Business Games: Getting the Job Done
2015-06-01 | Text: Ludmila Smercovich | Photo ©: Tatiana Petukhova, Alexey Kirillov, A. Shaihet, alphaspirit /, Korepanova's archive /,, | 4707

Games that were once seen as only kid’s stuff are now making more and more headway into our grown-up lives. This is most probably because our changing modern world can no longer be comprehended with the help of knowledge – knowledge simply does not have enough time to form and be verified.  And this means that other ways of working with information are essential in the here and now. One way of doing that is to look at it as a game. What hasn’t gamification touched in our day? Education, scientific conferences, and even business management have all been affected. Business games have become such a familiar part of our companies that now no one even stops to think where they came from. However, the answer to this question would seem obvious – the USA or some other developed Western power. But the answer is surprising: business games were born in the Soviet Union.

The New Construction Launch Group

The year was 1930. Soviet industry was growing; the country was undergoing an expanding program of electrification and industrialization. The Stalingrad Tractor Factory was getting ready to open while other giant industrial sites were being built and equipped – the Kharkov Tractor Factory, the Urals Machine Factory (Uralmash). However, there were still many things the Soviet Union lacked: a generation of people who had received at least a high school education, skilled workers, and experienced industrial managers. A poor agricultural country was making an impossible leap into an urbanized industrial system.

Under these conditions launching production was often plagued by such problems as failure to deliver on time, malfunctioning equipment, unmet production quotas, failure to meet quality controls in production, idle machinery in certain sectors at the same time that others were unduly overworked, and a quick-to-form problem with personnel turnover. During this difficult time the government turned to the Leningrad Engineering and Economics Institute (Russian acronym: LIEI) with a request regarding the launch of new building sites. The government needed LIEI to research the reasons for these difficulties in new production and find ways to eliminate them.

The scientific research department at LIEI created the New Construction Launch Group. The group carried out a far-ranging investigation into the launch period of several newly-constructed facilities to determine the reasons for hitches during the launch period. After analyzing the results of the investigation, Maria Birshtein proposed the idea of training management personnel to launch a new construction site before it was actually launched, just as military officers are trained with war games. However, directly copying war games, which had been invented back in the 17th and 18th centuries and gained wide acceptance by the beginning of the 20th, turned out to be far from easy. A war game is tied to the map: the spatial disposition of units drives the game. Completely different things were important when launching a new factory: qualitative and quantitative production figures, level of machinery usage, the movement of incomplete production, etc. The New Construction Launch Group began developing an entirely new type of game.

At first it was essential that they delineate typical situations connected to the launch of a new facility, and take as the basis for their games those situations that lent themselves to prompt management. This meant that from the very beginning the game in directly linked to the staff’s abilities, giving as game elements only those things that could be manipulated on the spot. Analysis and experience inevitably led to a series of simplifications and generalizations – the entire range of possible circumstances under which a facility can be launched cannot fit into a single game. Then there was the question of game modeling – creating a series of conventions, allowing game time to be reduced in comparison with real time, while still preserving all the important situations. Once models were created and a script – a sequence of game episodes – was developed, a number of organizational and technical devices were needed: dispatch and telephone communications, “organizational support materials” in the form of timetables to draw the business game closer to the real work of the enterprise’s managers.

On June 23, 1932, LIEI held the Soviet Union’s first business game, entitled “Shop Launch.” As was later discovered, this was also the first business game to take place anywhere in the world. The game’s subject was “Unrolling assembly shop production at the newly-built Ligovsk Typewriter Factor during its launch period.” A week before the game began, the participants were given introductory materials which they could use to familiarize themselves with the game. The game itself lasted two seven-hour workdays. There were 24 participants divided into four teams, each of which competed against all the others. The game gradually introduced typical launch-period hitches that had taken place at the real Ligovsk Factory. An investigation discovered that such hitches included a lack of a set assembly technique, incomplete exploitation of the workforce, and an enormous quantity of only partially completed goods with many components missing. The production cycle at the assembly shop in May 1932 was 19 days with a normal rate of 4.9 hours a day, so the game incorporated equipment failure, personnel turnover, failure to meet quotas, incomplete delivery of parts for assembly, increased levels of defective parts, etc. The game’s participants had to make decisions, give orders to their subordinates, and carry out the necessary actions required by the production situation given to them.

