The Business GRID

POWER ProfitAbility® - The Power Industry Simulation

Power Simulation

The Programme

POWER ProfitAbility® is a board-based business simulation that builds on the business essentials of managing a generation, transmission and the distribution portions of the power and energy business simulations ProfitAbility® has established a global reputation for creating business simulations. Clients from the energy sector include RWE, EDF, Ontario Power Generation, Consumers Energy, BC Gas & Hydro, Eon, Detroit Edison and Southern California Edison.

Who Should Attend

This engaging and challenging business simulation is for first line managers, those in a senior management position and future leaders. Power ProfitAbility® is designed to give a global overview of how an energy company works, and to make the learning of strategic planning, marketing and financial concepts compelling, easy and enjoyable.

What will they Learn

POWER ProfitAbility® teaches managers how profit is made, how business finances really work, the importance (and cost) of cash, how strategic direction affects daily operations, and what they can do to move their numbers in the right direction.

Using a unique, board-based simulation — which represents the workings of a company, complete with sales, marketing and financial operations — participants learn how money moves through their business with every decision they make.

The learning outcomes are:
Improved profitability on a sustained basis
A clear understanding of the financial drivers in the business
How to achieve specific objectives in, for example, production, inventory management, sales and cost reduction.
Knowing how to interpret income statements and balance sheets … without dying of boredom!
Understanding budgeting, cash flow forecasting and profit margin analysis
Increased understanding of the key measures of business: gross profit, net profit and shareholder value
How to control cash moving in and out of the business
Understanding the need to develop a marketing strategy for a competitive marketplace

Power Simulation

Good Decision Making at Ontario Power Generation & BC Hydro

American utility companies needed managers to understand what constituted good decision making under regulation. The principle that you should spend as much as you can on capital projects, because you will get a guaranteed rate of return on every dollar, for example, would not make good business sense in a free market, deregulated industry. In this scenario, cash flow needs to be tightly managed, and both capital and operating expenses need to be minimised. Managers and leaders had to know enough about the business to see what would make sense, so that they could manage through the transition to success on the other side. Ontario Power Generation and BC Hydro trained the entire staff (600 at BC Hydro, 10,000 at OPG). They hoped that with a better business understanding, decisions would be made which would help the business run smoothly through the troubled waters of deregulation. This theory became reality, and for most, paid off handsomely.

How simulations made a difference at American Electric Power

The original learning programmes designed for power utilities were used by a number of generation companies, and several of them asked us to tailor the design to their particular needs. American Electric Power, for instance, wanted people to understand why it could make perfect business sense to keep an older power station going with chewing gum and string, while a newer (and more efficient) one was having yet more investment poured in to increase its capacity and productivity. So we built a simulation with both stations depicted, and let the managers find out from personal experience what the results are if you spend on one (and hardly use it) compared with the other (which was in constant use providing base-load power). One of the great things about learning from experience with simulations is that you don’t need anyone to convince you about what you have learnt. People don’t argue with their own experience; they remember it for years, and use it as the basis for future decisions and actions.

A Customised end-to-end Simulation : From Generation to Retail

Power Simulation

A fully integrated company, with generation, retail, trading and hedging operations, has a complex structure. There is a lot to learn, which is mostly invisible for anyone working within any one part of the organisation. Simulations are a particularly good way to help people understand the linkages within energy companies. On the generation side, there are decisions to be made about maintenance and ongoing investment in coal- and gas-fired plants, as well as renewables, hedging through forward purchases of coal and gas, and forward sales of electricity. The retail business is driven by the quality of customer service (which in turn depends on staff churn and training); advertising and sponsorships; and the number, quality and motivation of sales agents. Getting your head round the interactions of all these operating issues, and seeing how they build the big picture of the company’s success or failure, is and to easy task, but it can be managed in just a couple of days with a simulation.

The Power Simulation

Each participant is part of a 2–4 person team, in competition with 5 other teams. Each team will operate power plants (generation) manage the grid and retail aspects of the power business. They will hedge on fuel, hire employees, make capital investments, take out loans, research the competition and make decisions based on their position in the marketplace.

The goal is to outperform your competitors by creating more profit and value than them, while maintaining cash flow that is critical to the business. The simulation is run over up to 8 business cycles. After each period of activity, short presentations are given on the following topics, followed by immediate application.

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