Cultural differences can undermine M&A, alliances, or entry into foreign markets. As such, it may be important to show students how difficult it is to comprehend and coordinate with a different culture. The BaFa BaFa exercise accomplishes this beautifully. This exercise was originally developed for the U.S. Navy to train personnel on how to interact when being exposed to new cultures (see the extended history in this Simulation & Gaming article). The web site describes it as useful in diversity training. That’s true but it is also useful for strategy courses where cultural differences are relevant. The exercise requires about 2 – 3 hours to run so it is more useful for evening or executive courses where you have larger blocks of time. Here is an overview of how the exercise unfolds:
Separate the class into two groups that will be trained in the two cultures (you will need two classrooms and assistance in bringing both cultures up to speed).
- The Alpha culture is hierarchical, paternalistic, and fun-loving but it also has strict rules for social interactions (violators of social rules will be ostracized)
- The Beta culture is transaction- and merit- based with little hierarchy. There are rules to a trading game they play that include a special language (BaFa BaFa).
- Once the two cultures are “trained,” several waves of emissaries are sent between them to try and understand how to interact in the other culture. Each team of emissaries tries to prepare the next wave so they can interact more effectively.
Debrief. After 3-4 waves of emissaries, the two sides debrief separately at first to try and figure out the other culture. Then they come together and share their experiences around the following points:
- Discussion of the cultures. It is hard to learn the new culture when there is a different language and/or one is continually ostracized. The debrief focuses first on the nature of the two cultures and how they felt when trying to visit the other culture.
- Lessons for M&A. Merging cultures is often a critical part of realizing value in M&A. The discussion then turns to practical implications for managing post acquisition integration. An understanding of these issues may lead one to revise the timing of synergies in one’s financial models. This, in turn, may affect the recommended bid.
- Lessons for Alliances. Alliances are also prone to cultural differences especially if they require close coordination such as co-production or co-development. Again, what are the implications for seeking alliance partners and negotiating agreements?
- Lessons for market entry. When entering a new market, firms must establish which of their existing routines can be transferred and which must be altered or dropped. Furthermore, it may help to explain why firms often enter markets with alliances as opposed to wholly owned subsidiaries.
The kit to run the exercise can be purchased for $400 — not cheap but perhaps worth it based on the usefulness in exec ed and executive MBA courses.
Contributed by Russ Coff