Posted by Greg Warman on Dec 8, 2005 1:46:00 PM

“Sim U” – Part II

Why industry leaders are choosing simulation over the School of Hard Knocks

Please see last issue’s ‘Our View’ for the first part of this article.

 After the US Military fully assessed the carnage wrought by its fictional adversary in “Millennium Challenge”, it did what any defeated force dreams of – it traveled back in time to start again. The game was reset, battleships were miraculously raised from the ocean floor, and crews were resurrected. The next battle was the antithesis of the first; US forces quickly routed the enemy’s army and the beleaguered rogue leader had little choice but to surrender. The entire war – first and second attempts – unfolded in less than 48 hours.

The above example highlights one of the key advantages simulations haveover reality – the concept of ‘time’ is flexible in the world of simulation. Another key advantage is simulation’s ability to limit the variables at play in a scenario thus focusing a learner’s attention on what really matters. Finally, simulation has the ability to not just mitigate, but completely eliminate the costs of mistakes. These three advantages in combination – flexible time, limited variables, and eliminated risk – produce highly efficient and effective learning experiences that are simply impossible to duplicate in the School of Hard Knocks.

Time is money
How long should an organization wait for its managers to develop a particular competency? In the School of Hard Knocks, it may be a very long time. Why? A manager acts and then waits weeks, perhaps months or even years to see a result.

Imagine conducting your first performance review. The employee sitting across from you is thoroughly average and you need to help him improve. Through your discussion, you determine some specific steps for you both. Are they the right ones? Is there anything else that should be done? You likely won’t have a clue until the employee’s next performance review. And in the interim any errors in your ‘performance improvement plan’ will fester with the employee continuing to achieve sub-optimal results.

By condensing time, simulations expedite the above scenario. A focused exercise on ‘performance reviews’ is highly efficient – managers can build plans, implement, and immediately see the results. This approach is also highly effective – unlike the real-world where the link between a decision and a long-awaited result becomes blurred by the passage of time, simulations make cause and effect crystal clear. Years of experience can be gained in mere hours. As a result, a manager’s “time-to-competency” is greatly reduced conferring a meaningful competitive advantage to the organization.

Knowing what matters really matters
Simulations are controlled experiences and can focus a learner’s attention on what really matters while simultaneously muting what doesn’t.

The business world can be a confusing place. For example, a leader might return from vacation to find his team’s productivity has declined. Why? Is it because she wasn’t there to provide constant guidance? Did something unexpected occur? Is it a lack of proper incentives, structure, or purpose? Perhaps that new transfer from regional sales has disrupted the team’s harmony? Knowing which factors resulted in the downswing is the first step to getting the team back on track.

If you’ve taken a statistics course, you’ll be familiar with regression analysis. The technique is used to find the essence of a situation – to sift through all the variables that potentially influence something and determine those that really matter. Playing through a good management development simulation is akin to understanding a regression equation. Simulations focus the learner on critical factors, highlight those within their control, and grant the power to experiment with these elements. The result is that learners can clearly link their decisions with the outcomes achieved.

Should an organization worry that simulation oversimplifies reality to the point of rendering lessons useless? It is true that the School of Hard Knocks has the added thrill of unexpected events – the sudden arrival of competition, a leadership change, or the introduction of new regulations – that can play a major role in determining an outcome. Although it is appropriate for a learner to be aware of potential random events, it is detrimental and distracting to make these the focus of attention.

Why? The answer can be illustrated in the chart below. If we broadly categorize all random events as either ‘good luck’ (i.e. happenings that help you achieve success) and ‘bad luck’ (i.e. happenings that are impediments to success), it is clear that good decision-making skills lead more frequently to desirable outcomes.

By simplifying the world and focusing learners on understanding what makes for good decisions, simulation ensures that more managers are able to deliver “Superior Results”.

  Potential Outcomes
Good Luck Happy Accidents Superior Results
Bad Luck Disasters Heroic Efforts
  Poor Decision-making Good Decision-making

Revisiting the concept of ‘Risk’ in Management
As previously stated, tactical management decisions are rarely a matter of life-and-death and the costs of mistakes are often difficult to quantify. As such, some organizations are reticent to invest in simulations and instead default to the precarious playground at the School of Hard Knocks.

Nonetheless the risks associated with poor management decisions manifestly exist (in the form of employee turnover, lawsuits, sub-optimal deals, and missed deadlines and targets). And although the consequences of an individual manager’s bad decision is unlikely to cause significant damage, multiple poor decisions by several individuals magnifies risk and can bury a company (anyone remember Enron?) Therefore, learning-by-doing in the safe environment of a simulation greatly reduces costs for organizations by granting managers the latitude to make and learn from poor decisions.

The elimination of risk also has a corollary. In the School of Hard Knocks, risk aversion can lead to managers consistently making familiar choices. These aren’t necessarily the best choices (nor ironically the least risky!) but feel safe because the manager can comfortably divine the outcome. In simulations, ‘no risk’ equals the freedom to experiment. Managers can try new things, see the results, and build confidence for real world application.

The increasing popularity of ‘Sim U’
Perhaps not surprisingly, the Military is one of the organizations increasingly embracing simulation in management development applications. For example, the U.S. Navy has adopted ExperienceChange, our company’s change leadership simulation. Participating Senior Officers learn a best practice approach to leading organizational change. These participants are not concerned with the life-or-death consequences of bad change management decisions, but rather are interested in rapidly gaining valuable experience to help them become more effective leaders.

In other words, the Military has recognized that simulation is better than the School of Hard Knocks for reasons that extend well beyond risk mitigation. Simulations save leaders and their organizations time, money and are ultimately more effective at delivering powerful learning.

And the Military is not alone. In a recent survey on Executive Education, 100% of the respondents said simulation was now playing a role in their management development programs.

It appears the enrollment figures at ‘Sim U’ are climbing indeed.

TABLE 1 – Summary of Simulation Advantages

Simulation Attribute Efficiency
Managers learn more in less time and at a lower cost
The quality of learning is superior
Safe environment for mistakes

SOHK: Although a single manager’s mistake is unlikely to have catastrophic consequences, the multiplicative effect of several poor managers can bury a company (e.g. Enron).

SIM: Managers can experiment without risking their careers or the company’s bottom line.

SOHK: Risk aversion can lead to consistently making familiar choices. These aren’t necessarily the best choices (nor possibly the safest!) but feel safe because manager understands the outcome.

SIM: Freedom to experiment, try new things, see the results and build confidence for real world application.

Condense Time

SOHK: Can take weeks, months and even years to learn the full consequences of a decision.

SIM: The time between cause and effect is minimized allowing years of experience to be conferred in mere hours.

SOHK: Because of the time lag between decision and result, the link between the two can be blurred.

SIM: Time lag is controlled so the link between the two can be cemented in a manager’s mind.

Focus the learner on what really matters

SOHK: Multi-tasking means that managers are continuously jumping in and out of learning moments. Each time they return to a specific learning opportunity, there is a ramp-up period required.

SIM: As discrete, focused experiences, managers can start and finish a learning moment without wasting time.

SOHK: The sheer volume of variables at play make it difficult for a manager to truly understand what influenced an outcome.

SIM: The manager is focused on the variables that truly matter and that are within their control. This provides an accurate picture of cause and effect.

*SOHK – School of Hard Knocks

Topics: Simulations

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