"You're bankrupt."

"No we're not."

"Yes you are."

Our management team of Epsilon Inc. is arguing with our banker. Our company's admittedly shaky financial condition is splayed in paper and plastic across the bland table we huddle around in a conference room at the offices of KPMG Peat Marwick in Chicago. While the city poaches outside in the stew of a summer heat wave, our palms sweat in the room's fluorescent chill as Jim, Ray, and I try to persuade Lucinda to give us one more bridge loan to keep our business going.

Epsilon' s position is dire yet tantalizing. After three years of operation, our professional services company's equity has suddenly sunk to a negative $22M . But our growing "intangible" assets--our adroit staff, our deep technical expertise, and our resulting solid image with customers --still leaves us with a plus $22M market value, and just about enough cash on hand to pay the interest on our debt.

As time is running out, we get the argument off the technical interpretation of our balance sheet and focus on the prospects of our business strategy. From the git-go, our Epsilon team believed that if we invested in building our expert knowledge and in growing a first-rate staff, while obsessively catering to our clients' needs, we would eventually capture a major share of blue-chip business from our competitors. In fact, our steadily growing sales seem to justify the wisdom of our strategy. But we need more time--and more cash--to see our plan succeed. We've tried merger talks with other firms, but we could not come to terms.

Lucinda relents. With some creative juggling of receivables, debt, equity, and maybe a dollop of pure spirit, we work out a financial package that enables Epsilon to stay afloat.

We keep on working. Epsilon seems to be turning the corner. Our strategy may actually be paying off at last. And then time runs out and our world comes to a screeching halt.

No, we didn't hurl ourselves into the Chicago River. We were only playing a game.

Specifically, a game called "Tango," jointly developed by Swedes Karl-Erik Sveiby and Klas Mellander. Sveiby, the author of "The New Organizational Wealth" and several other volumes on knowledge-based management, designed Tango to reflect some of the key lessons from his years of experience running a knowledge-based business--a Swedish publishing company. Sveiby currently bases his far-flung consulting sorties at the Queensland University of Technology in Brisbane, Australia.

Mellander is the founder of Celemi, a company based in Malmo, Sweden, (with US offices in Salisbury, Connecticut) that develops and publishes corporate training materials, particularly simulation games. Mellander applied Celemi ' s learning methodologies to Sveiby's Knowledge Organization theories to create Tango. The business relationship is traditional to publishing: Celemi has worldwide marketing rights to Tango, and Sveiby receives a royalty from sales.

I played Tango as a guest of Celemi with a group of almost two dozen people at KPMG' s Executive Conference Center in Chicago, over a Thursday and Friday in late July. Our session was intended mostly as a demonstration for trainers, consultants, and faculty who were considering using Tango as an instructional exercise; nearly half our group also was there to explore becoming a licensed Tango facilitator. Lucinda Berlew, a representative of Celemi's US office, actually helped run the game with a young man who was practicing to become a certified facilitator.

Overall, I found Tango can be an engaging and potent motivational tool: It helps get across why attending to "intangibles" is an important part of managing in the Knowledge Age. Whether the Tango experience is actually effective in changing organizational behavior is less clear. The game's cost and some features of its design and marketing may make it unattractive for many people and organizations who might benefit from its lessons. There's much of value to be learned from Tango, but neither the game nor its presenters can do the learning for you.

After The Tango

After discussing Tango with Sveiby, and reading Tom Stewart' s enthusiastic chronicle of playing the game In Fortune magazine, the key questions I had about Tango were: What difference does it make? As the old saying goes, is the game worth the candle?

The cost of playing Tango is, in fact, substantial. Celemi's price for the game board, counters, cards, manuals, and other paraphernalia that comprise the Tango package comes to $500 per player. In order to play the game, Celemi further requires that customers employ a facilitator who is "certified" by Celemi. (At the time I played last summer Celemi had certified about 50 facilitators worldwide.) Facilitators set their own fees, but I was told that $2,000 per day is typical. The game takes about a day and a half to complete and the materials are designed for a maximum of six teams (virtual companies) of four players each, though a few more people can be squeezed in. With fewer than four teams, the lack of competition undermines the simulation.

Altogether then, the direct cost of playing Tango comes to at least $600 per person . The total cost to a company to put employees through a Tango session--factoring in the opportunity cost of people' s time as well as other incidental costs such as meals, meeting facilities, and possible travel--may add up to double or triple that amount.

As a first step to judging whether that investment is worthwhile, I wanted to know to what extent players' behavior or organizations were changed after the game was played. Mere evaluations of "intangible" interest, enjoyment, or entertainment from the experience are not enough --at $600-$1,800 a head, I, for one, would like to see at least some kind of tangible impact if not outright benefit.

I asked Celemi to provide contacts with past clients so I could find out what results or benefits Tango customers had observed some time after the game was over. Celemi declined, but did invite me to participate in the Chicago session. Three months later, several of our group of Tango players have kept me informed of what happened subsequently. While I have no way to know whether their experiences are representative of other Tango customers, here is what I've learned from them.

