Among the many benefits of simulation-based learning is the opportunity to immerse learners into a role senior to them and to which they aspire. This presents leaders with new opportunities, challenges, and responsibilities they may not encounter in their current role but will in their next one.
For example, in many of our middle-management and director-level simulation experiences, participants assume the role of a General Manager. In this leadership position, they must adopt a broader perspective on their business and make decisions that benefit the overall organization rather than optimizing functional performance.
A well-designed simulation experience can help learners better understand and appreciate what drives enterprise performance and deepens their understanding of the industry in which they compete.
Participants gain deeper insight into areas such as:
How Different Parts of the Business Contribute to Overall Performance
Many companies have several lines of business and different revenue sources. Most leaders understand how their organization contributes to overall company performance but may not know how an adjacent business unit does.
A simulation experience can help participants better understand the unique business models of their different operating entities and how they contribute to the bottom-line financial performance of the company. For example, in our work with heavy equipment dealers, our simulations model the financial drivers of their sales, service, and rental businesses. Each is unique, and each has different profitability profiles and capital requirements. A deeper understanding of other parts of the business prepares participants for more senior leadership roles.
How Business Functions Interact and Impact Each Other
Insight Experience’s business acumen and strategy simulations are typically multi-functional businesses. Simulation teams need to make decisions for several different functions such as sales, manufacturing, research and development, or finance. Participants quickly learn that they are managing a business system and that a decision made in one area of the business can impact others.
Let’s consider what might be a relatively simple decision such as pricing. If a team reduces its pricing, what might the consequences be? Well, they would hope to increase sales volume or market share. However, they need to anticipate the impact of price discounting on profitability.
How might other functions be affected? Increased sales could lead to additional downstream service customers or result in more invoicing and collections activity.
A systems-based simulation helps participants to anticipate the impact of decisions not only on functional performance, but also on cross-organizational results.
Their Company’s Position and Advantage Within Their Industry
No two businesses serving the same industry are exactly alike. Each will have its own value proposition, a unique portfolio of customers, and may have lines of business that are very different from its competition.
Business simulations can be designed to include competitors with different characteristics, offerings, and advantages in the marketplace. This helps participants understand the position of their companies relative to their competitors and allows them to experiment and explore ways to compete more effectively with them.
The Importance of Enterprise Performance Relative to Functional Performance
As leaders rise in the ranks of their companies, they become increasingly responsible for enterprise results rather than functional or departmental performance. Placing learners in the role of a senior leader of a fictional simulation business forces them to adopt a strategic and cross-functional view of it. Their decisions must bias overall enterprise performance rather than optimizing any single function’s.
This can result in subjugating resources and results in specific areas of a business in favor of the greater whole. These can be difficult, but critical, decisions to make, which provide invaluable insights for participants.
Seeing the big picture becomes increasingly important as leaders take on greater roles and responsibilities. A well-designed simulation experience can provide a powerful, yet risk-free practice ground to explore and understand the challenges of being an enterprise leader.
