By Nimit Arora, MBA 2012
It’s been a standard practice at many business schools to teach marketing, operations, strategy and other business concepts through simulations and games. In many of my MBA classes, we played games such as the ‘Beer game’ in Operations, ‘MarkStrat’ in Marketing strategy, Selling simulation in sales class and ‘The Game of leadership’ on the leadership day. I thought I was done with all the games in the business school when I was introduced to the Fishing game in my Sustainable Operations class. I hadn’t thought one could learn sustainability concepts through a game.
Sustainable Operations is offered for the first time this year at UNC Kenan-Flagler with Professor Deshpande and it’s proving to be an amazing addition to the Sustainability curriculum. It teaches some great concepts on how sustainability is dealt in different aspects of operations – product design, manufacturing, logistics and distribution. This class is a must for folks looking for a career in Sustainability consulting, operations, CSR and environmental sustainability. It is very case based and builds on concepts through case discussions.
To give you a flavor of the class content, some of the things I’ve learned:
- Cradle-to-cradle strategies – What it takes to implement a cradle-to-cradle strategy?
- Closed-loop operations and recycling strategies – What works and what does not work? When does it make sense for a company to recycle or remanufacture?
- lean manufacturing is not always green
The most important thing I got out of this class was the trade-offs that companies face when implementing sustainability initiatives. A company could redesign its product and make it more long lasting with a lower impact on environment but this will reduce the company’s sales and hit profits, which can actually make the whole initiative financially unsustainable. Companies will never take sustainability initiatives seriously if those strategies don’t make strategic and (or) economic sense.
I want to talk a little bit more about the game that we played in the class: it was a fishing game. It was an excellent tool to simulate real market conditions in managing a renewable resource like fisheries. Each student acted as a fishing company and was assigned a few ships to catch fish in the same sea. The initial fish density and the respective catch in the sea were also provided to us. The team which had the highest total net worth (cash + value of fleet) won the game. Every team started well by putting all their ships in the sea, thus catching a lot of fish and making money. This also increased the demand for the ships and hence the ships were auctioned at a high price. As more ships were put in the sea, the catch per ship also increased. This is where all the teams got the whole equation wrong. Every team thought, “Oh, we’re under-fishing. There’s still a lot of fish. Let’s put more ships and catch more fish.”
However, in reality, fish density was at its maximum level. Increased fishing at this point would mean lower regeneration rates of fish and an overall decrease in fish population. Moreover, this decrease was exponential. With the decreased catch levels, it was no longer profitable to send the ships in the sea. So, ships had to be kept in the harbor while the value of ships plummeted to zero as nobody wanted to buy ships anymore. Every team kept losing money after this point and my team actually went bankrupt.
Each firm’s short-term strategy of making more money puts into jeopardy the long-term sustainability of all the firms. We were allowed to talk to each other and collude but none of us did so. It was hard to reach consensus though not impossible. The teams in the other section of the class actually made an informal agreement and put only a fixed number of ships in the sea. All teams in that section made much more money than any other team in my section. Their wealth kept on increasing and the fishery was also maintained at a sustainable level.
The game clearly exemplifies the ‘Tragedy of Commons’. The exact same collapse happened for Atlantic Swordfish and Pacific bluefin Tuna in 1990s. It highlights the need for collaboration between firms when each firm is competing for the same renewable resource. It’s a strange business setting where cooperation is preferred to competition. Additionally, there also needs to be enforcement of rules so that no individual firm overfishes.
I’m fascinated that simple games still have the power of effectively teaching complicated concepts!