Business Simulations 101

Article by Scott Thompson, last updated April 2022

Introduction to Business Simulations for Learning

In this article I want to focus on Simulations which are used for Management and Leadership Development. My focus on management and leadership also excludes very useful simulations which are used to develop general or specialised practitioner skills such as customer service or servicing a computer printer.

I also must exclude other types of valuable (and sometimes life-saving) simulations such as those used for analytics, medical skills development or other operational skills (which tend to require hyper-realistic simulation models).

If you are interested in these types of simulations, you should explore the excellent work of places like “The Centre for Medical Simulation”.

Rationale for using Business Simulation for Learning

There are 4 main reasons why Business Simulations are chosen for learning:

  1. Provide a Safe and Efficient Learning Environment

    "Let's take flight simulation as an example. If you're trying to train a pilot, you can simulate almost the whole course. You don't have to get in an airplane until late in the process." - Roy Romer

    Business Simulation owes a huge debt to the techniques pioneered in aviation flight simulation (generally also hyper-realistic). In commercial aviation flight simulation is used extensively in 3 main areas – Skills Training, Emergency Procedures and Type Conversation and the 3 main benefits are safety, costs and environmental impact. In my white paper “What Business Simulation designers can learn from Aviation Flight Simulation” I explore how these applications and benefits also apply perfectly to the use of business simulations for learning.

  2. Combines Experiential and Social Learning

    Business simulations are great tools for learning by doing and gaining insight by making mistakes. This is classic experiential learning. Team-based business simulations and facilitated simulations add the extra dimension of being able to share those learning experiences with others. Jay Cross in his excellent book, “Informal Learning: Rediscovering the Natural Pathways That Inspire Innovation and Performance”, establishes that up to 90% of the information and skills we need to do our jobs is learned this way rather than formally, using what he refers to as Informal or Social Learning.

  3. Exploits Gamification Techniques to make learning more engaging

    Gamification is defined as the application of gaming techniques in non-gaming applications. Thoughtfully adding gaming elements to business simulations (such as leader boards, penalties, rewards and the unexpected), can significantly enhance engagement and team cohesion through competition with other teams.

  4. Offers the potential for Scalable Engagement

    Facilitated sessions not involving simulation can be hugely effective but are often difficult to scale as they are very dependent on the facilitators and can be very labour-intensive. On the other hand, technology, such as e-learning, can be quite easy to scale but very difficult to create real engagement in the participants. Business simulation can provide the best of both worlds - Scalable Engagement - where the same sessions can be rolled out quickly and effectively to hundreds of managers or leaders.

Benefits of using Business Simulation for Learning

When I interview game participants or business sponsors after business simulation events the benefits they report consistently fall into 5 categories:

  1. Virtual Experience

    This is the classic flight simulator learning model where participants get to try out ‘dangerous things’ in a safe and forgiving environment with no adverse business consequences. ‘Virtual Experience’ is not only the important decision-making which participants can practice but also the scenarios they may encounter. Also consider the major and minor unexpected ‘shocks’ which they have either brought on themselves or which have been pre-programmed into the simulation beyond the participants control.

  2. Knowledge Sharing

    A well-designed simulation game is one of the most effective ways for organizations to disseminate and spread knowledge, experience and best practice between colleagues using the social and informal learning approaches which I highlighted earlier.

  3. Resolving Dilemmas

    Any well-designed simulation should present the participants with dilemmas. These can come in many forms and include business dilemmas, leadership and team dilemmas. Simulation games should reflect the real-world scarcities that there are rarely enough resources (such as money, people, machinery and stock) to achieve everything you would like to achieve, and you must make trade-offs.

  4. Change and Pressure (Agility)

    As well as having to address dilemmas and scarcities a simulation can also model the real-world situation that things are always changing unexpectedly and that there is always a time pressure factor. This is very the essence of ‘agility’ – the ability to handle unexpected change well and in a timely manner.

  5. Confidence and Ambition

    Finally, a common theme reported by simulation participants 3-6 months after an event is that they feel more confident and are taking on bigger responsibilities in their jobs/roles. When I ask the question ‘why’ a common response is that the simulation they played was challenging but, yet they still succeeded (for example, running a flour mill or a country business unit in the face of challenging trading and market conditions)!

Defining Characteristics of Business Simulation for Learning

There are many different characteristics of business simulations for learning, but I believe the following 7 properties definitively classify these types of simulation:

  1. Players: Are the simulation participants playing as individuals or playing as teams?

    For example, in the SCENES Chatbot Simulation the players engage the simulation as individuals whereas in the CREW Team Leadership simulation they engage the simulation as teams.

  2. Player Dynamic: Are the simulation players collaborating, competing or some combination of the two?

    For example, in the CONSORTIUM (Silo-Busting Sim) the teams start off focussed on achieving their individual goals but soon realise that they also need to focus on their collective goals without which they cannot achieve their individual goals!

  3. Role of the Computer: Are the simulation participants playing against the computer or playing against each other?

  4. For example, in the XSIM Business Acumen simulation all teams grow market share independently of each other but in the COMPETE Business Acumen simulation the players or teams compete directly for market shares in real-time.

  5. Learning Domains: What are the main management/leadership topics the simulation addresses?

    We have found the 12 areas in the Leadership Colour Wheel below summarise well the main requests for simulations which we receive. Typically, there will be 1-3 primary domains and 1-2 secondary domains. More that this is usually a sign of an overly-complex simulation or an unrealistic set of learning objectives!

  6. Mediation - How is the learning simulation mediated – is it player self-directed or facilitated by a person or even by the computer as a virtual simulator.

    For example, CHAPTER High Performing Team Simulation can be played in self-directed mode (as an individual or team) with the Virtual Insights switched ON or with a human facilitator and the Virtual Insights switched OFF. Whereas in the SCENES Chatbot Learning Designer the computer itself can be programmed to play a facilitation or coaching role.

  7. Customisation: Is the simulation off-the-shelf or custom-built? If it is off-the-shelf can it be configured? If it is custom-built is it built from scratch or based on existing simulation components?

    For example, the SPAR WARS simulation was built from scratch for a major convenience store client but COMPETE is an off-the-shelf sim which can be substantially configured for a client without coding being required.

  8. Off-Sim Elements: Is the simulation wrapped up in some off-sim components such as papers, props, role plays or even actors or is the simulation itself the whole learning experience?

    Off-sim components, if designed and implemented well, can greatly enhance the whole “blended learning experience” of a simulation such as COHORT (Change Management) where the in-simulation characters can also be role-played by the facilitator or actors.

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Scott has been involved in the technology side of our Business from day one and now oversees it's journey as Managing Director

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