For more information about Forio’s consulting and modeling services in the Public Policy sector, contact:

Matt Adams
MAdams@forio.com
(415) 440-7500 x86

Forio Simulate is a web hosting application that makes it easy for modelers to integrate Vensim models into end-user web applications. It allows modelers working in Vensim to publish VMF files to a server-based installation of Vensim hosted by Forio. Interface developers can then employ use the user interface design tool to create a web interface using a drag-and-drop application. No programming is necessary.

In a recent webinar, Tom Fiddeman and Billy Schoenberg show how Vensim modelers can combine interactive Web applications with Vensim. The webinar covers:

1. Importing your Vensim model into Forio Simulate for use on the web.
2. Exploring your model with the Forio Simulate Model Explorer
3. Creating a web based user interface without writing code
4. Expanding past the drag and drop UI designer using Forio Simulate’s RESTful APIs

Watch the webinar now by clicking HERE

What do managers want most in their data?

This is great news for Forio and our users, since at least 3 of the top 5 (Integration, Consistency/Standardization, and Timeliness) are promoted by online simulation and analysis tools, such as Simulate.  A reasonable argument can be made that  model transparency (which Simulate promotes) improves Trustworthiness and encourages Simplification.  So, using Simulate to develop and share your models gives managers what they are looking for!

Where are Data-Driven Managers Headed?

Once again, great news for us — the  Simulate community!  Data-driven managers are moving right into our sweet spot!  We’ve always been able to support Today’s top two: historic trend analysis and forecasting, and standardized reporting.  But Simulate’s strength, especially when you consider the flexibility that comes with the UI designer, is in the top 3 “In 24 Months”: data visualization, simulations and scenario development, and analytics applied within business processes.  So be in front of the curve –  develop your Simulate skills now!

If you have comments, post them here.  If you’re working on a simulation and have questions about how to make the most of it, post a question on the support board.

Click HERE to access.

• Fun
• Accessible
• Clear
• Educational

From one of the earliest posts on Forio’s Forum, read more about The Four Key Attributes of Successful Simulations:

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Most of our first-time clients have had limited experience using business simulations. The term ‘simulation’ gets applied to a lot of different applications. So, to clarify things, I’ll describe a couple successful simulations that I’ve worked on. I think it’s easier to understand how to do things right by looking at success stories. Then I’ll distill the attributes from these and other successful simulations I’ve worked on to the four key attributes of successful training simulations.

Case Example 1: Competitive Strategy and Change Management

A few years ago I worked with the CEO of a large capital equipment manufacturing company. The company was losing market share, mostly to new, international competitors. The CEO saw new opportunities emerging in foreign markets, but customers in these markets needed simpler and less expensive products than the company made. He realized the company needed to change the way it had done business for decades. To overcome their challenges and build market share, senior management developed a new and radically different vision for the company.

To communicate this new vision, the CEO organized a three-day offsite meeting for his top 100 managers. In addition to the usual presentations and seminars, managers ran a competitive strategy simulation during the three days. It was called a ‘corporate wargame’ because teams of managers would be simulating their real company and competing against each other. From the CEO’s perspective, the objective was to build an intuition and deep understanding among his management team of how the new vision and strategy could be implemented.

The 100 managers were divided into 10 competitors, 10 people per competitor. All teams competed in one simulated market. That meant that if one team gained market share, it would be at the expense of the other teams. The simulation matched the company’s actual market size and demand for different products and prices in regions around the world.

Schedule Constraints

This CEO had a lot of material that he wanted to cover in three days. Also he wanted this retreat to be upbeat and fun. Some of the participants hadn’t seen each other in years, so the group needed time for socializing and group outings.

In order to meet other scheduling constraints, the CEO decided that the simulation would be run before breakfast, at lunch, and then after dinner for each of the three days. The problem with this schedule was that people typically used this time to relax. We were worried that the managers would rebel or disengage from realistic play.

Competition and Fun

Fortunately, the teams became competitive very quickly. Usually these managers would meet for a beer at the hotel bar after dinner. At this retreat, they took their drinks into the conference rooms we had set up for each team and strategized how to beat their competitors. Because we had intentionally made the teams as diverse as possible, the players spent more time interacting with their colleagues in other countries.

The teams got so engaged that the CEO had to personally go from room to room around midnight on the second day to get them to stop playing. He was worried that they would stay up all night and wouldn’t be alert for the next day’s presentations.

