Modeling Radical Changes in Technology within Strategy-Oriented Business Simulations

Abstract

A review of business-policy simulations demonstrates that their focus is on strategic planning, but with a primary emphasis on "incrementalism. " They do not address "radical changes in technology " and the impact that such change may have on an industry. There is a need to provide students of strategy the opportunity to experience some of the complex issues of technology management. This article provides an approach to designing a technology-oriented game which requires student teams to analyze the risk, uncertainty, and the financial trade-offs associated with budgeting large sums of money to new product research and development. The article reviews the key strategic issues of technology management and includes a framework for modeling some of the issues. This framework is composed of five parts and involves both the demand and the cost side of a typical strategy simulation. The article concludes with a mini-simulation which demonstrates how the framework works and how the structure of an industry can be dramatically changed when a firm successfully introduces a unique product based on a new technology.