What really makes BANKdynamics different - the WIF

Here's what happens in a typical competitive banking simulation (not BANKdynamics):

1. Participants are organized into teams
2. Teams review the case bank
3. Teams identify several operating/management decisions
4. Teams turn-in these decisions to the facilitator
5. Facilitator enters decisions from all teams into the simulation software & runs the competition
6. Facilitator distributes to the teams a printed copy of the results from competition
7. Teams review results and then return to Step 3 for another round or "quarter" of simulation

Most of the teams, unless they've run the simulation before, will make more than a few decisions that cause their bank to stumble down a path that's very rough and rocky.  I call this the "black-hole" approach to simulation because the teams are given just one shot, one chance, at getting it right each quarter.  They turn in their decisions to the facilitator and hope that everything turns out ok when the results come back.

At first glance this doesn't seem to be such a bad approach.  A team is given the chance to "correct" or "fix" any problems they've created in the next round (or quarter).  It is a simulation after all.  You're supposed to make mistakes in a simulation...better there than in the real world. 

But there is a problem with this typical bank simulation process.  The schedule & software seldom allows participants more than six or eight chances to make decisions.  There either isn't enough time allotted for more rounds (or there aren't enough resources available to "key-in" decisions).

Imagine running Microsoft's flight simulator with the limitation that you can only run it eight times and then your done.  You can't run it anymore.  I don't know about you, but it took me eight attempts just to learn some of the controls, forget trying to perfect a take-off or landing.

The more you are allowed to interact with a simulation the more you are likely to learn.  That's what really makes BANKdynamics different from other simulations...the what-if (or WIF).  Here's what happens in a BANKdynamics competitive simulation:

1. Participants are organized into teams
2. Teams review the case bank
3. Teams identify several operating/management decisions
   a. Teams take a snapshot of these decisions by creating & calculating a WIF
   b. Teams review the potential results of these decisions by looking at WIF reports
   c. Teams modify these decisions, or perhaps throw them away and start over with a new set
   d. Teams return to step 3.a. and repeat steps b through d several times.
   .
4. Teams identify their best or "most liked" WIF
5. Once all teams have identified their best WIF, the facilitator clicks a button to start the competition (no re-keying team decisions!)
6. Facilitator notifies teams that the competition is finished and the results are available online (no printing required!)
7. Teams review results and then return to Step 3 for another round or "quarter" of simulation

Compared to the typical bank simulation there are more than a few differences.  The biggest difference is in step three.  If you believe that "trying things out" is the whole point of an enriching simulation exercise, then you cannot deny that BANKdynamics offers a team much more opportunity to do so via the WIF.  BANKdynamics offers a team multiple opportunities to "try things out" by creating multiple WIFs.

Teams aren't the only ones to benefit.  The individual team members can have a more enriching experience too.  One reality of the team work in typical bank simulations is that, because there is a limit on "trying things out", the team majority rules when it comes to decision time.  Any individual curiosity about the impact of a particular decision is squashed if the majority of the team doesn't agree.  Here's a typical team discussion in a traditional bank simulation:

Bank President: OK, time is short so do we all think this is the set of decisions to go with?

VP #1: Yes, I think this will bring earnings back to a satisfactory level.

VP #2: But what about our rising non-performer level?  Should we address the credit quality issue? I think a small increase in staff would help.

VP #3: No way! That would probably kill earnings to add more overhead.  And besides, I think the impact on non-performers would be minor.

Bank President: I agree, sorry VP #2, three against one, but please keep the suggestions coming.

I added the emphasis to the words think and probably on purpose.  The point is that these team members don't have any sort of analytical information other than historical performance to make these decisions.  VP #2 might have a good idea, but nobody can look at a projection or proforma to help them decide...so the idea is lost. 

In BANKdynamics the conversation might go a bit differently:

Bank President: OK, time is short so do we all agree that What-if #23 is the one to go with?

VP #1: Yes, the preliminary reports show a projected ROE of over 15% which is our target.

VP #2: But what about our rising non-performer level?  Should we address the credit quality issue?  WIF #23 also projects non-performers to rise above 0.50.  A small increase in staff would help.

VP #3: No way! That would probably kill earnings to add more overhead.  And besides, I think the impact on non-performers would be minor.

VP #2: I disagree, I ran another projection, WIF #24, and compared it to WIF #23.  Look, ROE is still over 15%, and non-performers stays below 0.25!

VP #3: That's good news!  In that case I think we should add the small amount of overhead.  I vote for WIF #24.

Bank President: I agree, nice work VP #2, please keep the suggestions coming!

In BANKdynamics not only does the team have the ability to ask and analyze WIFs, but each individual member can ask them to.  More importantly they can compare their individual WIFs to one another and evaluate the relative strengths and weaknesses.  There's no reason for that good idea to be lost!