Simulations Formats

Virtual business environments

Use of Simulations in Management Training - an Overview

Under normal circumstances a simulation involves teams of participants. Each team assumes responsibility for an imaginary business, sets objectives and runs the business over a perion of simulated time, all the time competing against the other participants who have assumed responsibility for identical businesses. Each business is a Company, competing against a Group of similar Companies within a virtual market. The Teams are briefed, given details of how the business is structured and how it is currently performing (usually by the provision of several 'history' periods that illustrate the activity of the company over time).

They are then expected to run the business for a period of simulated time, moving forward in periodic steps, such as a simulated month, quarter or year. The total simulated time usually covers from between five to twenty periods (or more) but in real time this can be anything from one day (of very intensive decision making) to many months (enabling extensive decion making analysis and additional teaching).

Control and direction of the business is exercised by each team making a number of decisions each period over a wide range of simulated business activities (such as finance, personnel, marketing, production and many other business functions).. All of the teams' decisions are then processed, after which, details of the outcome are distributed so that they can analyse the results and drive the business forward into the next period of simulated time with a fresh set of decisions. At the end of the simulation, the team which performed best (according to a pre-defined criterion) is declared the 'winner'.

One of the advantages of using Simulations to enhance experiential learning is the fact that all teams are actually 'winners'. The individuals who form the Teams make many decisions, some 'good' and some 'bad' or 'poor'. The 'good' decisions lead to favourable results in the simulation, but 'bad' decisions, when analysed, often teach the participants very valuable lessons, very often illustrating that making assumptions without proper analysis can result in in very poor performance that, in real life, would be very costly to a business.

The competitive element provides the motivation. The realistic, live nature of the simulation 'events' encourages participants to learn experientially thus enhancing their business acumen. It is always a 'win-win' outcome and great fun at the same time

To be really effective and meaningful, simulations must be realistic in modelling the environment that they are simulating. They must mirror the competitive nature of 'real-world' markets. Participants must also believe that the operation of the functions are 'fair' and 'proper' otherwise their decision making becomes a lottery if, as many poorly designed simulations exhibit, the functions are effectively simply random number generators.

The choice of simulation depends on your objectives (teaching general management or skills, a competition or team building, availability time and the skill level of participants) and what resources are available or needed (computers or lap tops, location (in-house or remote), communication capabilities (Internet speed, reliability and availability) and accommodation if in-house)..