Most effective training is a simulator, and they are spreading into business

This week's The Economist (June 2, 2007) has a good story about the modern state of simulators in training. We of course write about virtual worlds, virtual pets and toys, and simulations in business and simulators used in training and education, in our book Communities Dominate Brands, in the chapter on virtuality. Education and training is also recurring theme here at our blog.

Started with fighter pilots

So first, what is it about. A simulator. When the cost of the training is enormously expensive, when the cost of a mistake by the decision-maker involved easily milllions, even literally billlions in cost, and a bad decision could cost the lives of numerous people, easily in the hundreds, and where the experimentation in learning the competence is far too expensive and hazardous even to try to learn by "trial and error". Oh, and where decision have to be made, literally, in fractions of a second. Those situations. An airliner attempting to land in a thuderstorm and one engine catches fire or a wheel drops off. A submarine captain discovers a leak in the nuclear reactor that could sink the ship and its crew. A fighter pilot battling the best aces of the enemy flying a superior combat aircraft. What to do in those situations. When you don't have even half a MINUTE to consider your options?

That is where simulators were first developed. It is too expensive to teach pilots how to save a crash-landing jumbo jet, by letting them learn it by crashing a couple of jets for real. No, all pilots of major airlines go through hundreds of hours of simulator training before they ever take off for real, learning all the major airports, and go through all kinds of disaster scenarios to learn how to deal with real emergencies.

Flight simulators started with combat pilots - where every combat sortie is potentially a question of life and death. Other combat training is based on "war games" ie simulations from teaching generals to marshall troops effectively on the battlefield to training modern tank captains to command their tank crews and fight effectively on the modern battlefront to the current US Navy wargames off the shores of Iran.

Simulators are used by submarine crews - modern submarines do cost over a billion dollars each, airline pilots - a Jumbo Jet with 400 passengers, we're looking at very significant loss of life if the pilot is incompetent, fighter pilots, tank crews - space astronauts. Yes, that is way too expensive to learn by trial and error - so all astronauts go through several different simulators to complete their training, from centrifuges testing their ability to withstand enormous g-forces to weightlessness simulators on aircraft on parabolic flight paths to simulate a couple of minutes of weightlessness, to underwater suits to approximate spacewalks, to actual flight operation simulators with full replicas of the cockpit of the spacecraft, etc.

Don't forget Formula One!

Oh, and me and my Formula One passion. Gotta toss in an F1 simulations angle, please bear with me. Yes, we all can take a Playstation and plug in the official Formula One race and learn each of the grand prix circuits. But while this is a hobbyist approach, take that one step further, and build a simulator for race drivers.

Toss in the actual tested telematics data that all F1 teams collect from every race. That is from last year obviously, or from recent testing at that given race track. Then add in the data for this year's car (a typical F1 car is 2 seconds faster from any one year when the regulations remain about the same - and the margin of error between pole position and starting at midfield is usually less than 2 sec, so the tolerances are so precise that the actual performance of last year's car would yield a wrong result). Note that the driver needs to achieve so precise level of perfection, that the breaking point into a given curve in F1 cannot be off by one tenth of a second ! So we really are playing with tiny fractions of seconds, by athletes whose senses of reaction are at exceptional ability. Plug that data into their simulators - yes each F1 team has a race car simulator - and now you get the next best thing to driving the circuit in their current car. This is part of why Lewis Hamilton the rookie at McLaren, has been so good also on tracks he has never raced on before. Its because he has driven that track, with his current car, virtually, on the McLaren simulator, hundreds and hundreds of laps.

Just how realistic is the simulator? Two-time former world champion Mika Hakkinen drove the current McLaren simulator a couple of months ago, and he deliberately crashed the car at a corner he'd never crashed at in the real races to try it out, and actually strained his wrist in the virtual crash. That is how realistic it is.

Simulators in business

So what has this got to do with normal business life? Actually simulations, and simulators, and simulations-based training - is also, of course, the most effective training possible, in any business environment - where we also need good decision-making, while lives are not at stake (usually), but millions, even billions of dollars are involved, and the jobs of employees etc. All of business and industry is undergoing the greatest changes that have ever happened in the business world - Business Week said modern digital communities alone are a change bigger than anything since the Industrial Revolution. And while that is the theme of our book, it is by far not the only concurrent change going on today, from digital convergence to the emergence of the virtual economies, this time in business history is one with the greatest change ever.

Great change brings great opportunity but also great threat. Almost no managements of any major corporation are well equipped to understand the SCOPE of the changes that are currently happening. So in every board room, every management team, every division, every company, there is management that needs urgent re-training. The world today is not what it was like 5 years ago, and the world 5 years from now is MORE different than the changes we've seen in the past 5 years. How can you teach your top leaders to understand the changes?

The Economist has this story for us this week in the Business section in the article entitled "Shall we play a game?" subtitled "Playing war games can give companies new perspectives on complex problems."  The Economist writes

"I Business, as in war, outcomes depend on what others do, as well as one's own actions. Yet many firms fail to think systematically about how rivals will react to their plans - and traditional planning does a poor job of taking competitors responses into account."

