"AROUSAL": A Model to Match Reality
by Peter Lansley, Assistant Director of Research, Ashridge Management College, UK

In the search for more effective learning methods, "real life" simulations have many attractions although their development requires a sound base of information about business practice and the translation of this knowledge into a form suited to simulation.
  The AROUSAL system has been developed to provide highly flexible simulations having a wide range of management development applications.
  The system simulates the "world" of the senior management team of a medium sized enterprise. Using audio visual and written case study material supplemented by a computer based model, a group of participants in the simulation can manage this enterprise into the medium term future. They meet issues which would typically arise in real life, and face the eventual consequences of the way they handle these issues. AROUSAL incorporates organisational, job design, and detailed personnel information as well as the production, marketing and financial factors usually associated with business simulations.

Current literature on management training reflects a quest for a greater understanding of learning processes and for the development of a wider variety of structured learning experiences. This is an account of the recent development of the AROUSAL system, instigated by the search for more effective learning experiences for managers needing to improve their knowledge and understanding of the functioning of the business as a whole. The simulation system in its present form is centred on the construction industry but is capable of adaptation to a wide range of businesses and industrial settings.
  This article considers some of the issues involved in the development of more challenging learning experiences focusing particularly on the potential of real life simulations. The AROUSAL system is then described, followed by an account of some recent applications. The views of industry are briefly discussed.

Specific Problems
Whilst the development of AROUSAL was based on an awareness of general problems in management training, the main focus was on satisfying the need for individual companies to develop their staff rapidly to handle highly specific problems which their organisations might face. Such a focus seems more realistic than one which presupposes that industry is seeking, and would support, general management training.
  Clearly, different problems are likely to generate different training requirements, ranging from the acquisition of knowledge, the development of problem solving skills, and the changing of attitudes to the enhancement of interpersonal skills. However, the problems share a common thread in that any learning that takes place needs to be easily translated into enhanced problem solving ability. The issue which arises here is that to be successful the transfer of learning to the work-place must commence before the participant returns to his normal job. The application of learning has to be part of the total training experience.
  One way of satisfying this need is through the use of highly realistic simulation models of an organisation, in which an individual or a group of participants run a business as its directors or senior managers. In turn such simulations can provide the major vehicle for meeting certain training requirements[1].
  Whilst a major constraint is the availability of suitable simulations, their potential usefulness is considerable; they provide contexts for learning, with which participants can readily identify, with resulting gains in involvement and commitment. Other likely benefits derive directly from considerations of the action related experiential learning nature of simulations. This is especially so when these are combined with opportunities for the participants to examine critically their own decisions and actions under the guidance of an experienced teacher or counsellor.

Real Life Simulations
Simulations vary considerably in their levels of sophistication. They range from computer based finance, production and marketing decision-making exercises, involving a single participant, to loosely structured events focusing on interpersonal relationships and communications between the members of a group of individuals. However, many of these bear little relationship to real life situations. Whilst their level of reality may be sufficient to facilitate useful learning experiences, they often fail to provide a full opportunity for the participant to apply learning in the context of his own real world.

Simulating Reality
An important requirement of the real life simulation is that the context it provides should be immediately translatable to the work situation. This means that the issues generated by the simulation, and addressed by the participant, must be expressed in a way similar to that which would occur in reality.
  Where the simulation focuses on interpersonal relationships the background to the simulation may be rather passive. Once the context has been set, the real-time relationships between participants take over. Other simulations, however, require a close and dynamic interplay between the decisions of a group or an individual and the context: such as when they are running a business. In these cases the information provided must be given in a manner typical for the business being simulated. It may be easy to provide routine production reports, profit and loss accounts and balance sheets but considerable imagination is required in generating and reporting "soft" information which in practice would not be formally reported.
  The issues generated by the simulation and handled by participants need to be sufficiently sophisticated to have implications which require decision-making at a variety of levels. Strategic issues cannot be resolved solely by strategic decisions. They require an understanding of, and an ability to handle, consequential operational issues. Many business games address single level problems, and ignore the strategic implications of a series of operational decisions and vice versa.

The issues generated by the simulation and handled by participants need to be sufficiently sophisticated to have implications which require decision-making at a variety of levels

Given a realistic context, the development of a strong sense of ownership of the problems presented by a simulation is fairly straightforward. Commitment and motivation to tackle these problems is critical to learning. It is important that this should extend beyond just owning and defending particular decisions.

