Every business dedicates time and resources to strategic planning in some capacity. By sorting through marketing research, making assumptions about where the market is headed and analyzing current trends, they attempt to optimize their decisions and quickly meet revenue targets to avoid uncertainty.
However, a focus on meeting short-term goals and the inability to address uncertainty often means their strategy isn’t as aspirational as it could be. Simply guessing how the marketplace may react to their decisions or hiring outside consultants for assistance ultimately has more drawbacks than benefits.
A better way to understand the market and all of its moving parts exists. Business simulation is the agile, comprehensive solution that is proven to help organizations map out and execute a roadmap to revenue goals. Let’s explore more about this unique business tool and how it supports interactive learning.
Not your average simulation experience
Simulation has long been used as a tool for learning at business school and leadership development in a variety of fields because of its attributes. At a high-level, simulation allows individuals and teams to test their ideas and strategies in a risk-free environment.
Business simulation, however, is different. While the main concept of being able to test a business strategy in a simulated environment for a learning experience is the same, this solution is tailored to an organization’s analytical needs. A business simulation creates an accurate, mathematical twin of the market that imitates the real world, not a hypothetical environment like a simulation game.
Unlike other simulations, this solution is a representation of the entire market — not just one brand. It uses a mix of internal and external data (on results, investments and consumer preferences for example) supplemented by artificial intelligence and machine learning. Business simulation includes all of the moving pieces in a marketplace and how they interact. This includes your brand, competitors, alternatives and consumers, so you see the big picture of how the marketplace will react to your strategy.
Since the simulation is based on current conditions, businesses are able to test their strategy in a real marketplace and gain accurate and timely insights. Users then run what-if scenarios, and through this experiential learning understand which decisions create the best outcome for reaching revenue goals in both the short- and long-term.
Analytics is changing, and so should your decision making
Conducting a business simulation is necessary for businesses to optimize their strategies and improve critical thinking across departments. Gartner explained that in the current business climate, enterprises must adopt agile and flexible scenario planning. The global research firm elaborated that an adaptive strategy includes four core practices:
- Start execution as early as possible
- Respond to changes as they happen
- Embrace and explore uncertainty
- Involve everyone in strategy
Recent events have made strategic planning more difficult, so businesses need a new way to produce, better, more effective plans and decisions quickly. At the same time, the analytics market has matured and made new technologies more powerful than ever before. Business simulation just happens to check off all four practices of an adaptive strategy that Gartner identified while harnessing the power of analytics.
A business simulation is deployed relatively quickly to allow cross-functional users to begin running their what-if scenario and executing their strategy. And it’s not just an analytics expert utilizing it. Simulation requires everyone in the business to work together to identify goals and define terms before running a scenario.
Perhaps most importantly, this solution is agile enough to respond to changes in the market, even when they are uncertain. Business users are able to ask questions like:
- “How do I launch a new product in the most effective way?”
- “What if a new competitor enters the market with a new product that undercuts our pricing?”
- “How do I improve my customer experience?”
- “What happens to revenue if I change my marketing mix?”
No matter the market conditions, the simulation will adapt to provide the most accurate forecast about what’s around the corner and provide ways to optimize further into the future. A solution with these capabilities helps organizations reduce uncertainty and adapt their different strategies based on market conditions.
A comprehensive solution provides complete answers
A business simulation helps users learn how their decisions impact the marketplace and see how other moving pieces (like competitors) influence consumer actions. More specifically, business users are able to answer questions about:
- Demand forecast: What would happen to demand if a competitor enters the market?
- Attribution: Which marketing channels have the most influence on revenue?
- Pricing: What would happen to revenue if we increased our prices?
- Growth strategy: Which decisions lead to the most company growth?
- Risk assessment: Which strategy has the least or most amount of risk involved?
- Product development: Which product features appeal to consumers the most?
- Competitive positioning: How should we position our product against the competition?
- Spend optimization: Which investment will have the greatest return?
Leading corporations already use simulations for business training because it’s a cost-effective and standardized way to train teams in-house. Business simulation for strategy, however, offers the same benefits. In an article for Forbes, Bill Hall explained that this solution is also beneficial for accelerating strategic change, which companies are usually resistant to.
Business simulation is a comprehensive solution that ensures everyone in the organization is on the same page while delivering fast and accurate forecasts.
Contact us today to begin ensuring your business strategy is adaptive.