As the simulation progressed, the teams got creative. Even though it wasn’t initially included in the simulation, two teams merged to make a larger and stronger competitor. Other teams discussed alliances and tried to gather competitive information. At lunch each day, we announced performance and distributed a newspaper with stories featuring interviews team members along with performance statistics and stock prices.

Competitive Strategy Simulation Summary

The simulation produced a vivid experience that managers remembered and discussed years later. Gold, Silver, and Bronze medals were awarded to the top three teams. As an indication of the level of player engagement, one of the members of the winning team was seen wearing his gold medal at breakfast the next morning as the buses prepared to drive everyone to the airport.

Because the simulation was competitive, participants were highly engaged and the managers learned the rationales and thinking behind the new company vision and strategy. Importantly, they built their intuition on how to best implement these new strategies. The simulation turned out to be a cost-effective way to communicate a lot of information in a short period of time. After the event was over, the managers were able take copies of the simulation with them use at their home offices to educate their own teams.

Case Example 2: AgLand

A few years ago, a crisis was developing for US farmers. A federal farm subsidy called the Conservation Reserve Program (CRP) was ending. Farmers, conservationists, and local citizens had different reasons to be concerned. In the short-run, the termination of the CRP would have a direct financial effect on farmers and, in the long-run, the economic vitality of the local communities, soil erosion, and water quality would all be affected.

Don Seville and I worked with Steven Taff from the University of Minnesota and Peter Buessler from the Minnesota Department of Natural Resources to create AgLand, a simulation that lets users test policies and see the impact on farms and the local environment.

What happened in the simulation

The simulation lets farmers and policy makers change roles and experience differing incentives and pressures. Because it takes many years to see the effect of environmental changes, the simulation runs through twenty years in an afternoon. That way, players could see the short- and long-term impacts of their decisions.

For the game, people who are farmers in real-life became policy makers. Before running the simulation, they would likely have espoused that they were free market advocates. Yet, in the debriefing, most participants came to realize how much their decisions had been driven by a goal of equalizing income. Most players ended up creating more government programs and attempted lots of quick fixes. They discovered that the policy tools they had available to them were blunt instruments.

People who played the role of farmers discovered that a system of government incentive programs could actually create a disincentive to adopting conservation practices. To quote one player, “We found ourselves farming the government or markets instead of the land.” In the debriefing, farmers complained they couldn’t achieve their goals because the government or market prices wouldn’t support them.

Typically the room became noisy as players moved about airing their opinions and making decisions. Facilitators encouraged conversation after each round of play, and periodically stop the game to discuss what’s going on.

Resource Constraints

AgLand is played in community centers and classrooms throughout the Midwest. Unlike most well-equipped corporate training centers, there’s no way that each participant will have a computer available. Often, they’re lucky to get one computer for twenty participants.

To get around this constraint, we focused the play of the simulation around a game board. The computer and printer are off to the side and, for each round of the simulation, players make decisions on the board by moving game pieces.

The game board is a map: on the map are four farms, a small town, a river with surrounding wetlands, and wildlife. An elected governing body known as the Policy Council is responsible for keeping citizens satisfied by influencing the management decisions of the farmers through policies.

The information from the game board is fed into the computer. The computer simulates one year forward, and the results are put back on the game board.

AgLand Summary

Although AgLand is a simulation, it is not a human-versus-machine game. Nor is it solvable. AgLand mimics the ever-changing dynamics of the real world. Its main objective is to help participants develop strategies for dealing with complex and ambiguous issues and then think about the consequences of their choices. They might then reconsider assumptions they may have about the driving forces behind their local economy and environment.

The Four Key Attributes of Successful Simulations

While AgLand and the competitive strategy ‘wargame’ are very different simulations, they share some similar attributes. These attributes are similar to other successful simulations. First, let’s review the main differences between these two examples.

• The audiences were vastly different. AgLand involved people with few shared goals or objectives while all the managers for the competitive strategy simulation worked for the same company.
• There were different constraints on the simulation. AgLand had technical resource constraints while the competitive strategy simulation had schedule constraints.
• The simulation run times were different. AgLand was over in a few hours while the competitive strategy simulation lasted a few days.

So what do these two cases have in common? It turns out that these two examples share four attributes that are part of all successful training simulations.