Mario Raia, president of an accounting firm in Vancouver, Washington, told me that he feels that playing Tango increased his awareness of the need to better manage his firmžs professionals and intangible assets. Yet he also felt "frustrated by the inability to take the knowledge gained right back into the workplace and use it."

Another player, Gary Bohringer, heads his own graphic design firm in Elmhurst, Illinois. Bohringer reports that the Tango experience significantly affected how he approaches his business . Formerly a one-person company, he decided to hire an art director "to grow our market value as a service provider." Tango also gave Bohringer some insights about the value of what Sveiby calls customer capital. "I'm less desperate now to take just another project, and put more value on fit. " So he recently turned down a corporate identity project because he just did not feel the "chemistry" with the client was right. But as a Celemi contractor Bohringer got to play Tango at no cost. Though he found the experience valuable, as a small business he is not sure he would have been willing or able to pay the normal price to play the game.

Several players in our session were trainers or "performance consultantsū with large corporations. They were trying Tango to see if they wanted to use it in their company's training programs. Among them were Dan Topf and Lynn Swanson, internal training consultants at the Principal Financial Group in Des Moines, Iowa. Three months after playing Tango, they have not yet done anything with it. Their group has used other simulation games in training, and Swanson said she was favorably impressed by Tango: „It has good learning points." Yet she and Topf have been concerned about the amount of time Tango demands. While one operating group at Principal has expressed some interest, Swanson told me that so far they have not found enough internal customers to justify the cost of using the game.

Jonathan Ross, an organizational development specialist with Square D Company in Schaumberg, Illinois, was less sanguine. Ross was interested in Tango because his company successfully had used another Celemi training game called Apples and Oranges. In comparison, Ross found Tango "awkward and confusing."

In particular, Ross noticed that if a team gets lost or confused by Tango' s complex accounting procedures, they are prone to lose interest in accounting accurately. In turn, that team is likely to lose interest in the game and may even contaminate it for others. My team actually saw that play out at two tables adjacent to ours. One team comprised of four business college professors got their company into such a muddle in the early rounds that the team gave up and departed. To our other side, the Delta team seemed to be having much more success with a business strategy similar to ours, until it became clear that they had made basic errors in accounting . By then it was too late to untangle the damage, that team quit, and we at Epsilon happily cherrypicked Delta ' s choicest staff and customers at a fire-sale auction.

Gung Ho At OnLine

Jim Palic and Ray Voegeli, senior managers of Online Consulting, a 60 person computer services firm in Wilmington, Delaware, took the lead of our Epsilon team and played Tango with gusto. Because they could readily identify with the game scenario-- "This is just like our business," Ray noted at the outset--and were used to running their own company together, Jim and Ray handled Tango's technicalities with a smooth acumen that eased playing for me and the other member of our team, Susan Esdale, a Chicago communications consultant.

Palic and Voegeli were sufficiently impressed that they arranged to have Celemi's Lucinda Berlew run a Tango session for a group of 28 of their staff in early October. To save on costs, Palic negotiated a minimal facilitation fee with Berlew. They also arranged to run the entire session in a single day from 8 AM to 6 PM. Voegeli pre briefed their game players on the rules and mechanics of Tango during the previous week, to save time getting them up to speed on game day. (Celemi's learning theories normally discourage such preparation.)

As gung ho as Jim and Ray have been about Tango, Palic reported only limited impact on his company's behavior a month later. Online Consulting ran the game on a Friday; everyone went home as soon as it was over. No further group discussion of the game took place until a company meeting ten days later. Palic proposed that they continue the game "asynchronously" (i.e., online), completing one round (virtual year) every few days. But the players preferred the intensity of the in-person experience. Instead, they agreed to play a few more rounds on a forthcoming Wednesday evening, after work.

With half of Online's workforce now having played Tango, Palic so far sees only two notable impacts on organizational behavior. "People occasionally will draw on Tango concepts in conversations," Palic notices.

But the value of the major effect Palic has observed--a new sort of empathy for management--is at best ambiguous. The more junior staffers who have played Tango now say to Palic and other senior managers, "We didn't understand how complicated it is to run this kind of business. So we will just leave you alone."

Untangling Tango

I found Tango a powerful and engaging experience that, under the right circumstances, can stimulate the unenlightened to see that corporate knowledge intangible assets, intellectual capital, and such are critical factors of modern management. But there are several problems in the current design and marketing of Tango that limit the game's useful impact on business practice.

• Lack of debriefing and planning. The way Tango is designed and normally presented lacks a systematic process for debriefing lessons learned, connecting them to the players' own business, and planning to apply the lessons to business practice. While Celemi' s guide to facilitators includes suggestions for periodic ''debriefing'' in the course of the game, the focus is on lessons internal to the game rather than on critiquing the game itself or linking lessons to a player's actual practices.

