Business Agility is a Serious Game

Something unexpected happens when companies combine the use of three types of systems: business process management (BPM); business intelligence (BI); and interactive simulation systems. It creates something larger than the sum of its parts. It empowers people to see emerging threats and opportunities and get real good at managing business operations in our high change economy. In other words – they get agile.

 

The combination of these three systems creates an engaging real-time feedback loop that causes a serious game to emerge. Serious games are what enable pilots, soldiers and surgeons to learn and excel at their professions (they become agile). It can also be what enables people in any company to learn and excel at the great game of business. Business agility is a serious game.

 

[ I’m doing a talk at the Game Developers Conference in San Francisco on March 5 titled “Running Supply Chains is Like a Massively Multiplayer Online Game” ]

 

Results Greater than the Sum of the Parts

 

BPM systems collect and display continuous streams of data showing movement of transactions through business processes. BPM also automates routine tasks such as moving data and documents from one operation to another, and as it monitors data flows, it detects predefined error conditions and sends automatic alerts to people. BI systems collect, store, and analyze data they get from BPM and other systems such as ERP, ecommerce and social media. Combinations of BPM and BI enable people to manage operations and analyze potential problems.

 

Now add one more type of system to the combination - interactive simulation systems. They allow people to create models of anything from a factory to a supply chain network or a product such as an airplane or a DVD player. A design that may seem good on paper could very well turn out to have problems that are not apparent until the design is modeled and its performance is simulated under a range of different conditions. Why not model and simulate business processes to see how well they work before we implement them? 

 

Companies have the opportunity to design and implement extraordinarily responsive operating procedures based on using combinations of these three technologies in conjunction with their existing systems. Existing transaction systems such as ERP, order management, accounting, inventory management, etc. provide a steady stream of data that reflects individual processes in a company or between groups of companies. This data can be monitored through the use of BPM systems to provide a comprehensive end-to-end picture of the productivity and performance levels in these operating processes. 

 

Once people have identified process bottlenecks and disruptions, they can make use of BI and analytical software to investigate the situations and identify root causes. When root causes are identified people can design ways to address these problems by using simulation systems to see probable impacts of each proposed change. People can quickly select the most effective changes and implement them with a high level of confidence that they will actually deliver the desired results.

 

A Serious Supply Chain Game

 

For example, consider a business such as supply chain management or wholesale distribution. Here is a serious game that has some pretty stringent rules. Players need to figure out how to deliver products where and when they are needed to meet demand while at the same time minimizing inventory levels and holding down transportation and manufacturing costs.  If you succeed in keeping down inventory levels and costs but fail to meet product demand then you loose. On the other hand if you always deliver the products but fail to keep the other factors under control then your costs get out of hand and you don’t make any money.

 

How does a person learn to excel in this kind of business? Back in the day, it was trial and error, making mistakes, and hoping you learned fast enough so you didn’t go out of business before you got good at it. Now supply chains are even more demanding. People need to continually adjust operations as prices, demand forecasts and other factors change every week. With profit margins so thin and competition so fierce, it’s getting risky to learn by trial and error alone. 

 

What if companies approached supply chain management as a serious game? Suppose they used an interactive simulation system with maps of the world and they could draw in factories, warehouses, stores and transportation routes such as roads, railways, and airports to connect those facilities. Imagine they could define production volumes of factories, storage capacity of warehouses, and carrying capacity of different modes of transportation. And finally, suppose they could associate operating costs with each facility and each mode of transportation.

 

(screenshot courtesy of SCM Globe)

 

The simulation software would allow people to try different combinations of facilities and transportation modes for different products and let them see what combinations deliver enough products to meet demand and also show the operating cost associated with those combinations. Companies would pick the best combinations and put them into action. 

 

Then imagine this system got real-time data showing actual inventory levels on hand at each location and in transit and sent alerts when things started to look bad. Now you have a game. As demand for products fluctuates, and as operating costs for factories, warehouses and transportation modes changes people would constantly test out different ways to meet demand while minimizing cost. People would develop and hone accurate intuitions about how best to respond to changing situations. 

 

It has been said that the only sustainable advantage in business is the ability for a company to learn faster and respond more effectively than its competition (also known as business agility). Companies using serious games like this would be awesome, agile competitors. 

 

[ Note: I am an investor and participant in SCM Globe. SCM Globe is based on principles and practices of supply chain management presented in my book Essentials of Supply Chain Management, 3rd Edition ]