Business simulations have been a commonly used learning methodology in management and leadership development offerings for several decades, dating back to the late 1970s and early ’80s. Despite their acceptance among leadership and talent development professionals, many of them still have misconceptions about simulations. Some of these myths include notions that business simulations are too expensive, overly complex, or require too much time to run — or that they only teach and reinforce analytical and financial skills.
Though some of these myths were, in fact, truths in their nascent use, business simulations have evolved significantly over the years. Let’s address some of the myths simulation providers often encounter when promoting their solutions to prospective customers.
Myth No. 1: Simulations Are Too Complex
This myth likely stems from the origins of business simulations, a commonly used learning methodology at business schools in the 1970s and 1980s. The earliest simulations were run on mainframe computers. These simulations had dozens, if not hundreds, of variables and required users to make a similar number of decisions.
The complexity of these simulations often made it difficult for users to understand causal relationships between the decisions made and the results they generated. The impact of a single decision could be obfuscated by other decisions being made. Rather than providing a clear linkage between decisions and results, overly complex simulations could create confusion.
The art of effective simulation design is making them as simple as possible. It’s relatively easy to create complex simulations; it’s harder to simplify them so that the decisions users make and the results they generate support a client’s learning objectives — and nothing more. This requires experienced designers who embrace a “less-is-more” philosophy.
Myth No. 2: Simulations Are Expensive
Although it can be true that the development of a fully customized simulation might be expensive for customers, a prospective buyer should first consider whether a custom simulation is necessary for their needs. Many providers have developed significant libraries of simulation assets. These assets can be used as is or can be modified to meet the needs of customers.
An existing simulation solution may work perfectly as is. It could be the right fit for a specific industry (e.g., technology or manufacturing) or for the skills it is designed to teach (e.g., financial literacy or strategy formulation).
The application of object-oriented design has lowered the cost of simulation development. This design practice involves creating modules of simulation code that can be mixed and matched to meet a client’s specific needs. For example, a simulation focusing on manufacturing might include decisions to invest in production capacity or to purchase raw materials.
But what if a client’s business model uses contract manufacturing? In that case, decisions about capacity and raw materials become irrelevant. If a simulation is built using object-oriented design, these decisions can be “turned off” relatively easily and replaced with other, more relevant functionality.
Anyone shopping for a simulation solution and evaluating simulation providers should always inquire about the availability of existing solutions that may meet their needs.
Myth No. 3: Simulations Must Be Realistic
Many prospective customers assume that a business simulation needs to exactly reflect or “simulate” their company, its business model and/or its industry. This is not necessary and can often be a design mistake. The development of simulations that attempt to precisely simulate a client’s business can encounter two issues.
First, participants often become too focused on the accuracy of the simulation. Instead of attending to the learning objectives of the experience, they dwell on whether or not the details of the simulated business are realistic. If they aren’t, participants become unnecessarily caught up in its accuracy and become critical of its design.
The second pitfall in developing realistic simulations is that they quickly become obsolete. Businesses are dynamic and can evolve rapidly due to internal changes or external market forces. As a business changes, a realistic simulation will require constant updates to maintain its realism and accuracy. Otherwise, it risks becoming outdated and irrelevant — and inaccurate in the eyes of users.
A successful simulation design uses a business metaphor. A metaphor is a fictional business designed to present simulation users with business and organizational challenges similar to those they face on a daily basis. The benefit of using a metaphor is that it presents users with relevant challenges designed to reinforce the experience’s learning objectives, and it prevents them from becoming caught up in the minutiae of the simulation.
A simplified example of a fictional business might be one that manufactures widgets. A more sophisticated metaphor might be a futuristic product, such as a drone package delivery business.
Myth No. 4: Simulations Take Too Much Learning Time
When business simulations were first introduced to the corporate education market, they often spanned multiple days with teams, who made multiple rounds of decisions. These simulation experiences were often used to teach strategy formulation and execution, allowing teams to implement their strategies over a long-term horizon, adjust those strategies, and respond to competitive and market changes.
In today’s environment, most businesses can’t afford to have their leaders devote so much time to these experiences with so many iterations. Simulation providers have responded by offering targeted, shorter-durations experiences. Some may be as short as three to four hours long, focusing on fewer learning objectives. Shifting away from quantitative and financial simulations that require multiple simulation rounds to be effective to scenario-based simulations that require fewer iterations has allowed for the ability to offer shorter-duration, high-impact simulation experiences. Scenario-based simulations present users with leadership and business challenges and opportunities highly tailored to their businesses and roles.
Myth No. 5: Simulations Aren’t Appropriate for Senior Leaders
Many people equate business simulations with gaming and, believing they are not a serious learning methodology, deem them inappropriate for senior leaders. It’s true that gaming is a distinct simulation category; however, the right type of simulation can be a powerful learning tool for executives.
Scenario-based simulations, in particular, are very effective with senior management audiences. Scenario-based simulations present participants with leadership challenges and opportunities unique to their business and industry. How participants respond to a leadership scenario will impact different facets of the simulated business — trust in leadership, employee engagement, customer satisfaction, or bottom-line business performance.
The scenarios presented in this type of simulation can be tailored to address the leadership challenges, cultural dynamics, or business climate unique to a client. These bespoke simulation solutions are highly targeted to a leadership team’s challenges and are received as realistic and compelling learning experiences. Scenario-based simulations can also be used to serve as a platform to communicate and launch new business strategies and initiatives, leadership competency models, or vision and values.
Myth No. 6: Simulations Can’t Teach Leadership Skills
We’ve seen that many prospective buyers hold a false assumption that simulations are limited to teaching financial concepts, strategy or business operations, and that they aren’t effective in teaching and reinforcing leadership skills and behaviors. In fact, business simulations have evolved to effectively address and teach leadership skills.
Simulations today challenge users with a variety of leadership decisions, including setting direction, communicating with stakeholders, collaborating with cross-organizational stakeholders, leading in a matrix, and strategically managing time. These leadership decisions are supported by algorithms that demonstrate their impact on employee morale and engagement and leadership trust and effectiveness, which, in turn, impact business results.
Business simulations and their use in corporate education initiatives have evolved significantly over the years. They have become more affordable, elegantly simple in design, and versatile in meeting the business needs and learning objectives of companies and their leadership development initiatives.
