Critical Incident Learning: The Fit With Business Schools Christopher Puto, Ph.D. April 15, 2005 What makes one leader succeed when placed in a completely new environment, while another leader with a comparable background does not? Those of us in business education would claim that the success factors include the individual’s intelligence, his or her previous experiences, and the knowledge and skills acquired through an excellent business school education. That is, in a very real sense, our value proposition: We provide the knowledge and skills that give talented people the edge to succeed.I believe that simulated learning environments, fully integrated into a business curriculum, can prepare students for the complex business settings they are sure to face after graduation. We place students in circumstances where they must confront a wholly new environment and then ask them to use their newly acquired knowledge and skills to learn the fundamental drivers in that environment. As a result, the students develop appropriate strategies and tactics to convert these fundamental business drivers into long run success in that environment.The key is mastering a skill called “critical incident learning,” one in which the aspiring business leader is immersed into the inner workings of an existing organization. From that vantage point, the would-be leaders begin the tasks of assessing and responding with problem solving, organizational skills and communication skills to map, assess and implement appropriate courses of action.Many Approaches to Experiential LearningIn the late 1980s, business schools began to embrace experiential learning, using consulting projects to augment the case method in providing problem- solving and quasi-decision making experiences in a real world context. These consulting projects were a major stride forward, but even they had the potential to give students only a glimpse of the total picture.The “critical incident learning” that is so key to understanding the foundations of business success does not fully transfer from consulting project experiences because the realities of our external constituent relationships preclude our ever permitting the project or enterprise to be truly at risk; yet, awareness and assessment of true risk are essential to real business decision making. Other non-business fields have made significant strides in using simulated learning environments to help students have “near experiences” with real risk. Notably, airline pilots and anesthesiologists routinely undergo technology-aided simulations that bring the real world and its attendant risks and consequences into the students’ immediate experience.A New Look at “Older” TechnologyWhen working on my M.B.A. in the 1960s, the professor for my capstone policy course introduced a business simulation as a complementary learning device added to our casebased instruction. In addition to the hypothetical decisions we regularly debated on behalf of the case protagonist managers, we also had the chance to debate our decisions in our simulation teams, make decisions and then live with the consequences. The learning experience was so profound and powerful that 12 years later, as an instructor, I introduced a next generation simulation as a supplement to my Principles of Marketing course.I believe the most profound use of business simulation technology is only now emerging. With the support of our faculty, the College of Business has used business simulation not as a tangential tool for learning business fundamentals but rather as the backbone of our full-time MBA curriculum. The early indications of its success are positive, with valuable insights all business schools might consider.The curriculum is sequenced to take students through a series of learning stages: a familiarization stage that not only shocks the system with information overload but also provides invaluable context for students, paving the way for constructive learning and appropriate integration of theory; a stage to focus on the execution of decisions, which is done by fully utilizing teams and understanding the role of data as the foundation of solid decisions; and the knowledge state and its application.The Corporate World Wants Better Decision MakersThe business simulation serves as both the initiation and the backdrop to all of the fundamental issues our students wrestle with in the classroom. Using the business simulation enables us to more fully integrate all the elements of a sound MBA education: teamwork, analytical skills, communication skills, core disciplinary knowledge, strategic thinking and effective decision making.I am convinced that this simulation-based curriculum is made-to-order for these critical skills – complete with a controlled environment that spawns ample opportunities for coaching and “critical incident learning” that instills the confidence in decision making that only comes from experience.It is All Very Real to StudentsBecause the curriculum is cross-functional, students struggle as they go through a rigorous decision-making process on matters ranging from whether to diversify their company’s product line, invest in new plant capacity or purchase expensive new market research. The stakes are high as grades are based in part on success indicators such as the company’s operating and financial performance.In the second year, there is a programwide election of CEOs, who must then recruit their own teams. The newly formed teams must define their internal policies and rules of operation. Teams can “fire” teammates, very effectively dealing with the “free rider” problem so notorious in MBA group projects. Overall grades are based on a formula devised by the financial accounting faculty to measure the net change in wealth during the new management’s tenure.The Flash of InsightSome of the stress designed to give students a “real” experience is induced through “curveballs” interjected at key points. For example, a more expensive synthetic version of a previously carcinogenic ingredient becomes available. This raises complicated ethical, branding and bottom line issues that are relevant in today’s business climate.Student teams react quite differently to this news, either seeing it as an opportunity or an enormous threat – and the team’s decision-making environment begins to mirror the heated discussions that certainly take place in today’s executive boardrooms.I believe this form of business education provides the potential for dramatically increasing readiness of today’s MBA graduates to accept and perform assignments with greater responsibility and impact.The case method, established at Harvard 90 years ago, has been the mainstay for conveying business knowledge and managerial skills to generations of business students. I am not advocating the demise of case-based pedagogy in individual course offerings; however, I am suggesting that this venerable method can be effectively enhanced by using advanced business simulations to create a truly integrated approach for MBA education and better prepare today’s MBA students to lead tomorrow’s ever more complex and competitive businesses.