Why Use Simulation In Business?

With affordable on-line computer simulations, we need to add a caveat: ... unless you have access to Business Games!

Of course, the use of sophisticated simulations in business is not new. Bespoke simulations which model specific markets/timeframes/products/services are occasionally produced for large corporations. Some business schools design or commission simulations which focus on specific aspects of business, such as marketing, finance, project management or other disciplines. But what about the practical day-to-day challenges of running a real business? And specifically, what about the key interactions and interdependencies between the different disciplines and specialisms? Has the need to develop better leadership skills, build more effective teams and satisfy the often-conflicting demands of shareholders, customers, employees and suppliers ever been greater?

Decision-making skills impact the performance of an organisation in many different ways:

• At Board level – addressing priorities, objectives and strategy
• At Operational level – balancing the needs of different projects or disciplines
• At Team level – ensuring that is working effectively and producing more than the sum of its individual members
• At Individual level – how we execute the tasts expected of us, particularly when under pressure.

At all levels and stages of a business, there is a need for decision-makers who see the bigger picture and understand the interdependence of all of its component parts. It is certainly possible to avoid the mistakes of others but only if - like the aviation industry and others - we put systems in place to ensure that happens.

In Business Game events, teams compete against each other, taking control of an under-performing company in a rapidly changing market. Policy decisions are similar to those encountered in real life, including pricing, salaries, research & development, staffing levels, customer service, promotion, quality and training.

The natural desire to win provides a powerful motivation to contribute to the team effort, identifying and eliminating any “unknown unknowns” by sharing knowledge and experience. Teams that make the most mistakes may not win but are often the most enthusiastic advocates!

Pilots are not born with an ability to handle every conceivable emergency situation in a calm, methodical and professional manner. They learn, mostly in flight simulators. Business simulations provide exactly the same opportunity for those with responsibility, authority and accountability for policy decisions.

The world of aviation provides a dramatic illustration of the benefits of halving the number of avoidable mistakes. After achieving this twenty times over the last century, the chances of being “the wrong sort of statistic” as a passenger have improved from one in ten, to one in ten million. If the number of avoidable mistakes in business were halved just once, the impact on the people and enterprises involved, not to mention the economy, would be little short of spectacular.