  In contrast, in the US (and NATO) military, where simulation-based training is the most highly advanced and widely applied, rigorous debriefing and action planning are considered essential to an effective simulation exercise. Maureen Bergondy, research psychologist at the Naval Air Warfare Center Training Systems Division in Orlando, Florida, sent me a stack of scientific research articles to underscore her observation that "feedback from debriefing is critical for effective training." While simulation experience alone may improve performance, Bergondy notes, the addition of debriefing and planning does improve performance.

• Limits of facilitators. Tango cannot run without a facilitator who, besides guide and referee, plays the roles of banker and auctioneer. Celemi requires that customers use a certified facilitator because Tango's complicated mechanics take some time and practice to master, and an unprepared facilitator can derail the experience for everyone. But facilitators are ''certified'' only for their ability to run the game smoothly. There is no assurance that a facilitator certified by Celemi has the expertise, experience, or methods to provide the kind of debriefing and planning beyond the game itself that most customers will need to put lessons learned into practice.

• Cumbersome mechanics. The facilitator requirement is a proxy for one of Tango's key problems: The complicated, awkward mechanics of the game itself get in the way of the learning that is intended. It takes several hours for most players to get sufficiently comfortable with the mechanical procedures of the game that they can start to concentrate on the strategic play of the virtual market. Then, it can take a full day to play enough rounds (years) to see how the dynamics of strategy and competition work out. In my opinion, digital simulation, networking, and online support ('Wizards' could make Tango easier, more accessible, and less expensive.

• High cost. The fact remains that Tango's high cost in time and money now prevents many people and organizations from learning anything from it. Celemi's business strategy caters to very big organizations with large training budgets, and with departments that are willing to spend thousands of dollars on a single event. But most entrepreneurs and small-to-medium high-growth companies will be unwilling or just unable to pay Celemi's price. As devout as Online Consulting has been about developing its people and corporate culture, Jim Palic admits that, had he not played Tango himself, he would not have been inclined to buy it for his company. Even then, the discount and experimental arrangements Online made with Celemi are unlikely to be duplicated

• Arguable assumptions. The value of what is learned from a simulation depends heavily on the authenticity of the simulation's resemblance to reality. Of course a simulation cannot duplicate reality, and should not try. Rather, good performance in a simulation game should transfer smoothly to good performance in the real world the game is supposed to model. In my view, some of the assumptions about the business world built into the Tango simulation are at least arguable.

For instance, in Tango, research and development investments are assumed to depreciate over time. This creates an incentive to keep on spending money on R&D, carrying out Sveiby's belief that such expenditure grows a company's "intellectual capital." Frankly, I doubt it. The knowledge from R&D has little relation to the cost of acquiring it; need not deteriorate over time; and even may grow in value with age, like fine wine.

To illustrate: A recent news story reported that, by slashing $1 billion from IBM's R&D budget, chairman Lou Gerstner actually has enabled IBM to generate more rapid commercialization and market value from his, company's R&D investments. Bell Labs and many other industry research programs have followed the same pattern of "reengineering" R&D in the 1990s. Similarly, the robot explorer that NASA recently sent to Mars was built by the Jet Propulsion Labs (I used to work there) for only one-sixth the cost of the Viking lander JPL sent to Mars two decades ago.

Many discoveries of science and technology arrive "before their time" and may languish for decades before their value can be realized or applied. For instance, the JAVA programming language that is now all the rage in the computer world is a revived version of aborted on-the-shelf software that Sun Microsystems had developed for an "interactive TV" business that never got off the ground.

On the other hand, Tango assumes that human knowledge does not depreciate. But any electrical engineer will testify that the "shelf life" of expertise in areas such as computer science is down to as little as six months.

These and other dubious assumptions of the Tango model are not fatal flaws. Indeed, if the stimulating Tango experience is combined with an effective debriefing and planning process, it can provide further opportunities to learn how your business really operates, and how to become a more knowledge effective organization.

Should You Tango?

In spite of its limitations, playing Tango is an intense experience that can stimulate a flood of ideas about what knowledge-based management should be. Sveiby and Celemi deserve praise for adding fun and excitement to learning how the knowledge economy works. If you can afford the cost in cash and time, Tango can be a worthwhile investment. But I judge that maybe 90% of the value of what may be learned from the Tango experience will be lost if the game is employed as a stand-alone event.

Rather, to be most useful, Tango should be used as the front end of a substantial training workshop of at least two to three consecutive days. I believe it is essential that the energy fomented by the game experience be channeled immediately into a systematic debriefing and planning process to make lessons learned explicit while they are fresh, and to connect them directly to the players' own business practices. The program should be organized and managed by a consultant with broad expertise in knowledge-based management as well as the learning and planning methods needed to transfer the "intangible" game experience into "tangible" business performance. A Celemi-certified facilitator alone may not, and most likely will not be able to provide that kind of service.

The cost of what I would consider an adequate program then would be significant perhaps $18,000 for a group of two dozen people, $750 each, plus the expensive investment oft heir time. Many large organizations will not consider that an extreme or even uncommon training expense. Meanwhile, smaller companies and entrepreneurs still may be able to access this kind of learning experience by sharing the program and its cost through an industry group or professional association.