It’s useful to consider attributes that aren’t included on this list. One attribute that comes up frequently that isn’t on the list is realism. This doesn’t mean that realism, especially for some audiences, isn’t important. It just means that realism is only useful in how it affects these four attributes.

Importance of Simulation Realism

Realism can make a simulation more fun, clear, and educational. A realistic simulation can be more fun because it feels familiar and relevant. Realism also makes it clear to users what it is they are supposed to do. The simulation behaves in a way that is plausible and reasonable. Finally a realistic simulation can be more educational because it’s easier for participants to draw a correspondence between the simulation results and the results of their actual organizations.

But realism isn’t always beneficial. Realism can also be boring. It’s sometimes useful to tune-up the drama in a simulation in order to engage the player. Drama makes simulations more interesting in the same way novels involving extreme characters or plots can be more interesting.

F.A.C.E. Value

Imagine ranking a simulation with a 0 to 10 score for each of these four attributes. If the simulation fails for any one of the four attributes, then the whole simulation is a failure. Also a mediocre score on any of the four attributes results in a mediocre simulation.

You have to rank each attribute from the perspective of your audience. What is fun for Midwestern policy makers may not be fun for managers at a capital equipment manufacturer.

You can calculate a F.A.C.E. score by ranking each attribute on a scale of 0 to 10 and using the following formula:

All four attributes must be present in order for a simulation to be successful. Moreover, in order to create a really successful simulation, all four attributes should be as close to a perfect 10 as possible.

For example, a training simulation you are evaluating might get a score of:

The F.A.C.E. Score for this simulation would be (7 x 10 x 8 x 10) / 1000 = 5.6. It’s a good simulation, but you could nearly double its success by making it more engaging and doing additional usability testing.

So what can you do to make your simulation more successful? I’ll discuss each of these four attributes in detail in future articles, but for now, here’s a short list of features that can make simulations fun, accessible, clear, and educational.

Successful Simulations

Calculating a score based on four attributes is a useful check, but it’s a bottom-up approach. Ultimately, simulation success is determined by your users; so there’s also a simple top-down approach to measuring success.

The simplest measure of success for a simulation is: people enthusiastically use the simulation without being required to. They tell their friends about it because they think their friends will also enjoy it and benefit from it.

Successful simulations don’t require a lot of advocacy and persuasion to motivate potential users because people are internally motivated to play them. The use of the simulation spreads via word-of-mouth throughout your organization. Colleagues compete with each other and proudly discuss their successes with others. Eventually, a successful simulation can become ingrained as part of a shared corporate culture and history. If the simulation is designed from the beginning with success in mind, then the terminology, lessons, and experiences it provides become deeply ingrained in the corporate culture. The simulation will have had a deep impact on affecting the future success of the organization.

Using SD Models to Create Online Simulations

http://forio.com/sd_webinar_09_2010.htm

With Simulate™, Forio’s online simulation development environment, you can put your SD models online, create beautiful intuitive, easy to use interfaces with a drag-and-drop designer, save and compare runs, and control user access.

In this 50-minute hands-on session we discuss how to:

- import Vensim, iThink and other SD models

- design interfaces in minutes

- let users easily save and compare runs

- set user access privileges

- embed sims on other web pages

Creating Multi-player Simulations

http://forio.com/sd_webinar_10_14_2010.htm

With Simulate™, Forio’s web-based simulation development environment, you can rapidly create multi-player simulations. Drag-and-drop design tools and support of models from Excel and System Dynamics packages make authoring sims easy.

In this 50-minute hands-on session we discuss how to:

- design interfaces for multiple roles

- use Excel to define game and player logic

- assign users to roles and teams

- use advanced facilitator and player features

Marketing Simulation Showcase

http://forio.com/2010_webinar_marketing.htm

Michael Bean presents our latest simulations for boosting student engagement and learning in Marketing. These simulations have been co-developed with faculty from Harvard Business School, Kellogg School of Management, University of Michigan, and other leading business schools.

In this 50-minute webinar, we will review four of our most popular marketing simulations:

SoftStrat: The Software Platform Migration Game

by Prof. Mohan Sahwney, Kellog School of Management

Covers technology migration, cannibalization, budgeting

Managing Channels and Segments for Profitability

by Prof. Das Narayandas, Harvard Business School

Covers sales force, channels, segmentation, competition, and positioning

The Big Picture Marketing Management Simulation

by Prof. Christie Nordheilm, University of Michigan

Covers customer retention, customer acquisition, segmentation, targeting, and positioning

Universal Rental Car Pricing

by Tom Nagle, The Monitor Company

Covers pricing, capacity management, demand elasticity, product and service differentiation

How to Build Educational Business Games

http://forio.com/webinar_2010_education.htm

Expert simulation developer Billy Schoenberg hosts a 50-minute webinar using Simulate™, our web-based development environment to create simulations using the drag-and-drop design tools.

