates), and currently Beat The Market: An Interactive Microeconomic Game (with Gold Simulations, a company he founded). Dr. Gold was past President of the National Association of Business Simulations and Experiential Learning (ABSEL). He has presented his research abroad at the International Simulation and Gaming Association in Weimar, Germany, and as a lecturer at Scheffield Polytechnic Institute in England; and the Czech Republic.