Simulation

What Is Simulation?

Simulation is a process that involves evaluating the behavior of a model by introducing changes. Properly designed computer-based simulation models can demonstrate the results of very complex systems quickly and effectively.

Why Is It Important?

When you create a model or a map of a system, you have done nothing more than propose hypotheses–ideas on paper. These hypotheses require testing.

Simulation provides a powerful way for people to test ideas and gain practical experience when real-life experience is impractical or too costly.

Intuition helps us guess what might happen. It helps us ‘jump to conclusions’, which sometimes work. But people’s intuition about complex problems is usually flawed, because complexity is counter-intuitive. Like backing up a car pulling a boat or a trailer, you feel like you should be turning left, when you should really be turning right.

Computer models can help us see what happens when we play things out. They provide new and less risky ways to test ideas before we act on them. They help us experiment with the results of our decisions.

Flight simulators provide a good example. You don’t get too many chances of landing a plane wrong. Flight simulators have proved very useful in training pilots, reducing accidents, and saving lives. Likewise, other types of business and decision simulators can help people learn, improve results, and avoid costly errors.

Without modeling, we might think we are learning to think holistically when we are actually learning to jump to conclusions. A well-crafted and well-tested simulator gives valuable feedback by showing us the implications of our decisions that help us understand and handle big picture issues more effectively.

The Connection Between Simulation & Scenario Planning

Computer simulation provides a very powerful way to evaluate the possible outcomes of decisions. But there are two potential dangers:

  • Design Flaws
  • Inappropriate Use

Design Flaws

Simulation models are very effective at modeling how well defined processes work. The usefulness of the models is limited by the skill of the designer.

For example, no one denies that spreadsheets are useful. But they also lowered the technical barriers facing people who wanted to do financial modeling. As a result, the first few years after the introduction of spreadsheets, the average quality of financial models plummeted. Today, many financial models are not only useless, but downright harmful to decision-makers who use them to justify poor decisions.

Inappropriate Use

Let’s suppose you have a computer simulation model…What shouldn’t you do with it? Attempt to make predictions about the future!

Until about 10 years ago, there were various approaches used in anticipating the future, from computer-based mathematical forecasting models to Delphi surveys. All of them were attempts to predict, all of them were scientifically rigorous, and all of them failed because the future is unpredictable.

It is simply not possible to predict the future with certainty.

Appropriate Use

You can’t predict the future but you can prepare for it. That’s why scenario planning has won out as the accepted methodology in future studies.

Are you trying to predict the past or the future? Without scenario planning, simulation is a power tool to predict possible pasts (what we could have done). You need scenario planning to consider possible futures.

When you combine simulation tools with scenario planning methods, you have a powerful combination that can be used to help people plan more effectively for the future.

© 2017 ScenarioSelling