Simulation-Based Pedagogy for Business Students (Mellon Project Report)

My project has been to redesign the BA 495 Strategic Management capstone course into a simulation-based management training program that integrates and reinforces knowledge and skills learned in courses of the core business curriculum. I have successfully implement the first iteration of the project in Fall 2016, providing students with an enhanced business strategy simulation experience enriched with a series of value-added activities and assessment. I am now implementing an improved version of the simulation in Spring 2017 based on feedback from students who participated in the first version.

The simulation software used in my course is called Marketplace Live Simulation (MLS). This is a web-based, large-scale, full-enterprise simulation interface offered by Innovative Learning Solutions, Inc. MLS has been used for corporate executive training programs in a variety of businesses around the world, such as Coca Cola, FedEx, Delta Airlines, Walmart, and IBM. The Mellon Foundation digital pedagogy award allowed me to work on the customization and adoption of MLS for business majors at Austin College. Our students are now learning with a management training tool that is widely used in real-life corporate management training.

The simulation employs a competitive market environment in which students build a business from the ground up to enter the microcomputer industry. The teams are tasked with introducing a new line of microcomputers into several international markets. MLS offers different difficulty levels for the simulated market environment. In Fall 2016, I used a market environment involving six decision rounds, three customer segments, and four geographic regions. This was my first semester at Austin College and I had little idea about the caliber of business students at the college. I started with a standard difficulty level in and planned to lower it, if necessary, in future iterations. However, observing how well students handled the decision making process in the simulation, I upgraded the difficulty to a very high level in Spring 2017. Students now interact in a market environment that involves eight decision rounds, five customer segments, and twenty geographic markets. A fifteen-minute overview of the simulation’s decision content is accessible at the MLS website.

The simulation requires students to form executive teams consisting of four or five members. Within each team, students work as the Vice Presidents of specific functional areas. Throughout the decision rounds, they conduct market analyses, evaluate the strategic position of the firm, and make tactical decisions with regards to product design, R&D, manufacturing capacity, production processes, inventory management, human resource management, sales channel planning, advertising, and financial accounting. They are required to adjust strategies and tactics in response to uncertainties arising from the market environment, the consequences of their own decisions, and the actions of competing teams. The goal is to achieve strategic dominance in the marketplace that is measured by a balanced scorecard within the simulation.

I conducted executive briefings on a weekly basis. Each team meets with me for about fifteen minutes to discuss and justify the decisions that they are planning to make for the decision round. These sessions trains students in professional meeting preparation and management and allow me to monitor the critical thinking process of each student. I challenge the students’ thinking by looking for inconsistencies in their analyses and decisions. I do not indicate the correct decision to make, but try ensure that students have considered the relevant issues related to their strategic and tactical decisions. In Fall 2016, executive briefing sessions were conducted orally, and I used a rubric to evaluate whether students can think on their feet and respond to questions and challenges in a thoughtful, confident manner.

To emphasize the development of business writing skills, I have implemented a executive memo requirement for Spring 2017. Students are now required to justify their decisions both orally and with a two-page executive memo. I have now also developed a rubric for the written memos, assessing the student’s ability to thoughtfully present his/her tactical decisions based on a concise analysis of the market environment as well as a consideration of how these decisions will impact the firm’s overall strategy. Both the oral and written rubrics measure student performance along the dimensions of Depth of Understanding, Breadth of Understanding, and Management by the Numbers.

At the middle of the simulation exercise, students are required to prepare a business plan and present it to independent judge(s) who serve as venture capitalist(s). I am currently working with one independent judge for the business plan presentation. However, I have plans to involve two judges in future. With his extensive business experience, Mr. Charles Curtis, Executive Director of Information Technology at Austin College, has been a great resource person to play the role of the venture capitalist. I am thankful to Mr. Curtis for his willingness to take part in this exercise. Business plan presentation is a comprehensive and complex assignment. Students develop a formal strategy involving detailed tactical plans and pro-forma financial projections for the next four decision rounds. In Fall 2016, the PowerPoint presentation, tactical plan, and pro-forma financial statements served as the business plan. To emphasize writing, I have added a five-page written business plan component in Spring 2017. To maintain tactical confidentiality, each team presents their business plan in a closed-door meeting with the venture capitalist. Teams answer questions and try to persuade the investor that they are worthy of a full investment. After listening to all presentation, the investor then decide how much to invest in each company.

