There are many ways to explain the impact of a business simulation for learning. Descriptions like hands on learning, engaging, interactive, real life, and immersive are often used, but “tension filled” – though it does not get mentioned much – is a key part of a business simulation’s value proposition to building capabilities.
Tension is defined as the act of straining or stretching: the condition of being strained or stretched. This illustrates one of the greatest benefits of a simulation: its ability to put learners in situations that stretch their ability and test their limits. Simulation is a learning tool that creates uncomfortable situations for learners to work through, building confidence and overcoming fear and hesitancy through practice in tense situations that seem very real but are actually risk free in order to drive experiential learning.
In a Business Acumen simulation there are numerous ways to create tension. In this article, I will discuss four key methods that I like to deploy when I design a simulation. These areas, which help to drive understanding, learning and skill development, are Budget Tension, Product Tension, Market Tension, Competitive Tension.
Budget tension in a simulation is when learners are provided with a budget and must allocate that budget to specific functional areas so that they can effectively execute the chosen strategy. Learners are faced uncertainty with managing a budget. They must leverage data and information to make decisions. However, the tension is derived from ultimately having to prioritize which function gets the resources and how much they get.
This can be further explored when learners have a business strategy, such as innovation, and yet have limited budget to spend to drive innovative products. For example, in one of our simulations, learners are provided with a set R&D budget and must choose the feature set their products should include via pull down menus that range from “innovative” to “standard.” Each feature has an associated cost. Tension is created because learners cannot choose “innovative” for each product feature given their overall set budget, yet they know they should be following an innovative market strategy. They typically get the best results when they decide which specific features are best for the customers in their market.
Great business simulations should provide learners with a portfolio of company products and services that are at different stages of the product life cycle. This creates tension as learners analyze where each offering is in its life cycle and decide on the short- and long-term direction of the product to align to the strategy and goals of the simulated company.
For example, Product A is mature and its revenues are declining. Product B is ready for launch but is unproven. Each product requires salaries for salespeople, budgets for marketing, and other drains of cash, so what do you do? Keep investing in Product A or sunset Product A and go “all in” on product B? Or do you cut prices and costs associated with Product A to drive volume and gain market share which could create tension and pressure on the supply chain?
Market tension in a simulation is provided by the inclusion of current and historical data such as market share, growth trends and customer buying preferences.
Just like in the real world of big data, learners in a simulation are faced with reviewing market data and using that data to make decisions for the future. But is the data correct? How quickly will the market change? Is the company’s value proposition correct and is the market opportunity real?
A business simulation creates competitive tension by the uncertainty of competitive actions. Whether through an Artificial Intelligence-based competitor, or a direct live competitor (another person or team playing the simulation), evaluating the competitive landscape and making decisions in response to competitor actions creates tension for learners.
For example, a competitor team has invested in a new version of Product A and is generating significant, higher margin sales because the product quality has gone up. Your team does not have the budget to invest because you are spending on marketing to launch Product B.
You are now stuck with excess inventory and declining cash. Do you stay the course? Or do you pivot and switch budget to improve your Product A? Do you take drastic action and drop the price to counter your competitor’s high quality?
Tension Helps to Learn
At the end of the simulation experience, everyone wants to know, “Who won?” The power of simulation-centric learning is that everyone wins each time they play it. One team may have ended with better financial numbers or business results, but each team or person that experiences a simulation has gone through a process of decision-making where they must look at facts, weigh alternatives, and ultimately manage the extreme tension of the situation in a risk free environment.
The tension of the simulation helps to drive the learning of business acumen skills, keeps learners engaged, and provides an opportunity for emotional and interactive learning that sticks.