What are Business Simulations?
Our co-founder and chairman Nigel Downing answers FAQs on Business Simulations.
The format of the simulation is such that you are turning something conceptual such as ‘value’ into something real, physical and dynamic. In regular training, the concept of value remains theoretical.
Can you give a quick introduction to ProfitAbility?
We are a training business specialising in helping companies to bring their strategy to life.
We do this because often strategies are devised well but executed poorly. We believe there is a need for better and more engaging ways to bring words in a document or numbers on a spreadsheet into something more like the real thing, that people can experience.
So really, we’re more of a strategy implementation company than a training company, but you can use either / or.
We have been around for 30 + years based in south Oxfordshire, in the UK. We continue to service global corporations which means that we deal in many languages and visit many cultures and many countries in order to run business simulation programmes for our clients.
What is a business simulation?
Business Simulations are a format we use extensively as part of the way we help our clients to solve a key operational challenge.
People often think of a flight simulator when they think of simulations, which is a way of getting a pilot into a safe environment in order to experience something they are going to do later, to a very high level and in some ways a Business Simulations does exactly that.
Instead of simulating a flight, we are simulating how to operate a business. In the same way as the flight simulator, it’s hands on. You are taking the reins. You will see how your decisions impact the outcomes. You can crash the business. You can choose to fly safely. You can choose to fly dangerously.
What’s the difference between this and regular training?
In a typical classroom, there is an authority standing at the front. The learners face them, listening to their words of wisdom. There might be some illustrations and some activities.
We call this ‘chalk and talk’. A class of people are told what they need to know. This style has its place but usually is not engaging.
The business simulation puts the learners in the centre. They drive their own learning through their experience. The format of the simulation is such that you are turning something conceptual such as ‘value’ into something real, physical and dynamic. In regular training, the concept of value remains theoretical.
So, it’s hands-on?
Yes, intentionally so. If you put people through an experience, they never argue with it.
A lot of our simulations are very hands-on, and it means that the speed of learning is rapid.
In a standard business simulation, the learner is confronted by a board which looks like a little bit like monopoly, but more complex.
On that board are small piles of tokens, which represent money or value. In reality, people make decisions in their teams or functions, often without seeing where the money goes. Here, they have to physically move it. This creates an emotional connection with something that was abstract previously. The physical nature of the simulation brings the ‘theory’ of money into something that is highly tangible.
When learners make a decision, they will move money from one place – let’s say cash - to an expense. They have made that decision themselves and they see the consequence of where the money ends up.
Often people describe Business Simulations as board games, don’t they? Can you describe the board game format?
Financial simulations are often in a board game format. Traditional finance training is theory heavy. The board simplifies the jargon into known business components.
Everything in the business is on the board; cash, production, expenses etc.
Onto this structure, the game now becomes dynamic with money moving around the board, which generates or destroys business value depending on how it is used. The board game format allows you to play with the concepts dynamically, rather than just seeing the figures on a screen.
What impact does this have?
Simulations bring to life concepts that people cannot see or feel or touch during their normal business life. They give people a highly visual helicopter view.
The core learning is to improve their understanding of how the business works, and the impact is that they can apply these principles quickly when they get back to work, because the learning environment has mirrored the reality very closely.
The greatest impact you can have is when you customise the simulation precisely to the value creation model of the business you are working with. Nestlé has a very different value creation model to Compass Group, and so on.
What other simulations do ProfitAbility use? What kind of business problems can you solve beyond finance?
Our non-financial simulations are generally not board games. They are what we call situational. Where are they most used? In things like strategy, decision making, leadership and building teams.
Those simulations create a lot of behavioural interaction between the participants and are designed to create a mindset shift that breaks down either silos or ways of working through better communication and process.
One of our leadership simulations (Magnetic Leadership) involves people being put into a position of leading a team. The simulation is designed in such a way that the learner automatically reverts to type, and the behaviours they they would normally display are exactly what you see. They haven’t got time to over-think because they’re under time pressure, as they would be in the real world.
At the end of each round leaders are given feedback by their peers. Learners find it incredibly insightful because they can notice their behaviour in the moment and adjust it quickly to get very different outcomes in terms of their performance in the simulation.
Finally, what does a typical simulation look like in terms of layout, number of participants etc?
Typically, simulations are run with around 18 people. Some organisations may simply run our simulations once or twice a year, others have been running our simulations for over two decades and have put through the high tens of thousands of people.
In the early 90s we ran a very successful business simulation designed around ‘Total Customer Satisfaction’ at Harvard University for 10 years. Every year over 900 MBAs did it simultaneously, so at the beginning of each academic year we took over the entire campus for two days!
That is an extreme, but the nice thing about that was the shared experience, everybody went through the same simulation at the same time as part of a course. Companies could use a similar approach for induction of new joiners or graduates and for large scale events, such as sales conferences.