USING SIMULATIONS TO REAL ADVANTAGE Software featuring hypothetical situations helps train salespeople, managers


Philadelphia - When Motorola Inc. wanted to give its seasoned sales force a refresher course, it turned to Strategic Management Group.

SMG developed a computer simulation to illustrate how to clinch a sale -- whether it meant climbing over repair-shop engines or bypassing secretaries to get to the decision-makers in the executive suite.

The Philadelphia company developed a software program featuring mythical customer accounts -- and gave sales representatives multiple paths to cement deals. Each time the reps embarked on the right course, the sales dollars toted up. And each time they strayed, it offered feedback about the error of their ways.

"We get the guys who have been selling for 15 years who are convinced they're not going to learn anything," said Malcolm Farser, Motorola's senior training supervisor, who has put about 400 executives through the course. "Some make mistakes and are embarrassed; it's a real eye-opener."

Computerized simulations, which have been used to train people who fly planes and who operate nuclear reactors, are now being used for more subtle management training.

SMG was founded 10 years ago by Les Spero and two fellow Wharton lecturers, Michael Aronson and Joseph Gekoski, who viewed business simulations as "a better mousetrap" than the case studies that dominated many business-school and executive-training curricula.

Today, SMG's client list features such members of the Fortune 500 vanguard as IBM Corp., Merck Corp. and Ford Co. in addition to banks such as Citicorp, retailers such as Sears, Roebuck and Co. and accounting firms such as Arthur Andersen & Co.

They have used SMG's software simulations -- generally offered along with courses of two to five days given by SMG executives -- to teach or reinforce business concepts ranging from rudimentary accounting and finance rules to strategic planning.

Recently, SMG also began to develop programs that attempt to simulate the "qualitative" elements of management, which are far more difficult to teach, such as how to direct a project with a limited budget and how to motivate employees.

In its new "Complete Project Manager" computer simulation, for example, participants are charged with developing a software package within one year with a team of employees who are busy with other projects, do not normally work together and generally do not like each other. The trainees must develop a project plan and make budget trade-offs, manage and motivate the diverse personalities, and glean information from sources ranging from spreadsheets to the office grapevine.

SMG's two dozen or so computerized simulations last 1 1/2 to 3 hours apiece, with a typical course including four or five simulations. Players race against their budgets and sometimes against each other in condensed time. A quarter of the year might be played out in 30 minutes.

The software programs are valuable, customers say, because players can see the instant results of their decisions.

"Tangible feedback is a great motivator," said Motorola's Mr. Farser. "The power of the PC is ideal for taking information, crunching it and providing tailored results."

Motorola's sales simulation, he says, shows the salespeople how to apply their time in the process of making a major sale. "The feedback people get from the simulation is much more personalized and detailed than face-to-face reviews," he said.

SMG also develops customized training programs for businesses.

For example, it is developing software for GE Aerospace to teach employees about regulations governing federal purchase orders.

It is developing another program to teach Schering-Plough product managers how to develop effective marketing plans for new products. For instance, in what form would it be most cost-effective to introduce a drug -- liquid, capsule or caplet? It shows which executives the product manager should consult in making the decision.

SMG's clients typically shell out $4,000 to $6,000 a day for SMG's seminars, or about $500 to $1,000 for each manager SMG trains. SMG also generally receives licensing fees from customers who buy the software simulations.

It also licenses to schools its strategic-management game, which Mr. Spero and Mr. Aronson use to teach a course at the University of Pennsylvania's Wharton School of Business. (Most of SMG's 75 employees are former Wharton students.)

In the last seven years, Champion International, the $5 billion-a-year paper company, has put about 400 managers through a course called "Managing the Business." Several teams compete, making decisions about price, performance and marketing a product that ultimately will boost a fictitious company's return on equity.

Starting with a generic, low-price product, the managers have to decide how much to invest in research and development, rTC whether to offer premium products and whether to expand marketing to the West Coast or Canada. For instance, if they pour a lot of money into advertising and have to price the product too high to compensate, sales will suffer.

"The computer is a way to speed up the decision-making," said Mort Shafter, Champion's manager of training and education. "You can play 'What if?' on it."

Mr. Shafter says he sees the simulations more as "superb reinforcers" than as great teachers. "If you didn't know what discounted cash flow is, it wouldn't do you much good to do a simulation. . . . I wouldn't want to learn to play chess from a simulation."

Champion's course concludes with an "action-planning session," in which managers develop individual plans to integrate the relevant portions of the course into their duties at Champion. And although many of the Champion participants do not directly influence the company's bottom line, the course is still valuable, Mr. Shafter said.

"They won't learn to play the violin, but they will appreciate the music."

The company is supplanting some of its weak domestic sales with international expansion. It opened a London office two years ago, and now 25 percent of its revenues stem from overseas seminars. It has developed course material to teach Soviet business executives how to more efficiently run state-owned enterprises and will teach its first courses in the Soviet Union this fall.

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