Definition and background

We often talk about the “power of practice” when discussing the benefits of business simulations and simulation-based learning. That’s because learners using a simulation get the opportunity to practice important skills and theoretical concepts in real-time, with all the situation variation that they’ll encounter in their careers, beyond the classroom. This is real-feel learning is crucial for future business leaders, and that’s why capturing situational variation is such an important part of a successful business simulation.

Business simulations vary in their complexity and sophistication. At one end, more simple simulations might be designed to simulate a single, very specific business scenario, and at the other, more sophisticated simulations can simultaneously model a variety of the challenges and risks that face the business practitioner.

For a list of some of the decisions and risks that advanced business simulations can capture, see the table below:

Business Simulation Situational Variation: Decisions & Risks

Importance of capturing situational variation in business simulations

With the dynamic interplay of business function requirements, shifting competitive landscapes and need to maintain strategic alignment, business decision making is almost always a complex challenge. This reality can be lost when students study specific management topics: they might be able to write a perfect assignment, or ace an exam, but not really understand how the theory of the topic they have just studied fits into the greater whole, or of how that theory can be applied ‘at the coalface’. A simulation that reflects the interconnectedness of business functions and the multiple risks faced by business leaders in real life is able to ensure that students get behind the theory and move towards skilled application in real life.

Taking the topic of human resource management for example: a simulation that helps the student understand the marketing, operational and financial impact of workforce decisions is going to help them develop a much deeper understanding of a taught ‘HR’ module.  Even more, if this simulation can simulate risks like wage disputes and strikes, then the HR student is able to much more effectively contextualize the course content.

Although touching on topic areas outside of the direct remit of a taught course might not yet be standard practice, we’d suggest that an educator almost has a duty of care to do this for their students: Exposing them to these realities via simulations in the safe environment of the classroom, accelerates their ability to handle management decisions in real life . Ultimately, whatever the specific topic within business management, simulations help students ‘learn by doing’, while protecting them – and the businesses they might work for – from the hard consequences of bad decision making.

Implementation Questions

Which simulation to use?

For modules and courses whose content touches on a variety of functional areas (such as ‘Principles of Management’ or ‘Strategic Management’ for example), a more complex simulation is an obvious fit. However, even for more focused topics, such as HR, Marketing, Operations or Financial management, a complex simulation, requiring business-wide decision making, ensures that learners understand the firm-wide impact of function-specific decisions.

What adaptations need to be made?

Clearly, within each teaching context, there are time constraints – not every risk or potential situation can be captured in one module! However, the most advanced simulations can be adapted so that situational risks that are most relevant to the topic at hand can be incorporated into the game, ensuring that the simulation is deployed in service to the curriculum and not the other way round.

Continuing our example of a class on Human Resource management: the relevance and usefulness of simulating a supply shock or energy crisis is marginal. Instead, it would be better to limit the risks presented in the game to those that most affect the HR manager such as labor disputes and strikes.

Another necessary adaptation is modulating the severity of simulated risks in accordance with the experience level and skills of the students. For example, continuing with our HR management example, a good simulation will allow the instructor to alter the degree that a strike might impact manhours: so perhaps for an undergrad class, the instructor might ‘punish’ the competing teams with a strike that reduces labor output by 10%, but for an executive MBA class, that figure might be 60%!

Conclusions

Capturing situational variation and risk is a key component of effective management education, and simulations are well suited to this task. To learn more about how we can help transform your training with simulation-based learning, visit www.hfxtraining.com.