When the word “simulation” is mentioned, what comes to mind is usually a flight simulator that fighter pilots use for training. While it is true that organizations such as the military or NASA have a long history of using simulations to prepare their pilots for the rigors of real-life experience, a new use of sims holds the potential for even broader benefits.
The corporate conference room is where decisions are made daily that can impact the revenue of companies. In order to facilitate optimal decision making, the very largest of companies (Fortune 500s) have long used something called “business simulations” to train their leaders. When a company decision can swing revenues by the billions and impact stock prices, every decision made has an enormous impact on employees and shareholders alike.
Thanks to the march of ever-improving technology, business simulations are gradually making their way from the corporate boardrooms of Fortune 500s to significantly smaller mid-sized companies. Until now, the main hurdle for using sims has been the cost. Regular sessions plus software licensing fees can easily add up to $500,000, putting it far out of the reach of most businesses.
But considering small to mid-sized companies comprise the vast majority of all businesses, the field is ripe for disruption. Technology is lowering the cost barrier, allowing smaller companies to experience to benefit of interactive simulation learning sessions for the first time.
These events gather executives from multiple departments such as marketing, product, finance, human resources and operations. They are given a case study and scenario, along with relevant data. Their goal is to make decisions as a team that will achieve certain goals, such as maximizing revenue or market share, while also maximizing employee satisfaction and customer happiness.
Even industries that would not first come to mind as benefiting from simulations are using them to good effect. Henry Schein, the world's largest provider of dental supplies, has a “Dental Business Institute” that is designed to teach dental practices business fundamentals and how to effectively grow their business through the use of state-of-the-art business sims.
The trend towards more affordable and accessible sims should only continue to accelerate, according to William Hall, Vice President of Learning and Development at Simulation Studios, a boutique corporate training firm. “The world is rapidly changing, and the way companies need to train their executives has to keep pace,” says Hall. “Nothing beats interactive simulations as a learning tool versus boring Powerpoint presentations. When different department heads get together and participate in a sim, they are surprised at how fun and applicable the learning is.”
US spending on corporate training surged 15% in 2013 to over $70 Billion, and over $130 Billion globally. Three trends in particular seem evident for learning and development: spending on leadership development remains extremely high, top performing companies spend more, and technology is completely changing the market.
This last point is the most important one. As devices such as Google Glass and Oculus Rift move from testing to mass market availability, count on savvy developers to leverage virtual reality to make business simulations even more lifelike.