Test-Fly Your Strategy

The ability to learn faster than your competitors may be the only sustainable competitive advantage.

— Arie De Geus

Many years ago I learned to fly. I love aviation and after receiving my private pilot certificate, I continued to train and eventually earned a commercial multi-engine certificate and instrument rating.

Frasca 142 flight simulator

Perhaps the most valuable training aid I made use of was the Frasca 142 flight simulator. The simulator allowed my instructors to throw problems of ever-increasing difficulty at me (faulty instruments, system failures, engine fires, etc.) and review my responses with me during post-flight debriefings. I could repeat and rehearse until I had an innate understanding of and reflexive response to the most dire situations. Moreover, I was able to train with safety, speed, and cost-effectiveness that could never be approached using an actual aircraft.

Imagine if you could do this with your business… How should you respond to an aggressive new entrant in your market? When should you invest in new infrastructure? How quickly should you expand into new territories? What if you could “test fly” your strategic decisions before you bet your company on the outcome?

You can, using a “management flight simulator” (MFS). An MFS is a simulation expressly designed to help business leaders understand and prepare for specific scenarios they may face. The simulation codifies the relevant structure of the business, the market, the competition — whatever is considered germane to the problem(s) at hand — and presents “the world” to the user via an interface, typically a dashboard consisting of the various reports, graphs, metrics, etc. that would normally be used by that decision maker. Upon evaluating the situation, the user inputs her strategic and/or operational decisions (e.g. investment amounts, pricing decisions, new factory construction) and the simulation advances one time period, usually one fiscal quarter, and updates the dashboard showing her what the new view of “the world” is, in light of those decisions. In a matter of minutes, a leader can simulate many years into the future and get a view of the far-reaching results of her strategies.

By being able to “replay the tape” and examine the long-term outcome of a series of decisions, leaders are able to learn the subtleties of the interconnections among business entities (e.g. internal departments, the competitive landscape, distribution channels, the capital markets). They can study and understand the secondary and tertiary impacts of the policies they set forth. They can learn to spot the leading indicators that warn of impending danger and signal the need for change. They can test theories, review the results, and rehearse until they’re satisfied with the outcomes.

In short, an MFS enables in-depth learning with amazing speed and efficiency and that learning leads to better decisions.

When aeronautical engineers design a new aircraft, they don’t just build it, climb in, and hope it flies. They simulate every imaginable aspect of it in order to ensure the safest, smoothest, most economical venture possible. Business leaders can take advantage of the same technology to “test fly” their strategies before risking their companies.