After the game was finished, looking at the most successful group’s results show which way of resolving the hitches was most effective. For example, one group created a reserve of skilled workers that could be sent to the most problematic sectors. After a while, the real factory reached the levels of production modelled in the game – a strategy developed for a game had proved itself in reality.

In the years that followed the same group developed games for the introduction of a dispatcher management system for reorganizing production, and later on one more type of game – one to handle accidents – was developed at the request of energy sector professionals. The first such game took place at the Shatura Power Plant in 1933 and was dedicated to emergency containment at a substation. From December 1934 emergency simulations in the energy sector were regulated by decree of the Main Energy Directorate. Unfortunately, in 1938 the use of organizational production experiments (what Birshtein called her games) was discontinued in Russia.

East and West

Now we move forward a few decades. While the Soviet Union was in no mood for games for a long time, game-based economic models were discovered anew outside the USSR. One wonders if the creators of the first economic simulator in the United States knew that they were almost exactly repeating the development process of a Soviet invention? Nearly all the key conditions coincide. First, it was a government demand regarding a serious problem: the supply of US Air Force bases, which by the beginning of the 1950s were scattered all over the world. Second, initially they considered a war game, but they later realized that a war game per se would not do: even though the matter at hand was related to the armed forces, the problem was economic, and not military, in nature. Supplying bases using the existing system was expensive and logistically inconvenient. Third, the game’s goal, as in the Soviet case, was highly intensive personnel training – it was essential that military managers be taught, quickly and efficiently, to do what no one knew how to do.

The first game for officers of the US Air Force’s logistical services was developed by specialists from the RAND Corporation and took place in 1955. One important aspect that set it apart from Soviet business games was the American game’s incorporation of computer technologies from the very start. The experiment was successful and the game showed promise.  By 1956 enterprising Americans had already begun holding games for civilians, mostly on important issues in business development. One of the first such business games was called “Top Management Decision Simulation.” A very short while later and the computerization of business games had been taken to a whole new level – computerized simulations had become the norm, and not a luxury. Games began to be used en masse in universities and business schools for instruction and professional development. And some thirty years after its creation, the computer simulation of business processes arrived in the former Soviet Union as a progressive Western technology for which Russia then had no equivalent.

Just recently, on September 18, 2014, Sochi held the finals of the 2013/2014 season of the Global Management Challenge. One of the world’s largest championships in business strategy and management, the Challenge uses computerized business simulators (which are, in other words, business games that use computerized models.)  Since its founding in Portugal in 1980, more than 500,000 students, entrepreneurs, and managers have taken part in the championship. In 2014 the Russian team took first place, beating China and Slovakia. It was Russia’s third gold medal in the Global Management Challenge.

But back to the history of business games. At nearly the same time the Americans were trying to solve problematic production and educational situations with the use of models, another strand of business games appeared in Japan. Admittedly, the first Japanese contribution to business gaming was only published in 1978, and translated into European languages even later, in 1988. This was the Toyota Production System and everything that’s now called the kaizen philosophy, lean management, kanban, the “just-in-time” principle. Тhese words give a touch of romanticism and foreign color to simple and prosaic things which Taiichi Ohno, creator of Toyota’s production system, discussed in his book: how to organize production so as to avoid unnecessary work and expenditures. When creating his production model he naturally relied most of all on Henry Ford’s experience with assembly line production around the world.

A mandatory element in Toyota’s personnel training are games that model production, hitches in production and their resolution, and difficult situations that arise in the process. Today there are already a fairly large class of games, so-called “lean games”, which are developed not only in Japan, but also in many other countries – everywhere where lean production has been introduced.  And if we look at the conditions in which these principles and these games were first conceived, then we see a picture that is familiar overall: post-war Japan was in ruins, its economy lifeless, with an average labor productivity ten times less than that of America, for example.  And at this time the president of Toyota, Kiichiro Toyoda, declared that it was “essential that we surpass America in three years.” More proof that no one starts working with business games just for the fun of it.

The Club of Rome is another part of the story of business gaming outside of Russia – specifically, the Club of Rome’s concept of sustainable development and system dynamics method. Donella and Dennis Meadows created games in which system dynamics could be seen – for example, World Fisheries, a game designed to teach the principles of balanced exploitation of renewable natural resources, has already become a classic of ecological education and systems thinking. It is important to notice her that fisheries are a problematic situation that affects our planet’s entire ecosystem, and the game was not created for just any reason, but rather to work with extremely complicated dynamic systems which could not be grasped using existing knowledge. Where human analytical abilities – even when enhanced with computer technology – cannot handle something, game-based methods can help.

