Sustainability in our business games
What do we mean by sustainability?
Sustainability can be understood as either being “able to continue over a period of time” or “causing little or no damage to the environment and therefore [being] able to continue for a long time”, according to the Cambridge Dictionary.
It is worth noting that our games about business have always promoted sustainability, as per the first definition we gave above: participants learn that cash burning and dumping are indeed business strategies, but the threat they pose on profitability and their future ability to invest is often just too big. Of course, they can borrow money, but the higher their debt leverage, the lower their share value and the worse the perception of their organization by both the workforce and the stakeholders.
Our gameplay is about building a strong business, one that has resources to invest, capacity to deliver and innovation to offer: all of them are key to outperform other companies on the market delivering similar products and will play a major role in determining the longevity of your organization.
Yet not a day goes by without the media reporting about global warming and its ravaging effects on the ecosystem, and a fortiori on society: this is where we connect to the second definition provided above. Global warming is a negative externality of the way we do business, though not all industries are equivalent when it comes to how much they contribute to the phenomenon.
Younger generations have grown up with the menace of environmental disturbances, either by being directly confronted to them, or indirectly on TV, social media and whatnot. For that matter, it did not surprise us that the first feedback we received about our content and its link to sustainability came from a Masters’ student at the University of Westminster:
“Why are we learning business with a game that asks us to manufacture cars? How is that taking into account current global challenges?”
Integrating sustainability into a simulation about cars – why it makes sense
That person was right, and their feedback confronted us for the very first time with how pressing the need was for business education material that considers sustainability not just as a nice-to-have, but a central aspect of business decisions.
That student, who from a business perspective is our customer, took time to flag a discrepancy between what they are learning, and the reality out there. This was a wake-up call that times are changing, and so are people: sustainability, in its definition incorporating the environment and future generations, is gradually becoming a major customer purchasing criteria.
The business simulation this student was referring to, is the only one of our business games dealing with manufacturing cars: the Customer Value Challenge.
Our approach to integrating sustainability into the game
We chose to revamp the simulation, rather than starting one from scratch: our reasoning was that developing a whole new game, solely based on creating a sustainable organization, would be further away from reality than a game dealing with transitioning an existing organization from generating a large carbon footprint to becoming more sustainable.
We do not believe that with the rise of environmental consciousness, cars are doomed to disappear – look around how major players in the car manufacturing industry are developing more hybrid or electric models than ever before, the most recent example being General Motors announcing its pivot to all-electric vehicles by 2025 (watch the ad, it’s hilarious).
The first thing we did was to create a new winning criterion: CO2 emissions, as measured by the European Commission. How does that work? Next to other winning criteria, such as ROCE, Employee Morale, share price and more, participants will be able to influence the carbon footprint of the vehicles they develop, produce and sell – note that you can also choose CO2 emissions as the only winning criterion, but it will not teach students how to run a business.
For each of the 4 lines of cars they produce – each serving a different customer profile – participants will need to determine their performance and consumption levels, the size of vehicles, the degree of novelty they integrate every year and technological advancements, among others. Said dimensions weigh negatively or positively in the balance, with differing multiplying factors. Each line of business will therefore have its own CO2 emission level, but the winning criterion are CO2 emissions at the company level: this will be computed by a weighted average considering the CO2 emissions of each business line and the total volume sold per business line.
This way, we encourage students not only to work on reducing the consumption and pollution of all their cars, but also to increase the sales of their least polluting cars to decrease their overall CO2 emissions index.
Customers reactions to our approach
This new version of the Customer Value Challenge lives up to our intent to give sustainability a central role, while taking participants on a journey through customer-centricity and visualization of an organization’s value proposition, so they learn the trade-offs to be made when running and growing a business.
Now used by major universities worldwide and available on Harvard Business Publishing’s catalog, the Customer Value Challenge is teaching students that business is about identifying what your customers want, designing, implementing and deploying a strategy that taps into their expectations, while leveraging cost cutting opportunities, to reach profitability and sustainability, in both senses of the word.
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