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B-Schools in Second Life

B-Schools in Second Life: It’s more than just Fun and Games;
It’s the Confluence of Playing, Learning, and Working

Vivek Bhatnagar
Vice President, Townsend Polymer Services & Information

Gazing out at the snow capped peaks from the window of her home in New Zealand, Mary Ellen Gordon, Ph.D. Managing Director of Market Truths—a state of art market research and analysis company—and who taught business courses at three universities, wondered if she was prepared for the talk. In another five minutes she was due to make yet another presentation.

11,000 miles away Gerald Murphy hurried to the cyber café in one of the nearby by-now-almost deserted streets. It was close to half-past midnight and Murphy—who was vacationing in Paris—knew unless he rushed, he would not be in time for the class he was supposed to attend as part of his evening MBA course.

About 3,300 miles to his west, John Bourne, Ph.D. Professor and Director, Olin-Babson Center for Online Learning was already settled for the evening. As always, he couldn’t help but stare at the near tranquilizing beauty of the Atlantic Ocean waves reaching barely yards away from his U.S. east coast home.

And as dusk settled in the greater Boston area and people reached their homes, nine others—within a hundred miles radius—reached for their computers/laptops. Within minutes of each other they all arrived at Babson region for, what was to be, their last class of this spring semester.

For next three hours or so they would discuss, debate, and review their progress over issues relating to entrepreneurship, education, and of course, second life.

This was no ordinary class, as, by now, you would have already guessed. This was a course aptly titled “Entrepreneurship and Second Life: Building Virtual Incubator”; and except for the first classroom face-to-face meeting, all others had been “in-world”—a term used to refer to the world inside second life.

Also attending this special session were Len Schlesinger, the president elect of Babson College along with Karen Maccaro, associate dean of the graduate school.

As Bourne adjusted his headphone and started typing on his laptop, his thoughts went back to some of the highlights of the past semester…

A few months back, at the beginning of the semester, National Collegiate Inventors and Innovators Alliance (NCIIA) made an award to Babson College and the Sloan Consortium to develop a virtual (business) incubator in Second Life. Students in this class would engage in research and development that had the potential of making a significant difference in the field of entrepreneurship globally. John’s challenge was to find ways to ensure this award money was well spent providing he and his class key learning lessons as well ensuring Babson gave back to the global community in more ways than one.

Second Life (also referred as SL “in-world”, i.e. within second life) is a 3-D virtual world on the internet built and owned by its residents (registered users who adorn different avatars and inhabit SL). It opened to the public in 2003 and has since grown exponentially. Today there are over 5 million residents (some claim it be in the range of 9-11 million) in SL from around the globe. SL has its own economy with its currency referred to as Linden Dollars (L$). Residents create virtual goods and services, and buy and sell them in the SL. There are also currency exchanges where residents can exchange real world currencies for L$. The exchange rate is around L$ 260 to one US dollar. So popular has been this platform for testing ideas and innovating that many real world (called RL in SL lingo) companies such as ABN AMRO, BMW, Cisco Systems, CNN, Dell, EMC, Intel, IBM, Nissan, Reuters, Sun Microsystems, and Vodafone have established their presence there. Some countries have even set up their virtual consulates/embassies.

In keeping with Babson’s reputation as the number one B-school in the U.S. for entrepreneurship for last 15 consecutive years (per US News and Report), as also one of the top ten B-schools in U.S. with most creative and innovative students (per The Wall Street Journal), the class decided they could add most value to the effort by providing guidance and mentorship to the over 50 e-Teams worldwide that were part of NCIIA.

This course, therefore, attempted to create a virtual incubator for these e-Teams. Milos Lundquist—the in-world avatar for John Bourne—knew with Babson’s resources and expertise in the subject they could really help these global e-Teams in their entrepreneurship efforts.

Incidentally, this wasn’t Babson’s first course in SL. Earlier, at the beginning of fall semester a similar course was offered that laid the initial groundwork resulting in the subsequent NCIIA award.

