Dress Rehearsal

Simulation Limitations

Simulators work best to build understanding and communication when they're used by groups, says Biach. Richmond says many of his clients use them to debug complicated processes such as order administration, while Ritchie-Dunham recommends them for persistent problems that seem to have many possible causes.

Simulations also have specific limitations. They're not for learning new information, warns Hiles. Books and videos are a better way to develop knowledge at a lower cost.

While they can help you check out the probable results of a particular strategy, they are not for making predictions, adds Richmond. "There are always going to be a number of things that are left out of the model because you don't know everything that could happen," he says.

Simulations are only as good as the assumptions used in their models, says Richmond. A formula in a simulation may assume it will take three months to train workers, when actually it may take six months. "If you get cocky about the assumptions and don't subject them to the light of day," Richmond warns, "you can massively fool yourself."

For all their faults, simulations are useful tools. Desktop PC simulation programs can be purchased for a few hundred dollars, and results come in weeks, not months, says Ritchie-Dunham. Entrepreneurs who have difficulty mastering them can find consultants or training firms to help, or attend training seminars sponsored by software companies.

Business is often compared to a game, but simulations take that comparison to a new level. Those who have tried them say they'd no sooner make a major business decision without a simulation than they'd seal a deal without a handshake. "The ability to write a simulation," says Mandelker, "is something I'm always going to rely on."

Contact Sources

Biach Industries, (908) 276-3110, bill@biach.com

High Performance Systems Inc., (603) 643-9636, http://www.hps-inc.com

Strategic Decision Simulation Group, (281) 496-2905, http://www.sdsg.com

Thinking Tools Inc., e-mail: jhiles@thinkingtools.com; http://www.thinkingtools.com

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This article was originally published in the April 1998 print edition of Entrepreneur with the headline: Dress Rehearsal.

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