Simulations have the power to transform businesses. They enable participants to rapidly and effectively adopt a wide range of practices, from supporting broad strategic transformation initiatives to improving business acumen, leadership and decision-making skills.
However, there is an important distinction between the two types of simulations: customized and generic (off-the-shelf).
Custom vs. Generic: Which is More Impactful?
Well-designed custom business simulations are powerful tools that immerse learners in a company’s business context. They provide a risk-free environment where participants can practice strategy execution and develop critical capabilities. These experiences produce new behaviors and deliver tangible action plans that are tied to real-world outcomes. End results include behavior change, on-the-job action and quantifiable business impact.
Generic simulations are a great instructional alternative to traditional lectures and case-based approaches, build foundational skills in a fun and engaging way, and are common in today’s academic settings and core management training programs. One drawback of generic simulations, however, is that they lack the power to fully transform a business in the way that customized simulations can.
According to BTS CEO and Founder Henrik Ekelund, the value of customized simulations is that they provide a scenario directly applicable to the company’s situation, and are able to drive the organization’s strategic priorities in a way that generic ones cannot. Customized simulations improve employee engagement, build critical skill development, and encourage on-the-job application.
Participants, he says, feel energized and aligned to the intended strategy; they understand their new responsibilities because they have experienced actions that drive results. Rommin Adl, Executive Vice President, adds: “An effective custom simulation captures the big picture and critical business interdependencies with enough granularities that people can make real-world business decisions.”
Customized business simulations can be applied in corporate settings to:
- Enable strategy alignment
- Develop business and financial decision making
- Build leadership capabilities
- Drive cultural change
- Implement key performance indicators
- Integrate newly merged companies
- Build operational excellence
“We partnered with BTS to build a program that models our business, so we can practice making decisions in a new and different marketplace. Their program helps us improve the execution of our new strategy and to achieve the results our shareholders and customers expect.”—Aetna Inc. Chairman, CEO and President Mark Bertolini
Customized business simulations deliver significant return on investment; moreover, they align leaders and develop capabilities in a way that creates an engaged and motivated organization that delivers long-term results. The Corporate Executive Board conducted a study testing employees before and after participating in a simulation. They found that employees were more committed to the organization and gave 57 percent more effort as a result of participating in the simulation. Measures like these demonstrate how the business impact of customized simulations is tangible.
While still meaningful, generic simulations are not a suitable substitute for customized simulations. Generic simulations are effective in building foundational skills and capabilities, but the learnings occur out of the company’s business context. Generic simulations are less costly to tailor and deliver, but Ekelund cautions, “In generic simulations, participants often treat the experience like it’s a big game because it is not always aligned to their current position. They will have fun with it, but once the simulation has ended, the application to the job will lack clarity. The results will not be as impactful.” Despite being extremely effective mechanisms for their purpose, generic and customized simulations are not interchangeable.
Joel Sigrist, Senior Vice President for BTS Western Europe, corroborates Ekelund’s point: “Without customization, you increase the risk of exposing learners to the wrong assumptions and tradeoffs for their business. When participants go back to their jobs and apply these assumptions and trade-offs, the consequences can be severe.” Not only is using the wrong type of simulation less optimal for skill delivery, it also presents a potential threat to overall business growth and success. Aligning employees towards the business’ strategy is the ultimate goal for a transformative simulation, and this is impossible if the wrong type of simulation is deployed.
How to Build an Impactful Custom Business Simulation
Custom simulations are a must for strategic transformation, and Ekelund recommends a six-step process for building the most customized solution. Utilizing this structure will allow for an in-depth learning experience and have a strong business impact.
The six steps include:
1. Identify the company’s business context
Before developing a simulation, it is essential to gain a clear understanding of the company’s business, markets, customers, competitors and key performance objectives. Simulation developers must first meet with key people in the various parts of the business who can offer an in-depth understanding of their business model, challenges, strategic priorities, culture, values and leadership behaviors.
2. Learn the strategies to achieve the objectives
Once the business objectives are identified, simulation developers must next understand the detailed processes and strategies in place to achieve the company’s desired objectives.
3. Identify the gaps in execution
After the objectives and strategies are determined, simulation developers must conduct a needs analysis to determine gaps in employee execution that may stall the success of the desired strategic change.
4. Determine the knowledge and behavioral skills required to drive change
Once learnings and objectives are in place, the next step is to uncover and pinpoint specific employee capabilities and knowledge components that will be instrumental in driving change throughout the organization.
5. Customize the simulation to the business model and strategic objectives
An effective customized simulation models the business, but the optimal level of realism is based on the desired outcomes. The simulation design typically includes the company’s business, key functional areas, market dynamic, customer information, etc. Customer parameters include value drivers, preferences, retention rates and brand loyalty.
6. Reflect on the results
After applying a customized simulation, it is important to bring all the participants together to discuss and tie outcomes back to the real world. This reflection is critical for participants to identify actions to implement back on the job.
Furthermore, Sigrist comments on the culture shift associated with participating in a customized simulation: “Customization done well allows employees to become more open to changing their ways because the experience is relevant to their current role.”
The Move Toward (Customized) Experiential Learning
Gartner, Inc., the world’s leading information technology research and advisory company, predicted “high-performing enterprises will shift 50 percent development spending from training to experiential learning programs to boost people’s effectiveness.”1 More recently, Gartner reiterated its endorsement of experiential learning, stating, “successful…business transformation requires every individual…to acquire and demonstrate business acumen to effectively execute on…business strategy.”2 Business simulation through experiential learning remains essential to successfully executing business strategy.
Ted Kelly, former CEO of Liberty Mutual, admitted after a BTS engagement, “I was originally against doing a customized business simulation. I am a big fan of case study presentations. I was wrong. It was the best training we’ve ever done.” Even those skeptical of the efficacy of custom simulations are ultimately able to see the benefits; simulations are, and will continue to be, the most powerful strategic business tool available to organizations for restructuring, strengthening, and cultivating the leadership, talent, and capability of the business.
Ekelund expects a steady move towards customized business simulations and an increasing transition away from generic simulations. This trend is happening already. “Companies are saying, ‘Customized simulations are not just a learning experience; they’re a strategy alignment and execution experience.’ The difference is in the results,” notes Ekelund.
In today’s ambiguous world, navigating from strategy to successful execution presents tremendous barriers and risks. The stakes are high. Often leaders have only one chance to get it right, and the repercussions of poor execution can be significant. As management continues to recognize their true power, customized business simulations will come to play a crucial role in every successful corporate transformation, and the business benefits will be truly exponential.