What makes a good business simulation?

Business simulations have been around for decades and they are used by organisations all over the world.

Most business simulations will cover a whole business, but they don’t have to. They might focus on a process, or part of a business. Some simulations are board-based, but most are computer based. A computer based simulation might include a sophisticated user interface and/or complex algorithms.

But what makes a business simulation ‘good’?

To answer that question, it helps to start with the purpose of a business simulation. If its purpose is to help people explore business and develop commercial judgement, then several things become particularly important.

A commercially credible model

Every good business simulation starts with a commercially credible model. It can be simple or complex: sophisticated isn't the aim. Credibility is. Participants never see the algorithms within the model, but they must trust them. Trust that the business behaves in a commercially believable way. If they don't, the simulation can never become more than a game and participants will never fully invest in it emotionally. Without that trust, nothing else really matters. It's your entry ticket into the game.

Standing up to scrutiny

The test then starts when teams of capable people don't get the results they wanted or expected (which is often straight away). And as our simulations are facilitator led, it is a test of both the simulation and the person facilitating.

“Why have material costs increased when production volumes fell”

“Why have our competitors sold more when their product is more expensive”

“Why is staff retention worse, when pay has increased”   

“Why…”

The model and the facilitator’s ability to help teams understand cause and effect will be challenged. And if teams are unsatisfied here, the programme will fail.

But if the simulation withstands that scrutiny, something changes. Participants stop questioning the model and begin questioning their own thinking… and that's when the learning begins.

Difficult decisions

A good simulation might offer participants some ‘easy wins’, but it will also present participants with difficult choices. Choices where competing issues have to be assessed and prioritised. Should we maximise profit now or invest for growth? Should we protect cash or margins? Choices that make something important better… but something else important worse.

Those are the kinds of decisions that experienced managers face every day, and they're the decisions that develop judgement.

Consequences that feel real

Decisions need visible consequences. Not simply because participants need feedback, but because consequences are what transform decisions into experience.

When a team runs out of cash, loses market share to a more expensive competitor, or finally sees a return on an investment made two years earlier, those results become memorable because they are connected directly to the decisions made. The consequences are theirs.

While the simulation has to be credible, the aim shouldn’t be perfect realism. It should be optimised for learning. A good simulation should always be commercially believable, but it should also allow participants to recover from mistakes that would destroy a real business. The model needs to be challenging enough to create consequences, but forgiving enough to allow reflection and another attempt.

Emotional engagement

The greatest potential strength of a business simulation is this:

People care.

Teams debate pricing. They worry about cash. They regret a decision they all agreed to an hour earlier. They celebrate when a difficult plan succeeds.

They feel the joy of their successes and the pain of their failures. They do so because their commercial world feels real and the consequences matter to them.

Without that emotional engagement, there is little to reflect upon afterwards.

Reflection

The simulation itself isn't where most learning happens. The learning comes when participants pause to understand what happened and why.

• What were we expecting to happen?

• What actually happened?

• If we were surprised, then why?

• How will this influence our next decision?

  
  

The facilitator's role isn't to tell participants whether they were right or wrong.

It's to help them connect decisions with consequences and encourage the conversations that transform experience into better commercial judgement.

More than software

After more than fifty years of developing business simulations, we take the view that software alone never creates learning. Its job is to build trust. Participants need confidence that the commercial world behaves in believable ways. Once that trust exists, their attention shifts from questioning the simulation to improving the business.

From there, meaningful decisions, believable consequences, emotional engagement and thoughtful reflection can do their work. Together they create experiences that stay with people long after the programme has finished.