Real life situations are dynamic. Decisions on how to tackle a particular issue not only lead to decisions at other levels but create new issues in the future. These new issues can provide feedback on the quality of previous decision making. However, such feedback is often possible only where there is direct comparison with the performance of other organisations; these may be other groups of participants in a simulation, or the real world. Comparisons with previous performance are often valid only when an organisation and its environment are in a steady state.
  The way feedback is handled is crucial to the success of any learning experience. At one level feedback in the form of performance reports and new issues arising from a set of decisions and previous behaviour may be useful, but processing this feedback often requires sensitive handling by trained teachers or counsellors. Their role is to develop, from the experience, as much useful learning as possible and to ensure that adequate reflection occurs. It is for the teacher to encourage experimentation, new ideas, and to help those groups with very constrained activity patterns to question the imaginary boundaries and assumptions to their behaviour.
  The ideas presented so far have been derived from an empirical, and pragmatic point of view; from experience of facilitating individual and group learning. However, there is a strong body of knowledge which supports the view that the type of simulation described can provide highly meaningful learning experiences. Some of this is based on considerations of the learning cycle proposed by Kolb[2] and from other ideas in learning theory—for example, that the acceptability of the content and process is a necessary precurser to successful learning. Other knowledge bases stem from an understanding of the likes and dislikes of managers about management training; that managers prefer:
    (1) Involvement and participation linked to realism
    (2) Active rather than Passive learning.
    (3) Diagnosing business problems and proposing solutions.

They dislike: games, gimmicks, lectures and theory[3]. This would suggest that a real life simulation could have a high level of acceptability, but a warning is that the more divorced from reality such simulations are the less acceptable they become.
  Clearly, a highly flexible simulation system is needed to meet the requirements discussed so far. This system would provide a context or business setting embodying human and organisational factors as well as financial and production variables, at more than one organisational level. Such a system needs to be capable of being fine-tuned to particular issues, as well as providing a realistic background for those issues.
  To achieve these requirements it is necessary to simulate a total business system as represented in the operations of a fairly self-contained business unit. For the construction industry this could be an individual site, for which supervision, and professionals representing the various parties engaged with site work, labour and production are involved; or it could be an individual company, as in the case which is described in the rest of this paper.

The AROUSAL (A Real Organisation Unit Simulated As Life) system has been designed to simulate the world of the directors of a medium sized enterprise. Participants in the simulation, formed into small teams, take the roles of the directors of that enterprise.

Case Study
Their initial experience is of an audio-visual and written case study of the enterprise. This case study is designed to highlight the issues about which a particular learning experience has been planned. Each group is expected to study the case material and make recommendations about future courses of action. These recommendations are then presented to the complete group and compared with each other and with those of acknowledged experts from industry. The case study lasts about half a day and leads to strong commitment, interest and sense of ownership of the enterprise for which each team is responsible.

Having made recommendations for the future, each team is invited to run its business for, say, two years. This involves making decisions in a variety of areas and, for example, involves:
    - Forecasting future market conditions, production levels and results.
    - Making effective use of existing resources.
    - Hiring, firing and transferring staff
    - Changing the design of the organisation structure and the design of particular jobs.
  Decisions, which are made on a quarterly basis, are input to a computer model of the firm, and the resulting performance fed back in the form of management reports. In this way the business, and its context, are developed into the future. This simulation element takes one and a half days.
  Throughout the simulation, individual work and team meetings are observed; advice and counselling are available when necessary. Depending on the objectives of the learning experience, participants make presentations to the whole group. Assessments may be made of each team's interpersonal skills, verbal communications, decisionmaking and problem solving methods by those supervising the simulation experience. These take a further half day.
  The most extensive use of AROUSAL has been with a model of a building contractor. The information available to participants and the areas in which they can make decisions in running their firm are outlined in Figure l. This shows the wide range of organisational and human variables that it has been possible to incorporate into this simulation. Each simulated individual employed by the firm has his own personality, capacity for work and skill level. Each project undertaken, and each different organisation structure, has its own particular characteristics. These characteristics can be inferred from a combination of the descriptive information available, the past behaviour of the firm, the experience of team members from within and outside the simulation, and relevant theory.

