Anyone with a web connection can engage in the marketplace maneuvering, the pressure-packed decision making, and the inevitable price wars that break out among business students at the Massachusetts Institute of Technology (MIT).
For four years, students in John Sterman’s business management courses have gone toe to toe in simulated business arenas, with the latest being a concocted world of video game companies looking for an edge in marketing and selling their game consoles and software.
The university announced Nov. 30 that the simulation, known as “Platform Wars,” would be freely available on the MIT Sloan Teaching Innovation Resources (MSTIR) website, following the lead of MIT’s OpenCoursWare program, a seminal experiment in higher education’s sharing of open source material.
Sterman, a professor in MIT’s Sloan School of Management, said the chance to employ out-of-the-box strategies in simulated business environments has proven perhaps more valuable to his students than strategizing in the real world.
“In many respects, simulation is superior to the real world when it comes to theory and learning,” said Sterman, director of MIT’s System Dynamics Group, a gathering of researchers. “[A simulation] is a safe container. Students choose strategies that may not work just to learn about it, and your actual bank account isn’t drained if you lose millions in the simulation. … Like a flight simulation, you risk nothing.”
In “Platform Wars,” students set the price of hardware, negotiate royalty rates with game makers, and decide if they should subsidize the first few games for their video game system, because, as Sterman said, “if there are no games to run on it, it’s just a big, heavy paperweight.”
“Platform Wars” often lures MIT students into price wars with their competitors. Companies in the online simulation see their prices undercut by the competition, and respond in kind.
Avoiding this vicious cycle of company destruction has served as a valuable classroom lesson for many MIT students on the precipice of the business world.
“The emotion comes into play,” Sterman said. “They know they’re supposed to signal willingness to cooperate and not trigger a price war, but feelings people have when they’re undercut are hard to overcome. … People’s not wanting to lose face gets in the way of making a good decision many times.”
Management simulations are nothing new for Sterman, who created three simulation programs before “Platform Wars.” “Salt Seller,” for example, teaches students about commodity pricing, and “Fishbanks” focuses on managing renewable resources.
These simulations take place over years or decades, helping students better understand short-term and long-term business strategies and the downfalls of getting big too fast.
Every simulator program is based on case studies read by MIT students. All four are available for free on the MSTIR website.
Simulations have become commonplace in much of higher education in recent years, including at Northern Illinois University (NIU), where students use a simulation that lets users design a desired movement or action using the required formulas and algorithms that apply to all types of engineering.
Brian Coller, an associate professor of engineering at NIU, designed the simulation after showing students computer-generated NASA footage from the Mars Rover landings.
Using Coller’s program, students are required to complete the applicable formulas and algorithms to successfully steer a video game car around an oval track. Students must consider rate of speed, geometrical calculations, and all manner of mathematical information to do this.
“These projects are very open-ended, meaning that I’m not going to tell [students] everything they need to know,” Coller said. “They have to go find stuff, and they have to put things together. There’s no one right answer, … so different students can get to a solution in different ways, and that’s what real engineering is like.”
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