Goal Setting and Performance Evaluation with Different Starting Positions - The Modeling Dilemma -

Abstract

"This paper focuses on design and modeling issues for computerized business simulations which are primarily used to teach strategic planning. A review of ten popular micro and mainframe strategy-oriented simulations demonstrates that most do not formally integrate goal setting as a component of the simulation and that all simulations reviewed had each firm start with exactly the same financial and operation base. The paper purports that even with the performance measurement problems associated with different starting positions, strategy-based simulations should permit each firm to set their owns goals and objectives and that the software should contain performance measures. These measure(s) should indicate not only if the firm reached its objective(s), but how well the team performed relative to other firms in the industry. A statistical methodology is presented where firms with different starting positions can set and weight their own goals, and then be rated on whether they attained their goals. Two summary measures of goal difficulty are presented, one based on absolute difficulty and the other on relative difficulty. Chebyshev’s inequality is then used to partition goals into three levels of difficulty: low, medium and high. While the statistics of comparative performance put forth in the paper do not provide a strict ranking, they do segregate firm’s performance and goal difficulty into different groups, and they should initiate a discussion of how to measure performance when teams have different starting scenarios. "