Figure 1. The World of the Management Team
Decisions Areas

Level of Marketing
Response to invitations
Mark up on Tenders

Recruitment, Sacking
Allocation of Staff to Projects

Reporting Relationships
Job Design

Forecasts of Future Performance

Information Available

Market Conditions
Invitations to Tender
Tender Results

Project Progress
Specific Problems with Projects

Prospective Employees
Staffing, Workloads
pecific Problems with Staff

Reporting Relationships
ob Design

Cash Flows, Balance Sheet
Profit-Loss, Overheads

Work in Hand

Ad Hoc Analyses

The underlying model has been developed from the findings of a long-term programme of research into the construction industry, which has focused on the relationships between environmental conditions, organisation practices and performance[4, 5, 6]. As a consequence there has been no substantial difficulty in arriving at a suitably well defined set of relationships on which to base the model, or in selecting actual companies on which to base particular simulations in the construction industry.
  Given a good understanding of the building industry, and the simulation philosophy outlined earlier, the major issues in developing the system have been in producing appropriate case study material and computer programs. The latter have provided some exacting problems, in ensuring that the participants are not intimidated by the interface between their decisions and the computer based simulation model which processes those decisions. At present the participants do not use a computer terminal; after all, the simulation is not meant to be an exercise in operating computer equipment. However, as managers become more familiar with the use of such equipment in their routine work situations, so the use of such terminals with simulation work will become less significantly novel.

The potential for applying the AROUSAL system to other industries is considerable, provided the necessary data-base is developed

The present AROUSAL system is highly flexible for use within the construction industry and, for example, is capable of being fine-tuned to particular enterprises where it can reflect the specific nature of jobs, organisations, and environmental conditions. The potential for the application of the system to other industries is considerable although, because of the database required for the building of models appropriate to these sectors, such developments are progressing slowly.


Management Development Courses
The AROUSAL system has been used most extensively as an integrating experience on a range of short postexperience and post-graduate courses. In these situations the participants have been provided with an opportunity for testing out previous theoretical and technical inputs to their courses with a means for establishing strategies for implementing their new knowledge. The associated learning objectives have been broad.
  Participants have had little difficulty in achieving a high degree of acceptance of their roles as directors of a business, the context of that business or its behaviour. This is true of both experienced managers, who have continually judged their simulated business against their experience in the real world, and the less experienced post-graduate students who have used a more theoretical frame of reference. Further, participants have had little difficulty in reconciling the real-time decision-making process of the management teams with the computerised backcloth of their business activities and performance.
  The simulation is usually operated with several teams running the same company, in isolation from each other. They compete in a simulated environment and not directly against each other. This allows teams to progress at their own pace without the pressures of deadlines or fears of irrational decisions being made by the other teams. However, where teams choose to compare their performance, a competitive element can arise.
  A variation on this standard situation is where different teams run different businesses, at different stages of development, operating in different locations, with different types of work, and with different prospects. These different businesses can represent the subsidiaries of a large organisation, which report to a holding board, also comprising a team of participants. With this configuration the main emphasis is on the real-time relationships between teams, and businesses, the "balancing" of the businesses at holding board level and on negotiations for resources between holding and subsidiary boards.

Corporate Appraisal and the Management of Change
One of the prime reasons for developing AROUSAL was to provide a means to help particular firms handle highly specific issues. The system can be tuned to reflect the characteristics and behaviour of such firms, for example in terms of the numbers and types of staff employed, the organisation structure, the design of jobs and the nature of projects available and undertaken by the firm. The staff of the firm can then project their company into the future and develop a sensitivity for the particular issues of interest.
  The issues addressed so far have involved the management of the introduction of new technical specialists, with consequent reorganisations; the investigation of substantially different approaches to competing for work; and the growth and development of subsidiaries. In these cases the role of the tutor has been to help the participants investigate alternatives to existing practices and to assist them in revealing feasible methods for making these alternatives work.
  Not only can AROUSAL be used as a senior management tool in their appraisal of possible future strategies but it can help to explain their choices to staff lower down the organisation.

With increasing change in business practices, many individuals find themselves bewildered and confused about their roles, areas of decision-making responsibility and, quite simply, how to handle the mass information which they have to use in the course of their jobs. Given an AROUSAL model tuned to a particular firm, it is possible to counsel individuals about their roles, and the influence of their decisions on the firm as a whole and on how to use the information system. By removing the pressures and risks associated with decision-making in real life, individuals can develop a richer appreciation of their jobs and improve their confidence for taking decisions in real life.