For Spring 2017, I have added a follow-up negotiation meeting with the investor. In these meetings, the investor (i.e., Mr. Curtis) met with each team separately to discuss the plan in more detail and negotiate an investment amount. The business plan preparation serves as an important tool for the development of the students’ ability to think broadly and deeply about their business. The purpose of the follow negotiation meetings is to give students a hands-on experience with business negotiation process. Students faces the challenge of learning how to ask for money, justify its use with a credible plan, and convince a critical investor. I have developed rubric for assessing students’ performance in presenting their business plan. The rubric cover thirteen performance dimensions. Students receive a copy of the rubric and we discuss it in class to make sure that expectations are fully understood.

At the end of the simulation, the venture capitalist is invited back to class. Teams present a final report to the investor about their business performance. They must look in the eye of the person from whom they took money and be accountable for their actions and performance. It is often uncomfortable in real life to report performance outcomes that fall short of promises. Student go through similar experience as part of the simulation. I have also developed grading rubrics to evaluate final presentation performance. The final report rubrics covers thirteen performance dimensions and also focusses on the assessment of lessons learned from the simulation.

Observations:

I used a sports-like draft process to form teams in Fall 2016. The simulation business environment is highly competitive and students are required to keep corporate information confidential. Since the size of the student population is relatively small at Austin College and most students personally know each other, maintaining business confidentiality proved to be challenging. I even had students who were roommates, but placed on competing teams. They reported that it took conscious effort  to refrain from discussing the simulation due to a fear of unintentional disclosure of corporate secrets. As a result, there was some effect on the openness of the conversations that they had previously enjoyed. Based on feedback, I changed the team formation process to a peer interview-based model in Spring 2017 to allow students more flexibility in choosing teams.

The peer interviewing process was an engaging experience for students. Most students reported that it was their first experience of sitting on the employer’s side of the table in a job interview, and it gave them an opportunity to reflect and evaluate their own job interview skills as candidates. However, some students used this opportunity to recruit friends or relationship partners in simulation teams. Teams that formed based on personal relationship are currently struggling to perform well. Since friends within a team tend not to challenge each other’s thoughts, peer scrutiny is relatively weaker in these teams, and as a result the quality of the decision making is poorer. I now realize that it is necessary to teach students the importance of keeping personal life and work life separate.

To integrate knowledge gained in other courses is one of the top learning objectives of this course. Evaluation of oral executive briefings and written executive memos show that students struggle to demonstrate cross-functional knowledge in early stages of the simulation. The average score on the breadth of understanding for the first four decision rounds in Fall 2016 and Spring 2017 combined was 1.94 on. a 4-points scale, where 2 is the benchmark for satisfactory rating. Students generally lack the understanding of how decisions made in a specific functional area are tied into the overall strategy of the firm. In the later part of the simulation, the breadth of understanding score increases to an average 3.2, where 3 is the benchmark of effective rating. This indicates that the simulation promotes better decision making by helping students see how their decisions can affect the performance of others and the organization as a whole.

A strong group dynamic is at the core of the simulation exercise. Students are provided with an opportunity to work within a group context where group performance is a major determinant of final grades. I allow teams, under my careful supervision, to fire non-performing team members. If a student is fired from a team, he/she receives significant grade penalty and is required to complete the whole simulation on his/her own. In Fall 2016, one student was fired from their team and eventually had to drop the course due to increased workload. This challenging conditions tends to remove the barriers between the individual students and motivate them to become colleagues by creating a shared space that emphasizes care, trust, and commitment.

Instructors interested in developing simulation-based course should keep in mind that the changing market environment makes each iteration of the simulation unique. As a result, course preparation takes a significant amount of time as instructors will need to evaluate market condition faced by each team to be able to contribute during the executive briefings.

Simulation-based pedagogy offers an experiential learning process that emphasizes repeated action, reflection, accommodation, and testing. This process allow students to refine their knowledge and developed business skills. As such, simulation based-pedagogy can be implemented in any business courses. In the future, I am planning to extend simulation-based pedagogy at Austin College with a Jan Term course targeted to non-business majors. This will create hands-on experiential learning opportunity for non-business majors to develop an understanding of business with a fun, intro-level business simulation.