But how can SL be used for business education? Some time back, Berry Beattie, a lecturer in leadership and organizational behavior in an interview with Jan Kingsley, Director of the Corporate Services at European Foundation for Management Development (EFMD), responded to the above question with this answer: “There are over 200 educational institutions—mostly American universities—and another over 3,000 members in the Educator’s list present in SL. All of them are seeking ways to best use the technology for educational purposes. What is interesting to me is that the primary educational groups are in health, technology, the arts and social sciences. Apart from INSEAD and Boconni, I am not aware of any business school with an established presence (in SL). And yet the potential to use SL for business and management education is really major: here we have a global society with an average age of around 38, a real economy to experiment with, a wealth of real social relationships to establish, a technology which allows a cohort of students from around the world to interact synchronously, and an environment which itself fosters innovation and creativity. In addition, it provides a really cost-effective way to provide tutor-student interaction. So, the potential is enormous.” 1

Perhaps, he wasn’t aware of Babson just across the Atlantic.

Notwithstanding, INSEAD has been one of the first B-schools to offer an innovative learning environment in which its participants from around the world collaborate in real-time and learn from the diverse experiences of their faculty and peers 2. The school planned to integrate Second Life into a range of programs, including MBA, EMBA and Executive Education. “The Second Life campus underscores the value INSEAD places on entrepreneurialism,” said Miklos Sarvary, Director of The Centre for Learning Innovation at INSEAD. “Our presence there is a natural extension of our dedication to provide participants with the most current, real-time technological advancements and deliver top leadership development programs, whether it takes place on a physical campus or online digital world.”

The INSEAD SL campus now hosts events for applicants or admitted students. A number of courses are also planned to be made available, including an MBA class on entrepreneurship in which participants would have the opportunity to develop a business plan and test it in SL. As a prelude, INSEAD recently hosted lectures for MBA and EMBA students focused on the theme of virtual worlds.

In addition to the course offerings, INSEAD also planned to build a research centre and social science research lab on its virtual real estate.

And how much did it all cost? The island was about €1000. They pay a monthly fee of about €100. The most expensive part of this project was the design and development of the campus, costing them about €10,000. The school hired three architecture students to create virtual classrooms suitable for lectures that would supplement in-person learning.

Another B-school in Europe that has its presence on the SL is IE Business School in Spain 3. They too have an island and have provided their professors with technical support to explore SL. In fact several of their training sessions of the Master in Telecom & Digital Business have already taken place in this environment.

Closer home, within the U.S. Kevin Werbach, a professor at the University of Pennsylvania's Wharton School, in a recent BusinessWeek article 4, mentioned he rarely uses the virtual world directly in his teaching. But he does include it for illustrative purposes in his undergraduate course on the law of e-commerce.

The article further mentioned about a group of five students at MIT's Sloan School of Management dedicating an entire semester to studying Linden Lab, creator and owner of Second Life. As part of a project for their Strategic Organizational Design course, these students focused on how the company intended to sustain its internal, democratic structure amid such rapid growth.

While adoption of virtual worlds by B-schools has been somewhat slow, although gaining traction, some educators feel that business schools may be missing the point. Megan Conklin, an assistant professor of Computing Sciences at Elon University in Elon, N.C. coaches educators interested in bringing Second Life into their classrooms, says business professors should think beyond distance learning, which isn't really Second Life's strength.

"Don't try to replicate the real world in Second Life," she says. "I can fly in Second Life. I can design something out of my imagination. I can buy and sell money without any risk. I can test crazy business plans."

Berry Beattie echoes similar sentiments. “The worst thing to do is to try and recreate a classroom in SL and bring in a specific group of students and give them a lecture. Instead, using SL, one could get a group of students to actually develop a business, make products, market and sell them, analyze the issues involved and report back on them based on totally real interactions with the rest of the population”.

Adding further, he says, “In terms of leadership, one of the issues that multinationals face is how to develop motivated virtual teams operating across the globe. What better environment could there be than SL for the development of such skills? Indeed, a number of companies are using SL for that purpose already. So SL provides a platform for developing leadership and management skills in a real context.”

However, Joe Harder, an adjunct associate professor teaching a "Spirit of the New Workplace" course at the University of Virginia's Darden School, isn't sure that SL is the right place for MBA students. "There's a possibility to be someone very different from who you are in the first life," he says. "But in business school, it's probably more important to be who you (actually) are."

For most of us brought up with a particular way of thinking, online worlds such as Second Life are just for fun and games. In another words it’s just meant for playing.

Not if you were to see the attendance for a recent panel discussion held in SL on the evolution of stock exchanges, the role of regulation, and other issues facing the SL economy (see picture 5). The panel was hosted by Cornell's Johnson Graduate School of Management professor and Director of Business Stimulation Lab Robert Bloomfield who has been researching in using lab experiments and mathematical models to study the effects of financial market regulations on investor welfare and effect of psychological forces on financial markets.