Topics covered include how to:

- provide faculty summaries of class results for easy review or grading

- add faculty control over class scenarios so that the simulation can be used many times

- create both student and faculty login pages with different views of the simulation

- create multi-choice, short answer, and long answer surveys or quizzes within the simulation

- include facilitator guides, student guides, and videos into the simulation

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I was happy to learn that the Iridium network was relaunched under the new company Iridium Satellite. In the 1980s and through 1990s Iridium was a big idea. The scale and risk of Iridium made it an exciting venture: 66 satellites at a cost of $5 billion. Just a few years later, Iridium Satellite paid only $25 million for the entire network—discounted more than 99% from the original investment.

To me the failure of the original Iridium is interesting because it was technically successful, but a commercial failure. Not enough people subscribed to the $3,000 phones and the expensive service. What seemed like a good idea in 1985, performed poorly 15 years later.

In general, I don’t like criticisms of failed businesses, especially when those businesses are attempting to do something new and innovative. Looking backward, reasons for failure are often obvious, but at the time decisions are made, it’s difficult to know how things will turn out.

Avoiding risk when making decisions that are difficult to retract (as opposed to reviewing risk factors after the fact) is why business prototyping is so important. I first saw the word prototyping used to describe business decision-making in Michael Schrage’s excellent book, Serious Play. Prototyping, a word usually reserved for industrial design, just means trying a few versions of something before making a decision. Prototyping occurs all the time in businesses, often with spreadsheets and sometimes through simulation.

It’s almost always a good idea to prototype decisions if you’re attempting something new. And this applies not only to business; it also applies to personal decisions. Prototypes don’t have to be a computer simulation. It just has to give you a feel for what life will be like after you’ve made your decision.

The realism of the prototype you create should vary according the complexity and consequences of the decision you’re making. The reason for this is that what you learn from a prototype changes significantly as that prototype realism changes.

Successful Personal Prototypes

I recently observed a demonstration of how prototype realism alters how and what you learn. A friend of mine moved from California to Virginia. Changing states meant he had to get a new license plate for his car and he thought it would be fun to get a vanity plate, with his own custom combination of letters and numbers for the license.

Choosing a vanity license plate is a little like getting a tattoo—once you’ve made your decision you’re committed. Changing or eliminating the thing is going to be difficult and expensive. OK, I admit that removing the tattoo is more difficult, but it’s still an example of a decision that you are far better off making the right decision the first time.

Occasionally I would get emails asking my opinion about particular choices he was considering. The original list consisted of the following names:

WONTO
7-GRAIN
INQUIRY
I ASKWHY
IMNAKED
HUGTREE

Now, most people would have just picked a name at this point. But my friend realized that whatever he chose would be associated with his car for a long time. So he took it a step further, to get a better understanding of what is car would look like with the new plate.

Without violating the law, you can’t create a fake license and drive around for a while to see how you like it. But fortunately Virginia has a web site where you can check the availability of words you are considering for your plate and prototype your license plate. For example, 7-GRAIN (one of the names he considered) would look like this:

Now that is a lot better than just looking at a name on a list. For example, you can see that the name won’t be exactly centered. It’s shifted a little over to the left. This is one of the many little things that might affect his decision.

While the license plate prototyping offered at the Virginia web site is helpful, it’s actually possible to take it one step further. My friend got a digitized photo of the back of his car and pasted the new license images on the back. The result looked like this:

Looking at an image of his car with the plate makes it a lot more obvious what the final result will look like. Compared with the original list of names, it’s much more of a simulated experience of what the future will be like with these new plates. Although picking a license plate ultimately isn’t a critical decision, still spending thirty minutes on a photo editing program possibly saved hours of regret later. And it illustrates why the more realistic your prototyping medium is, the more likely you are to make a good decision. For my friend, increasing the realism (by using photos instead of words) didn’t so much build his understanding as it did build his intuition.

