Virtual Workplaces in the Classroom

Computer simulations got their start in the game aisle. Now these online programs are an important part of MBA programs

by Francesca Di Meglio

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Today's business students have grown up with computer-based simulations. So it's only natural that business simulations are growing in popularity in business-school programs—and threatening the once unassailable dominance of the case study (BusinessWeek, 1/24/08).

Online simulations are Internet-based games that allow students to perform tasks such as overseeing operations management of a virtual factory or serving as chief executive of a virtual business and networking with other executives. Professors can track every move students make in these online games and use the data to grade the students and provide feedback on specific skills. Often the online simulations drive competition among students and give them a chance to apply the skills and theories learned in class in a virtual arena similar to a typical workplace.

Companies that are developing the online simulations say they have an inherent advantage over paper-based case studies. "You can read about bicycles, but you won't be a good cyclist until you start riding one," says Samuel Wood, one of the creators of Littlefield Technologies, an online factory simulation, at Stanford Graduate School of Business. Wood, who has left Stanford to head Responsive Learning Technologies, a Los Altos (Calif.) company that markets Littlefield Technologies, estimates more than half of AACSB-accredited business schools are using online games or simulations.

A Tool for Motivation

Online simulations tend to be closer to reality than lectures and straight theory, says Sunil Kumar, a Stanford GSB professor and co-creator of Littlefield Technologies. Kumar says the simulation forces students to figure out how to put textbook theory into practice.

Some of these simulations take up a day or two in class and replace a lecture. Others are assigned as homework and can last the duration of the semester without taking up lots of class time. Students log in to make changes and check their progress on their own clock. Professors can get in-depth data showing every move each student makes. This can then be brought up in class discussion to motivate students, show them their mistakes, celebrate their successes, and pump up the competition among classmates and teams.

Daniel Smith, president of Capsim Management Simulations, a creator of simulations in Northfield, Ill., says the programs are also good tools for employers who want to verify that MBA students can apply what they've learned in classroom. Recruiters can look at simulation performance to help them determine whether a potential hire is ready for the real world.

Hand in Hand with Case Studies

Simulations aren't capable of replacing case studies just yet, though. Critics point out that having students work on a computer isolates them and does not provide enough interaction with other people, something a manager has to be able to do successfully. Case studies are also easier and cheaper to develop. And even Smith says some simulations can be overly broad.

So developers are starting to create case studies and simulations to used in combination. Harvard Business School Publishing, known for its case studies, recently launched its first online simulation on pricing, and this spring is planning to unveil an online simulation on service and operation management designed to go hand in hand with one of its best-selling case studies.

Meanwhile, at the University of Pennsylvania's Wharton School, professors who want to create online simulations tailored to their needs can turn to the Alfred West Jr. Learning Lab, a center that helps Wharton educators develop and build online simulations for their courses. Professors can bring a case study to the lab, turn it into a simulation, run it more than once in class, change the outcomes, and redevelop it to suit their needs, says Robert Holthausen, professor of accounting and finance and co-director of the Learning Lab.

Sifting Out the Junk

What's next? Capsim's Smith expects more behavioral simulations that test MBA students' soft skills. Eric Abrahamson, a professor at Columbia Business School, envisions a new kind of case that would actually overload students with online information about a particular company. Then they'd have to sift through it, just as a new CEO would, to determine which information is relevant to a particular problem the company is having.

All of this should appeal to the new MBA students who are accustomed to living, working, and socializing online. Yet, Abrahamson warns that like case studies, not all online simulations will be done well or turn out to be useful. "There will be a lot of junk," he says.

Abrahamson also notes it wasn't too long ago when experts predicted students would do all their learning in their own homes in front of a computer. Those unrealistic ideas have long been dashed—and no one should apply them to online simulations now.

Check out the BusinessWeek.com slide show to learn more about how online simulations are being used.

Di Meglio is a reporter for BusinessWeek.com in Fort Lee, N.J.