Are business simulations realistic?
Games about business are increasingly used in business schools and corporate universities to, on the one hand, teach the dynamics of running a business, and on the other hand, to develop the decision-making muscle of students or employees working in teams.
Not all business simulation games are targeting the same population nor fostering the same set of skills among participants: some games will tend to focus more on the operations side of things, some will look more thoroughly at how to create a strategic roadmap, while some will explore more human-related themes. Some of MEGA Learning’s simulations blend all these elements together.
Now the question is, does a business simulation replicate the reality of a company? Yes, but:
The dynamics of a business are dependent on a wide range of factors: the quality of the value proposition, the profile of employees and the company culture, the competitive environment, the number of competitors and their profile, the economic situation, the financial status of the company, and whatnot.
Given that each company has its own, highly complex and volatile reality, which is intrinsically embedded in the complexity and volatility of society as a whole, there is no simulated model that could replicate with 100% exactitude the reality of a specific business. The best learning space for employees would be to try things out in reality and see if it works.
Yet it comes as no surprise that if your employees start to play with prices, or make decisions with a large financial impact ‘just to try’, your business will not last long.
That is when business simulations come into play: games about business do replicate the reality of a company in many aspects, while allowing participants to try new things in a safe environment.
They teach participants to look at the right metrics on a P&L statement, for example, and to understand the causalities between price, costs, and profits, and how one can play around with them to optimize the financial situation of a business – regardless of the business or the industry. Business simulations are also realistic in that they invite players to take competition into account, to develop an information system and to think ahead of the curve.
And this leads us to a very important conclusion: business simulations are not forecasting tool for an existing business and cannot predict with 100% accuracy how the industry in which that business operates will evolve.
What they do, is teaching participants to take on the right attitude, to look at the right things, to question and explore their mental models, to learn to communicate with peers around strategy, and to recognize, based on their playing experience, similar situations in reality. Ultimately, business simulations allow participants to develop faster and more relevant responses to business challenges.
In that respect, yes: business simulations are realistic.