The answer is corporate/business wargaming, among members of senior management, where each represents a given type of player in their market. The article says that for example Booz Allen Hamilton, the strategy consultants, run 100 simulations per year. They don't say how much BAH charges for their simulations, but a rival, OpenOptions of Canada, charges 100,000 dollars per simulation. These typically run a day or two, and involve very intense interaction by literally top management of the company. When the simulation is well designed (and run by competent simulation trainers) - the feedback by all who attended - and bear in mind its a competition where there is only one winning team and most who attend will end the training "having lost" and top managers hate to lose so you'd expect many to feel very hostile to the experience - is incredibly positive. Considering these people are most pressed for their time, and it is near impossible to get top management to sit together for a day or two - still, the responses are off the scale. The Economist quotes feedback saying "the bang for buck is outstanding". This for training that costs in the six figures, for a day or two, mind you!

The Economist explains that while there needs to be solid business understanding and business modelling underneath the simulation, good math alone does not a good simulator make. They write:

"The secret of successful war-gaming does not simply lie in mathematics, however. Interaction, not algebra, is the best way to win support for a new strategy. Game-players must be senior for the same reason."

We totally agree. Simulation training is not the optimal method for young guns entering your organization. But the old veterans who seem to suggest they know it all - put them in a simulation and let them show their mettle. They will never think as hard as they are forced to do over the two days of a typical competitive simulation. But yes, this needs to be senior management training, not junior..

So first - great story Economist. Secondly, we monitor this space as well, obviously, as we wrote of it in our book and see a great future for simulations in the business world. As to third...

And there is a telecoms competitive simulator

Then on a personal note and to those of our readers who are with telecoms management. At Nokia my budget covered the econometric models that Nokia owned, including the legandary MDF, the benchmark by which other telecoms business case models are calibrated to, and obviously several other business models etc, but also Nokia's Equilibrium/Arbitrage strategy competition simulator workshop. Its a 2 day "wargaming" competitive simulator workshop which needs 20 top management to attend for it to be run, and is aimed at mobile (3G/4G) telecoms but works for all telecoms markets. I have seen most of the other simulations in the telecoms space, and this is clearly the top of the line. By far the most complex and complete telecoms environment simulation, where each team starts from a radically different market position (one is a fixed-mobile incumbent, another a pure mobile, another a pure fixed player etc) and the game is so well designed that each team can win, as they are all measured not by market share or revenues or profits - but like the real market does - by their actual stock market performance based on the EXPECTATION for that kind of company. So a large incumbent is not expected to double in size but must grow to a reasonable degree and maintain profitability and market share, whereas the start-up is not given much benefit from doubling in size, it must truly explode onto the scene to make an impact into the game and become profitable; etc. The winner is that team which gets best stock market evaluation of their performance (simulated in the model obviously) - like any true corporation today.

Because I had had a lot of simulations and training experience prior to joining Nokia, and I had an interest in this method long before I owned its budget ha-ha, I became one of the people trained and qualified to run the simulation at Nokia from 1999 (it always needs 2 to run) and I also served on the development team to update the tool. I can say from my experiences, the Equilibrium/Arbitrage telecoms simulation is a most exhilirating competitive training simulator, and all who attend it regularly rate it as the best training they have ever had, and inspite of the enormous amount of time spent away from the office, all say it was totally worth their effort. Can you recall ANY training you have ever arranged where that is the consensus opinion of top managers who attended? And compared to any other simulators I've tested or participated in, because this is so realistically modelled on the real world of telecoms - where each team has conflicting, colliding interests and needs to outperform the market expectations for that kind of company, it is really a most intense, rewarding and mind-expanding training I've ever seen. The attendees walk away never having thought so intensely and hard for so long, utterly wiped out at the end of both days, but learning incredibly valuable lessons about the real world of telecoms competition, that will help them for years to come.

As it happens - here comes the plug - I have been authorized by Nokia to run the Equilibrium/Arbitrage simulation also for my customers, so should you be a telecoms operator or vendor, or another major player in this market and want to give the most powerful training to your people, please contact me. Notice we're talking major money here (it doesn't cost 100,000 dollars but it is well in the 5 figures) and it ONLY works for telecoms (cannot be ported to another industry, sorry IT and media readers of our blog) AND you have to get the top management to join, and we need 20 of your staff to participate. But if you are concerned your staff is not up to speed on how to win in the telecoms game today, this is your best training. BY FAR the most effective way to train senior staff. Please write to me at  tomi at tomiahonen dot com   if you'd like more info.

Comments

[Allen Varney]

By coincidence, I just wrote about business simulations from a game design viewpoint for the weekly online gaming magazine The Escapist:

http://www.escapistmagazine.com/print/99/9

[Dick Davies]

This is one of the focus topics at Serious Virtual Worlds 2007, 13-14 Sept at the Serious Games Institute in Coventry, UK. We have the longer term aim of meshing 2D biz games into the 3D Web.

[Tomi T Ahonen]

Hi Allen and Dick

Thanks for stopping by.

Allen - very good coincidence yes. We'll come and read the article, I'm sure its more real hands-on than the generalist view that the Economist tends to have.

Dick - Serious Games Institute, great ! Wishing the Serious Virtual Worlds a lot of success, please let us know what happens at the event, we'll surely want to blog about it also.

Thanks for posting comments

Tomi Ahonen :-)