Business is a Serious Game - So Start Playing

What do pilots, soldiers and surgeons have in common? They are all in professions where making mistakes carries a heavy penalty. Yet at the same time they need experience in order to build their skills. In the old days they learned the hard way and paid the price. Now they are learning in a new way. They are trying out new procedures and avoiding the high cost of mistakes. How do they do that? What does this mean for business?

These three professions are currently the biggest users of a technology known as “serious games”. The Wikipedia definition of serious games is, “A serious game is usually a simulation which has the look and feel of a game, but is actually a simulation of real-world events or processes. The main goal of a serious game is usually to train or educate users, though it may have other purposes, such as marketing or advertisement, while giving them an enjoyable experience.”  There are the makings of a whole new way of doing business for organizations that adopt the use of serious games.

For example, consider a business such as supply chain management or wholesale distribution. Here is a game that has some pretty stringent rules. Players need to figure out how to deliver products where and when they are needed to meet demand while at the same time minimizing inventory levels and holding down transportation and manufacturing costs.  If you succeed in keeping down inventory levels and costs but fail to meet product demand then you loose. On the other hand if you always deliver the products but fail to keep the other factors under control then your costs get out of hand and you don’t make any money.

How does a person learn to excel in this kind of business? In the old days it was trial and error, making mistakes, and hoping to learn fast enough so that you didn’t go out of business before you got good at it. These days with profit margins so thin and conditions changing so fast the learning curve is steeper and the cost of mistakes is higher – it’s starting to be almost like the situation faced by pilots, soldiers and surgeons.

What if a company approached this problem by using simulation software to model their supply chain? Suppose the simulation software provided a map and on that map you could locate the factories, warehouses, retail stores and transportation routes such as roads, railways, and airports that connect those locations. Imagine that you could define the production volumes of the factories, storage capacity of the warehouses, and movement capacity of the different modes of transportation. And finally, suppose you could associate operating costs with each facility and each mode of transportation.

Then imagine you got a real-time flow of data that showed inventory levels on hand at each location and in transit as well as forecasted product demand at each of the retail stores. Now you have a game. The simulation software allows you to try different combinations of factories and warehouses and transportation modes for different products and lets you see if that combination will deliver enough products to the retail stores and also show you the operating cost associated with each combination.

As demand for products fluctuates, and as operating costs for factories, warehouses and transportation modes changes you could constantly test out different ways to meet demand while minimizing cost. If inventory planners and supply chain operators could literally draw supply chain configurations on an electronic map display and then run those configurations over some time period they would quickly learn what combinations produce the best results. They would become immersed and completely involved. People would develop very accurate intuitions about how best to respond to changing business conditions. They would be able to constantly adjust their supply chains to maintain the highest service levels at the lowest costs.

There is an old saying in the training biz that goes, “Tell me and I’ll forget; show me and I’ll remember; involve me and I’ll learn”. It seems to me that businesses are games. They have a set of rules, a set of operating techniques for getting things done, and the score is calculated by the amount of profits that are generated. In the real-time global economy, companies that adopt the use of serious games are going to be big winners. These days the only sustainable competitive advantage is the ability to learn faster than your competition. And innovative use of IT in the form of serious games is going to make that happen.

Copyright © 2006 IDG Communications, Inc.

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