Business simulations have become an increasingly popular tool in corporate training, offering an engaging way for employees to learn and develop their skills. Unlike traditional learning and training methods that focus heavily on lectures, simulations immerse participants in realistic, interactive environments where they can apply knowledge and solve problems. This shift towards experiential learning has shown significant benefits for individuals, teams and organizations, making business simulations an important asset in the professional development and training toolkit.

Why Business Simulations?

Business simulations have actually a long history. They originate from war games used in ancient China and have evolved into sophisticated tools for training and education over the centuries. Modern business simulations were first developed in Europe in 1932 and then quickly gained popularity across North America and beyond. By the end of the 20th century, more than 60% of large companies incorporated business simulations into their training programs​ and they have also been included in the curricula of business schools. (Farashahi and Tajeddin, 2018).

The primary advantage of simulations lies in their ability to transform theoretical knowledge into practical skills. They provide a safe environment where participants can make decisions, take risks, and experience the outcomes of their actions without real-world consequences. This kind of hands-on approach facilitates deeper understanding of concepts, as learners are actively involved in the process rather than just passively receiving information.

Tailored Simulations for Effective Learning

Business simulations can also be taken further by developing custom simulation games tailored specifically to the needs and challenges of individual organizations. By designing the game and simulation situations so that they are taking place in the company’s unique context, business simulations can truly create a very relevant and impactful learning experience. We have noticed that individuals taking part in these kinds of training days are more engaged when the scenarios, situations and risks that they face in the simulation reflect their actual work environment and the specific issues they deal with in their daily work. This relevance not only enhances motivation but also ensures that the skills and insights gained during the simulation are directly applicable to their roles.

The Learning Impact

Research supports the efficacy of simulations in developing a wide range of skills, from strategic thinking and decision-making to teamwork and communication. For example, simulations provide a structured yet flexible environment where learners can experiment with different strategies, analyze their outcomes, and refine their approach based on real-time feedback​. This iterative process promotes critical thinking and problem-solving, essential competencies in today’s fast-paced business landscape.

Moreover, simulations foster a collaborative learning environment. Participants work together to navigate complex scenarios, negotiate solutions, and achieve common goals. This not only builds individual skills but also strengthens team dynamics and communication. The immersive nature of simulations allows for real-time interaction and discussion, encouraging participants to learn from each other and build on their collective knowledge.

Addressing Potential Drawbacks

While business simulations offer numerous advantages, they are not without limitations. Some simulations may focus too narrowly on specific areas, failing to capture the full scope of business activities. Additionally, simulations can sometimes oversimplify time management and other complexities of real-world operations. To address these concerns, it is crucial to design simulations that are comprehensive and realistic, covering a broad range of scenarios and challenges. Developing simulations in close collaboration with clients is also crucial to ensure that the simulations reflect their business environment, real-world conditions and situations.

The Future of Business Simulations

In conclusion, business simulations can be a useful tool for corporate training, offering a unique blend of practical experience and strategic insight. By providing a safe yet challenging environment for learning, simulations help employees develop the skills they need to succeed in their working life.

More importantly, generative AI will offer various novel and interesting ways to make business simulations even more engaging and realistic. While traditional business simulations are mostly focused on more technical and operative decision-making situations and selecting between scenarios, generative AI allows for the incorporation of natural dialogue and interaction with the simulated company’s representatives and stakeholders using natural language. These possibilities will offer an additional layer to business simulations, making them far more realistic. Developing these advanced simulations requires substantial technical and design expertise, and we are very excited to be part of this journey of innovation and development.

References

Farashahi, M. and Tajeddin, M. (2018). Effectiveness of teaching methods in business education: A comparison study on the learning outcomes of lectures, case studies and simulations. The International Journal of Management Education, 16(1), 131-142.

Author

Kirsi Aaltonen, Ph.D., LessonLab Oy