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How do simulation games fit into a course curriculum? These interactive sequences develop new skills for students, who learn from doing, and are therefore good additions to traditional case studies, explains Jean-Claude Larréché, Alfred H. Heineken Chaired Professor of marketing at INSEAD and creator of Markstrat, a simulation game centered around strategic marketing.
Learning by doing
Markstrat’s primary function is to place students in various situations. The game allows them to observe a market and its players, make them take strategic actions, and observe the results. Indeed, the most important lessons are learned from experience. Researchers formalized the “70/20/10” model, well known in the corporate training world. According to this paradigm, 70% of what people learn comes from experience, 20% from social interactions, and 10% purely from training.
‘’We allow students to learn as if they were positioned in a company, except that their potential mistakes won’t have any costly consequences to the business”, summarizes Jean-Claude Larréché. “It’s an effective way to educate. It alters the attitudes and behaviors of students facing a situation. Markstrat works similarly to training ‘on the job’ – even if it is not the only tool for learning this way. Collaborative projects, working with a community, and internships are other forms of experiential training.”
A realistic simulation
The effectiveness of Markstrat in a word is its realism. “Realism is the basis of Markstrat”, insists Jean-Claude Larréché.
“The process begins by observing a real and complex situation, gleaning the essentials from it, and recreating it in a simulation. Professors who have never set foot in a company can’t make these simulations. The workflow is very detailed, the developers make a good number of adjustments and test them against corporate environments. The game is a success when our testers are unable to detect whether a situation was created for the game or is from a real business.”
That being said, if Markstrat does realistically reproduce a market and its players, the game has its proper timeline. The evolution is simulated over several months, in order for students to comprehend the effects of their decisions in the short and long term.
“Compared to a real business situation, it’s very useful for the students, because it shortens the learning time by immediately showing the consequences of a decision in the future”, Jean-Claude Larréché points out.
Also unlike in a real business: time is limited.
“Students don’t have five hours to make a decision, but just one or two. This forces them to think quickly, and so the decision-making processes are better absorbed in their minds. This also teaches them how to make faster decisions”
Simulation game vs. Case Studies
Case studies and simulation games do not have the same outcomes. “These two things are complementary, just as the conceptual courses are”, states Jean-Claude Larréché.
“Case studies are precious tools, because they give a unique insight into the workings of a business. The disadvantage is that they only show how things work in one way. We don’t know what would have happened if other choices had been made. Also, [with case studies] the students are involved as analysts, and not actors”, points out Jean-Claude Larréché.
Conversely, simulation games put students in charge. They are in a position to make decisions, make choices, test their ideas, and understand when they are on the wrong track.
“One has to make mistakes to get better. Failure is an excellent education”, affirms Jean-Claude Larréché.
Markstrat vs traditional business games
The philosophy of traditional business games, developed by businesses for management students, show some similarities to more elaborate simulation games like Markstrat. Both organize a form of competition between students and create an emulation, which motivates the teams and involves them in an apprenticeship.
“However, what Markstrat does, and what most traditional business games don’t do, is simulate the market in such detail and in a realistic manner. It’s the most difficult part to simulate and is Markstrat’s great strength. Traditional business games focus on the inner logic of management (accounting, finance, production…) and simulate the market in a simplistic way”, assesses Jean-Claude Larréché.
In Markstrat, the development is less “mechanical” than in a traditional business game, and there are many more pathways that can be taken.
“Traditional Business games are less realistic because they are an extreme simplification of the corporate environment”, Jean-Claude Larréché explains.
Also, unlike in case studies or classic business games, a simulation like Markstrat remains relevant when played a second or even a third time. The workflow never has the same effect, and “one always discovers something new”, notes Jean-Claude Larréché. He says he met a student who played it 5 separate times, and he believe professionals would benefit from doing it regularly to update their knowledge and to call their practices into question.
An adaptable game
Another difference: Markstrat can adapt to the types of participants. The professor can vary the difficulty, the level of details and type of information he or she wishes to use according to the audience, whether it be undergraduate students, Masters students, or executives in continuing education. Additionally, the professor can tailor the simulation to a specific profile, such as students with a scientific or social science background, managers, research analysts, marketing specialists, etc.
“We make a very good engine, but the car has to adapt itself to the client,” sums up Jean-Claude Larréché.
What matters most is that the professor in question knows exactly what the participants’ objective is, so they can focus on acquiring the particular skills needed.
A common culture
In the end, unlike case studies, Markstrat has the advantage of creating a common culture among the participants.
“Markstrat teaches people to speak the same language. After having played, the students share the same competitive values, and spend less time on the details, allowing them to work more quickly. This game is an excellent antidote against what I call business theatrics, the non-essential debates and politics”, says Jean-Claude Larréché.
He recalls a speech by the CEO of a big company, who had 2,000 of his employees play Markstrat.
“He said that after Markstrat, decisions that had taken six months and dozens of exchanges and meetings were settled in one week and a few phone calls.”