Serious Play: How the World's Best Companies Simulate to Innovate

Serious Play is one of those rare books that will change the paradigms that many companies and other organizations have, enable them to learn faster and more effectively, and then make better decisions.

In the foreword, Tom Peters connects the concepts in this book to one that Bob Waterman and he wrote about in In Search of Excellence: Ready, Fire, Aim! The idea is that we can learn a lot by trying things out before they are finalized. In the process, our aim improves. This is an elegant description of some of the advantages of simulation.

The book is rich in examples of how companies use simulation. These examples are clustered around financial models (both spreadsheets and more advanced computer models) for transaction decisions, creating three-dimensional models of new products for development and testing (Boeing's 777 and DaimlerChrysler's new cars), improving choices around environmental changes (Royal Dutch/Shell's planning process), and examining business model alternatives (demand and scheduling simulations for airlines and hotels, and combining better cost information from activity-based costing to identify strategic alternatives). Each of these clusters is examined in some detail, with lots of lessons of what works and what does not.

Here are the book's organizational structure and key ideas:

Part I: Getting Real

1. The New Economics of Innovation (it's usually cheaper to spend time and money on simulations than to make mistakes in the marketplace)

2. A Spreadsheet Way of Knowledge (spreadsheets allow companies to look at more alternatives and explain them better, but there are dangers in relying on faulty ones)

Part II: Model Behavior

3. Our Models, Ourselves (models reflect how we think about innovation and our assumptions more than the real world)

4. Productive Waste (the more we waste in thinking through alternatives, the better the final result and eventual economic returns are as long as we are focused on speed to implementation)

5. Preparing for Surprise (the most valuable benefits come from surprises we don't expect -- be sure to keep your eyes open and follow up)

6. Perils of Pathological Prototyping (ways to make simulations worthless or harmful -- lessons of what to avoid doing)

Part III: S(t)imulating Innovation

7. S(t)imulating Interventions (creating shared space and information flows allows more types of stakeholders to participate including suppliers, other internal functions, and customers)

8. Measuring Prototyping Paybacks (understanding how you generate the most value from your project can improve your process)

9. Going Meta: Evolution as a Business Practice (future steps for simulation improvements)

User's Guide (10 key lessons):

(1) Ask who benefits? This may create bias. Eliminate or reduce the bias.

(2) Decide what the main paybacks should be and measure them. Rigorously. Without this focus, your process can miss the most important elements of the activity for you.

(3) Fail early and often. Iterations are more important than making the most progress with each prototype.

(4) Manage a diversified prototype portfolio. Each way you prototype will have biases and errors in it. By duplication of prototypes in different forms, you can avoid those mistakes.

(5) Commit to a migration path. Honor that commitment. This means that you integrate simulations into a business process.

(6) Prototypes should encourage play. Otherwise, finished models simply cast ideas in concrete (clay models of cars often had this effect)

(7) Create markets around the prototype. This means getting customers involved through methods such as beta testing.

(8) Encourage role playing. This is an effective way to create empathy and a shared view of the problem.

(9) Determining the points of diminishing return. This means to spend your time and efforts in those areas that are most productive, and to manage your total time to implementation against the cost of errors you can eliminate.

(10) Record and review relentlessly and rigorously. This is the idea of how to improve your overall simulation process.

What, then, are the limitations of this book? As someone who has worked with simulations and studied them for over 25 years, I believe the author missed some important points:

A- Simulations are even more valuable for choosing what technologies to pursue than they are for any of the applications described here. By combining factors like the expected rate of cost decline, effectiveness enhancement, inherent demand for the technology, price elasticities, and functionality, one can estimate likely paths for one technology to dominate others. Then you can plan your development path to take advantage of those paths.

B- All public companies can benefit from simulations involving polling of current and potential shareholders, but most limit themselves to financial models and spreadsheets which produce misleading results.

C- A major advantage of simulations for looking at external scenarios outside your control is that those using the scenarios begin to think of strategies that will outperform under all these circumstances (Arie de Geus taught me this from his experience at Royal Dutch/Shell, but it was not reported in this book).

D- Simulations are also very useful for generating new technology concepts. I often use these in my consulting practice to help R & D organizations to locate new technologies that are worth developing.

E- Simulations work best because the play has no immediate 'real world' consequences. In several places, the author seems to suggest that people be evaluated for how well they perform in simulations (the military does this). Those real world consequences will harm the value of the simulation for creativity purposes. See Creativity in Context. As a result, I find the title a little off target. I think a better one would have been Seriously Improving Results from Playful Play.

F- Simulations do not have to be numbers, model, or prototype based. Some of the most useful ones I have seen are based on having people create their own stories and story boards. Although story boards are described here as a method, they are not explored nearly enough.

G- The author isn't careful enough about his use of terms. As a result (although he warns us to be careful), it isn't always clear what he means by a 'model' or a 'prototype.' I was surprised by this weakness in an otherwise well-done book.

H- Simulations using analogies are among the most powerful. I did not see any of these described here. You can read the Synectics literature to get ideas for how to do this.

Despite these limitations, I strongly urge you to read and apply this book. Simulation is a major step forward in improving innovation and communications. Those who fail to master simulation methods are doomed to be overcome by them.

After you have finished reading the book, think about the 5 areas where an improved result would be most valuable to your company. Then think about how you could use simulations to help you create those improvements. Be sure to set high goals (like 2,000 percent solutions)! Then get started today! You'll be amazed at what you can learn!