The greatest and most appropriate learning takes place when managers are able to introduce, handle and experiment with new ideas and techniques, against a backclothof a familiar business setting

The need for this counselling should not be taken to imply a deficiency on the part of individuals, since often it is the employer who has provided insufficient long-term training or development to enable staff to establish a sufficiently broad view of their own jobs.

Team Building and Leadership Development
Further, partially developed applications of AROUSAL involve its use as a vehicle for the building of teams of individuals who are required, for example, to set up new businesses or to handle significant projects. Although many highly effective team building exercises are available, there are many attractions in simulating situations which individuals are expected to meet in real life. Team members are able to develop a better appreciation of each other's strengths and weaknesses, mutual adjustment of roles can take place at an early stage, and any necessary development needs or the requirement for personnel skills counselling can be quickly identified.

The View of Industry
The exposure of AROUSAL to industry has been relatively restricted, but considerable interest has been generated. Some of the major features which appeal to industry reflect the overall philosophy of the system. This is expressed in the view that managers learn by doing, and that the greatest and most appropriate learning takes place when managers are able to introduce, handle and experiment with new ideas and techniques, against a backcloth of a familiar business setting. AROUSAL also meets other demands and some beliefs found in industry:
  - Management effectiveness is best measured by quantifiable results.
  - An effective manager is able to forecast the outcomes of his actions, and so take specific actions to keep his areas of operations under control.
  - In order to select appropriate outcomes the effective manager has to integrate a wide range of skills and operate across the full range of problem levels.

There are some reservations about the potential usefulness of AROUSAL; some managers, particularly principals of construction firms, find the view that their businesses can be modelled particularly challenging. Another issue is the artificiality of simulation: in real life, actions and decisions could be very different. To a point this is true, but a major objective of the simulation is to remove some of the factors which inhibit effective decision-making in real life, to enable individuals to explore and become more familiar with alternative approaches to making decisions. Further, these reservations have not been shared by participants from industry. Much to their surprise (and to the trainers' relief) comments such as "we soon stopped wondering what was in the model and started asking what would happen in real life" are fairly common.
  Arguments about the artificiality of simulation can be overstressed. With the rapid introduction of new technologies and especially of information systems, the worlds of many managers are becoming increasingly unnatural. The use of artificial intelligence for the study of human and organisational problems becomes increasingly valid[7]. So too does its use in providing realistic contexts for management learning experiences. However, this is not an argument to be pursued too strongly with most construction managers!

The AROUSAL system facilitates learning through action, by providing a simulated organisation with realistically structured decision-making needs, and through the opportunity for reflection, provided by the sensitive engineering of relevant learning situations. Experience of AROUSAL in a number of different modes has been very encouraging.
  The system meets many of the criteria for effective learning, derived empirically and from current theories of learning, as well as matching the demands of industry, and managers, for practical, situation specific and action oriented experiences.
  Although the most extensive experience of AROUSAL has been in the construction industry, the system has been designed to be applied to a wide range of industrial settings. The main constraint to the development of AROUSAL in other industries is the extensive database required for sector specific simulations, but this is likely to be eased by the development of more sophisticated simulation methods for handling organisational and human related factors.

1    Olivas, L. and Newstrom, J.W., "Learning Through the Use of Simulation Games", Training and Development Journal, September 1981.
2    Kolb, D.A., "On Management and the Learning Process", in Kolb, D.A. Rubin, I.M. and McIntyre, J.M., Organisational Psychology: A book of Readings, Prentice Hall, 1974.
3    Cole, G., "Management Training in Top Companies", Journal of European Industrial Training, Vol. 5 No. 4, 1981.
4    Lea, F.E., Lansley, P.R. and Spencer, P.A., Growth and Efficiency in the Building Industry, Ashridge Management Research Unit, 1974.
5    Sadler, P.J., Webb, T.D. and Lansley, P.R., Management Style and Organisation Structure in the Smaller Enterprise, Ashridge Management Research Unit, 1974.
6    Lansley, P.R., Quince, T.A. and Lea, F.E., Flexibility and Efficiency in Construction Management, a report to the Department of the Enviromment, Ashridge Management College, 1979.
7    Simon, H., The Sciences of the Artificial, The MIT Press, 1981.

Scanned from:      Journal of European Industrial Training, Vol 6, No 6, 1982

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