Business Strategy - Simulation Advantage

Being able to anticipate, learn about and adapt to change is increasingly important. Simulations can reduce costs, risks, time and greatly increase the odds of success.  They can be used to develop and test products, business strategies, and business models.

Most companies conduct some experiments, but often they are too costly, lengthy, and ineffective.

Boston Consulting Group outlined six levers for “capturing a simulation advantage.”

1. Generate and capture ideas at greater speed and lower costs
2. Make the process of experimentation faster and less expensive
3. Increase the volume of experiments
4. Lower the cost of failure
5. Enhance predictive power
6. Accelerate learning and scale-up

Royal Dutch Shell’s GameChanger unit uses an online collaboration portal, workshops, and relationship with universities to gather ideas from contributors” in and out of the company

“Kimberly-Clark uses a 3-D virtual store to gauge consumer and customer reactions to new products, shelf layouts, and packaging”

Amazon.com tests “numerous page variants on different groups of consumers and track their resulting behavior”

Best Buy used an online tool where employees provided their best bets on forecasts online. The accuracy of the forecasting was significantly improved

Some companies provide learning through “online knowledge platforms or virtual training”

Walmart “tests different layouts in its own stores as a regular part of its operating model. Traffic patterns are measured for each layout, and the most successful designs are rolled out across the company”

• Procter & Gamble (P&G) uses innovation networks, such as InnoCentive, to solve technical design problems
• P&G uses a walk-in, 3-D virtual store to run experiments
• P&G uses online panel to introduce produces to friendly audiences before full launches

Link to “Simulation Advantage” article by Boston Consulting Group

Business Strategy - Simulation Advantage

Highlights by David Willden