December 23, 2021 Last updated December 23rd, 2021 1,415 Reads share

What Are Business Simulations and when are they best used?

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What are Business Simulations?

Business simulations are used to simulate real-world situations that a company could have to deal with at some time in the future. Their purpose is to better prepare their staff and more importantly leaders so that the situation, when encountered, is handled effectively.

Every simulation is created to mimic the business situation, with realistic reactions to a wide range of possible actions by users.

For example, a simulation could cover the implementation of a large project, with the users having to deal with delays in materials, strikes or other mini ‘disasters’.

For example, in the case of a strike, they might choose to use other labour sources, and the outcome of this is programmed into the simulation’s algorithm.

The terms business simulation and management simulation are often used interchangeably. Some like Jay W Forrester suggest that business simulations focus on how to enhance profits as the ultimate success measure. Others like Thomas H Naylor have stated that management simulations do not have profit as the main goal, but rather examine how well users handle situations in general.

In most cases, business simulations are used to enhance business acumen, strategic thinking, improve decision making, problem-solving, market analysis and especially teamwork and leadership.

Benefits of Simulations

Simulations have many potential advantages over traditional ‘sit there and listen to me’ training. Not only do they offer excellent opportunities for staff members to practice decision making, without the danger of causing the business any problems as could occur in ‘real life; they also create a challenging and interesting learning environment. One that allows students to think ‘out of the box’, whilst also allowing them (and their managers) to better recognise their strengths and weaknesses.

When to use Simulations

Simulations may not be the answer to every training need for a business. It is necessary to consider the problem and what sort of simulation could be used before making a final decision.

There is no point in playing a simulation just to liven up a training course. They should only be used when the unique aspects of business simulations (i.e.the way they provide a synthetic learning environment, decisions are made within a complex and dynamic setting,  and students experience real-time information and feedback)will assist in reaching the goal of the organisation.

There is no doubt that simulations increase student engagement and that learning through ‘doing’ rather than ‘listening’ increases retention levels and hence their ability to perform in their business roles. But this alone should not be the reason to use a simulation. They should only be used where other needs are met, such as enhancing teamwork or breaking down cultural barriers.

Choosing the Right Simulation

Simulation companies like Prendo, offer a variety of simulations, each one being suited to a different topic and skill area.

These include issues like

  • stakeholder management,
  • improving influencing and leadership skills,
  • managing change,
  • project management,
  • managing risk,
  • crisis management or leading change or innovation.

With any simulation, you have to bear in mind the following issues:

Time required

It is vital that the simulations available must fit in with the time that can be allocated to them. Longer running simulations cost more due to the increased preparation times required.

Levels of Complexity

The potential number of decisions and variables in the simulation determines not only its complexity but also its run time and costs. Highly complex simulations can offer more realism, but this does not always mean that they are the best. Any additional complexity can also reduce the ability of students to determine the cause and effect of any decisions/relationships that the simulation is designed to demonstrate.

On the other hand, very simple simulations can fail to engage students as they do not seem to be ‘real enough’ and do not mimic the situations that they are likely to encounter in their roles.

It is therefore vital to determine the correct level of complexity to meet the learning objectives.

All of Prendo’s Simulations are developed by a multi-disciplinary team, the members of which have experience in the fields of management topics, the science of learning, software development and programming, algorithms, data modelling as well as interface design.

The team also works with ‘thought leaders in the world’s leading business schools and industrial practitioners.

Each Simulation is Carefully Prepared and Balanced

If you’re unsure whether a simulation is a right way to solve a particular business training problem, please contact Prendo to discuss your needs, they have over 20 years of experience to call upon, and have run thousands of workshops. The latter is an important fact as the feedback from tens of thousands of participants has allowed them to perfect and optimise the learning experience provided, balancing each simulation so that they have the best mix of realism, complexity and usability.

Manas Kundu

Manas Kundu

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