Prototyping Suggestions

Doing some kind of prototyping in business, even if your prototype is just a simple spreadsheet, is far better than doing nothing at all. Unless your decision is trivial, spending a few hours or even a few minutes in front of Excel could save you money and problems in the future.

Depending on how important and retractable your decision is, you can vary the sophistication of your prototype. For example, for a simple investment decision with limited consequences, an Excel spreadsheet is probably a good choice. Spreadsheets produce results that are like my friend’s original written list of license plate names. Spreadsheets prototypes give you the dry facts without much realism as to what life will be like after you’ve made the decision, but a decent spreadsheet can often be pulled together in a few hours. So there’s a tradeoff between effort and results.

For decisions with big consequences it’s usually worth the effort of producing a realistic prototype of your decision on the computer. Not only will it help you understand the consequences of the decision, but you can also show your prototype to colleagues. Because a good prototype is a simulated experience, a prototype can communicate alternatives in ways that are hard for words and even Powerpoint presentations. This is why change management training simulations are a great way to explain a new strategy to help others understand its implications.

Of course, the ultimate prototype is reality. Businesses managers, reporters, and other satellite communications companies learned a lot from Iridium’s daring experiment. But the experience was far too costly for Iridium’s investors.

1. SoftStrat: The Software Platform Migration Game by Prof. Mohan Sahwney, Kellog School of Management: covers technology migration, cannibalization, budgeting

2. Managing Channels and Segments for Profitability by Prof. Das Narayandas, Harvard Business School: covers sales force, channels, segmentation, competition, and positioning

3. The Big Picture Marketing Management Simulation by Prof. Christie Nordheilm, University of Michigan: covers customer retention, customer acquisition, segmentation, targeting, and positioning

4. Universal Rental Car Pricing by Tom Nagle, The Monitor Company: covers pricing, capacity management, demand elasticity, product and service differentiation

On several occasions, I have heard a meteorologist defend denial of climate change through some variation of the argument “I know all too well that beyond four or five days out, our forecast models are meaningless . . . how on Earth am I supposed to believe a model that goes 40 or more years into the future?” For example, see CNN’s Chad Myers http://www.youtube.com/watch?v=_Fvsnqehjq0. (In this particular clip, Mr. Myers goes so far as to accuse climatologists of inventing climate change for their own personal financial gain). And in a sense they are right—it would be foolish to use a short-term local forecast model to evaluate what might happen 40 or more years into the future. But that doesn’t mean that NO model can be used to forecast 40 years out.

The factors that go into modeling long-term trends and dynamics are different from those of modeling short-term dynamics. Different relationships are important. Different trade-offs matter. Different models are needed.

Consider business models. The model needed to manage a business over the next two weeks is different from the one needed to manage the next two months, which in turn is different from the one needed to manage the next two years. Over a two-week period, cash flow may be the most important consideration, and a good model is going to track expenses and income in meticulous detail. If my horizon is two months, finances still matter, but operational concerns are likely a more important element of the model. And while finances and operations will make an appearance in a strategic model looking at the next two years, competition, market changes, and technological evolution are bound to play a much more central role.

The two-week cash flow model will be largely worthless for forecasting cash flow two years out. Too much will have changed. But that does not negate the value and validity of a two-year model that focuses on long-term concerns.

We already know this, though. Even the climate change deniers know this. And here’s how. Suppose someone is a motor sports fan. Ask her to forecast the winner of the next big race. See if she thinks her forecasted winner is guaranteed to win. “Well, no, there are no guarantees” will be the likely answer. Then ask her to forecast the season champion. She will have no trouble identifying a small number of likely champions, maybe even just one or two. But how can she predict who will win the championship, if she can’t predict the winner of the next race?

You can do the same thing with any sports. Can you predict with certainty who the winners will be for this week’s baseball (or football or basketball) games? No. But does that stop you from predicting who will make the playoffs?

Card games, board games . . . you can use most any situation that plays out over time to highlight the fact that short-term forecasting is fundamentally different from long-term forecasting, and that limitations related to a short-term forecast in no way negate the ability to forecast over the longer term. Other factors might, but mere shortcomings of short-term models are not among them.

I don’t know about you, but I’m not going to rely on climatologists to tell me about the weather over the next few days, and I’m not going to rely on meteorologists tell me about climate change.

This article originally appeared on the Pegasus Communications blog, and can be found there at: http://blog.pegasuscom.com/Leverage-Points-Blog/bid/34630/A-Tale-of-Two-Models#Comments