sealPurdue News

October 1997

War-gaming moves from war room to board room

WEST LAFAYETTE, Ind. -- What would happen if computer terrorists attacked the New York Stock Exchange? How would an expanded NAFTA affect the local and national economies? Those are the kinds of economic scenarios that can be simulated by a new business teaching tool developed at Purdue University.

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Two professors in the Purdue Krannert Graduate School of Management have teamed up with a computer science professor to develop a business "war game" that can help answer strategic-management questions. The game creates a synthetic environment where people are free to make mistakes and learn from them. It was inspired by Pentagon war game exercises.

"The Synthetic Environments for Advanced Simulations is an interactive, computer-generated environment that provides a simulated economy with fully functioning goods, labor, asset, bond, and currency markets," says Alok Chaturvedi, professor of management information systems. "It represents the next generation of the business simulation environment, where hundreds of students learn valuable lessons in managing global corporations by creating virtual products while working in virtual teams for virtual corporations in virtual economies, and see the consequences of their actions unfold in front of their eyes in real time."

The simulation is being used by Purdue graduate students to learn leadership and decision- making skills. Chaturvedi developed the software program along with Shailendra Mehta, director of entrepreneurship and small business outreach, and computer science Professor Chandrajit Bajaj. In a recent simulation, students formed teams to compete for the largest piece of the telecommunications industry in a synthetic U.S. economy.

"We try to program as many economic variables as we can into the game while still leaving the kinds of surprises and discoveries that the real world throws our way," Mehta says. "The chaos that can ensue during the course of a game is of great value, because the economy itself is always in flux."

Students begin with only information relevant to their assigned identities. For example, some are telephone companies, others are cable and satellite providers, still others are consumers buying stock in these companies. As the game proceeds, they have to learn through the market; but they also have access to on-line "consulting firms" where they can buy information about market needs and industry competitors.

"The game lets the students find out what can happen in the communications industry when companies enter each other's markets," Chaturvedi says. "This is a very practical tool that can be used not only for training students, but in the corporate world as well. I can't think of a more hands-on way to let management experience the consequences of a potential buy, sell or new-product decision without actually taking the risk."

The simulation is based on traditional military war-gaming, and Mehta calls it a "fire drill for business."

The simulation game is similar to other business training tools like the board game "Tango," by Celemi, a Swedish learning firm. When playing Tango, a business groups its employees into teams to play out the board game over a period of one to two days. Tango teaches the executives how to locate and leverage hidden sources of corporate value. Another business simulation is "Aspen," developed at the Sandia National Laboratories in Albuquerque. Aspen creates a society-in-miniature of up to 10,000 households, 1,500 factories, stores, banks and government agencies inside a computer.

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The Purdue team says their game has more advanced features than other programs because it functions in real time, can simulate a year in 30 minutes, has an advanced 3-D graphics interface and can be played by a large number of players, real and virtual. A key component to the simulation is a pregame briefing and the after-action review, which the professors say is probably the most crucial step to learning.

While only implemented in the classroom so far, the game soon could be available for corporate use. For instance, Mehta says the simulation is much more effective than a traditional training seminar or meeting at holding the attention of the players from beginning to end. He envisions it as communication and training tool for issues that corporations grapple with, such as changes in technology, regulatory laws or consumer demand.

"Soon we hope to be able to play the game on the Internet," Mehta says. "That kind of access would allow a multinational firm to play the game from several different corporate sites. Having executives around the world playing out the same scenario would be an invaluable teaching tool for corporate decision makers."

Business application isn't the only use for the Purdue game. In July, the professors ran the simulation at a synthetic economies workshop sponsored by the Institute for Defense Analysis in Washington, D.C. The players, who were high-level military, government and business executives, played out a scenario for "cyber-terrorism." The purpose of the simulation was to learn how governments, businesses and the economy would react if terrorists attacked telephone networks. The outcome -- the terrorists won.

"It is a tool for knowledge formation," Chaturvedi says. "The human interaction between the players of the game helps make the simulation so unpredictable. The outcomes are changeable, and the game itself is a mirror of the real world."

Sources: Alok Chaturvedi (765) 494-9048; e-mail,
Shailendra Mehta (765) 494-5703; e-mail,
Writer: Kate Walker, (765) 494-2073; e-mail,
Purdue News Service: (765) 494-2096; e-mail,

NOTE TO JOURNALISTS: B-roll also is available upon request. Journalist are invited to attend the next simulation at 9 a.m. Friday, Nov. 21, in the Krannert Building. Call Kate Walker (765) 494-2073 for more information.

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Purdue management students check their market position in a computer-simulated market economy. Purdue's Shailendra Mehta (standing left) and Alok Chaturvedi (standing right) are the developers of the program. (Purdue News Service Photo by David Umberger)
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Participants follow the outcomes of a simulated market economy game, through 3-D graphic projections, which Chandrajit Bajaj, Purdue professor of computer science, helped develop. (Purdue News Service Photo by Vince Walter)
Color photo, electronic transmission, and Web and ftp download available. Photo ID: Chaturvedi/Game2
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