Back in the USSR

Considering our previous examples, when we return to Russia to search for the moment when the country began using business games again, one automatically begins searching for another problem spot, some sort of economic collapse. And the answer is simple and easy to find – the last years, which are usually called the recession years, of the Soviet Union and the subsequent collapse of the USSR. In that period games were actively developed, and among them were truly unique games with no real counterparts in other countries. In this connection one cannot help but mention Organizational Activity Games (Russian acronym: ODI) – a special class of games developed in the USSR. In the ODI tradition, unlike the vast majority of other games, the position one takes interacts with the positions of other players; also unlike most games, people play “for real”, acting on the real-world production situation, resulting in a very complex, harsh, conflict-filled, but productive format. The creator of systemic thought-activity methodology and ODI, Georgii Petrovich Shchedrovitsky, has from time to time stated that “ODI is probably not just a game.” Nevertheless, it was in this methodological group that on a conceptual level set the questions on the game’s essential structure, its practical significance, its place in thinking and work. Work diagrams and game techniques were also created. The first ODI took place in 1979 and was dedicated to the topic of “Developing an Assortment of Popular Goods for the Urals Region” – a timely issue which the USSR did not know how to deal with. Once handling the ODI was worked out, it began to be used to solve other problematic managerial situations, up to and including decision-making in the work of nuclear power plants and the decisions of managers of major industrial enterprises.

Today business games are being considered as an effective means of developing many types of processes, as well as the managers and specialists that take part in them. Instructors discuss questions related to the development of an engineering education using a business game, included as part of the program of the international conference New Issues in Engineering Education at Kazan National Research Technological University

The ODI method was used most widely in the 1980s and 1990s. At roughly the same time another distinctive school of management games was forming, once again in answer to late Soviet problems. This was Vladimir Konstantinov Tarasov’s School of Managers. Created in 1984, it became – as oxymoronic as this may sound – the first Soviet business school. Vladimir Tarasov begins his book The Managerial Elite: How We Select and Train It with a detailed description of his work as a department head at the Logistical Computing Center of the Soviet Socialist Republic of Estonia. It was an analysis of production problems and his own organizational and managerial conflicts at the Center that lead the author to an understanding of the Soviet manager’s state at the time: “Our manager must not wait until a client appears in the country; he has to take on that role himself.” From this self-definition grew Tarasov’s personal school of managers and the concept for his business games, which were devoted primarily  to business communication. Tarasov’s book Management Duels, besides being used to train and evaluate management personnel, became an officially-recognized and fairly widespread form of intellectual sport – not a bad career for a game. This brings to mind how the ancient game of chess and modern Western business simulators have also become sports [translator’s note: the Russian concept of “sport” differs somewhat from the English-language one; while the overwhelming majority of Russian sports are, as per the English definition, athletic competitions, some challenging intellectual events of an explicitly competitive nature are also considered legitimate sports]. However, you have to admit, that is a long way from business gaming’s original purpose – solving production problems and training managers.

The current state of business games in Russia is rather mixed. Well-established traditions – such as ODI-type games – are actively used in combination with role-based scenarios.  Forecasting games are widely used and are being widely developed – for example, using Foresight techniques. A market for board games, some of them educational, is also gradually forming.

High schoolers  “playing at” managing the production, finances, and municipal government bodies of Samara Oblast as part of the Foresight summer camp, organized by the Tolyatti Academy of Management

Various games have taken a firm hold in the Skolkovo Moscow Management School – what is, in all likelihood, the most prestigious Russian business school, whose services are used by Rosatom, Sberbank, the United Aircraft Corporation, Evraz, and other major corporations. Traditional education is also beginning to use game-based methodology. Among recent developments, it is worth mentioning a large-scale project that took place in September 2014 at Moscow State Industrial University. There first-year economics students were given a two-week game marathon as an introduction to economics thanks to an inter-regional team consisting of the Constructors of Practical Unions and the Kazan Practical Gaming Center. The marathon included not only business games, but also role-playing games, forecasting games, and board games. All the students in the university’s first-year courses – more than 800 people – took part in the first three-day session.

We can only guess what the next challenge for business gaming will be and what problem will soon have to be solved with its help. Chances are that we will not only see the birth of a new gaming format – it’s also entirely possible that we will participate in it. Games are everywhere around us, and today they can’t be avoided.

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