Bloomfield in his avatar Beyers Sellers uses SL as his classroom for a course that guides his students through the complex economics in the metaverse (a metaverse is a fictional virtual world, first described in Neal Stephenson's 1992 science fiction novel Snow Crash, where humans, as avatars, interact with each other). His course Business and Oversight in Second Life is a new directed-study seminar for graduate students. The students use SL to study the business and policy issues surrounding the largely unregulated "wild west" of the metaverse. Bloomfield, has even coined a new word—“metanomics"—the economics of the metaverse, which answers to a distinct set of masters.

"My goal is to use virtual worlds as a way to teach students about real-world business" says Bloomfield. Thus, Bloomfield has extended the boundaries of SL from mere playing to learning as well.

In fact, many economics researchers, including Bloomfield are using the virtual environment to test ideas involving aspects of economics such as game theory, the effects of regulation, and other monetary issues. Bloomfield has been running experiments in the lab since 1989 in which he creates small game economies. When the Financial Accounting Standards Board (FASB) approached Bloomfield about studying how to create financial accounting standards that will assist investors as much as possible, he turned to the virtual world for answers 6.

"It would be very difficult to look at the complex issues that FASB is trying to address with eight people in a laboratory playing a very simple economic game," he says. "I started looking for how I could create a more realistic economy with more players dealing with a high degree of complexity. It didn't take me long to realize that people in virtual worlds are already doing just that."

Bloomfield points out that today's virtual economies are very much like the U.S. economy about 100 years ago, when there was no regulation whatsoever. That makes this other realm ripe for study. "Virtual worlds like Second Life give students an opportunity to understand what the purpose of regulation is, why it arises, what forces drive it to look ultimately the way it does," says Bloomfield.

And yet most of us continue to view the changing world around us with our as yet old lenses.

When Wall Street Journal came out in January 2008 with a story “Cheer Up, Ben: Your Economy Isn't As Bad as This One”, where the author Robin Sidel mentioned Bloomfield hosting a “pretend” television show, Bloomfield reacted by shooting off a letter to their editor.

In his letter he observed “I am glad to see the Wall Street Journal covering the banking crisis in the virtual world Second Life. Having spent a good deal of time studying virtual world economies, I would caution that terms like “make-believe,” “game” and “pretend” obscure the nature of these new bastions of entrepreneurship.

To take one example of particular interest to me, Ms. Sidel notes that I host a “pretend” television show in Second Life. The show, called “Metanomics,” airs live on Second Life Cable Network every Monday.

I am not sure which aspect of the show is not “real.” The guests seem pretty real, including faculty from Stanford, Emory and various law schools; top-level executives from tech giants like IBM and virtual world developers Linden Lab, There and Forterra; and senior government officials from Congress, the Federal Reserve Bank and NASA. My audience seems real as well. The Second Life Cable Network reaches close to half of all Second Life residents, and Metanomics is nearing the top of the ratings, while appealing to a pretty desirable demographic of entrepreneurs and academics. This has made the show seem real enough to our sponsors, who include Sun, Cisco Systems, SAP, Saxo Bank and Generali Group.

Are we providing real insights into the future of business and policy in virtual worlds? Tune in and decide for yourself.”

This, in essence, is the true confluence of playing, learning, and working requiring a paradigm shift in thinking for many of us schooled in the good-old ways of the world.

There have been many articles describing Second Life and its potential for education and businesses. With advancement in technology, over the next few years there is a shift away from the Web 2.0 platforms towards Virtual World platforms. With greater adoption of open source for technologies supporting these platforms, this would accelerate even further, allowing an avatar to seamlessly move from one virtual world to another, just as we now move from one website to another.

At another level, people’s expectations are changing too. Bery Beatie is working with a group of senior university managers on the potential uses of SL and he has discovered something quite interesting. There is a group of 13 to 18 year-olds who are more than comfortable with the Web 2.0 technologies and who appear to have little interest in avatar-based virtual worlds. They use a range of different platforms regularly and are happy to jump from one to another.

However, there is a growing group of under 12s who are using virtual world technology such as Club Penguin, and this group is not only familiar with virtual worlds but will expect to access their information and develop their relationships through Web 3D—the new web as Beatie would like to call it.

Says Beatie “In effect, this means that there is a five to seven year window where organizations have an opportunity to develop their Web 3D presence. Just as what happened with the Internet, what is now perceived as a game will become an essential part of the technological infrastructure and within ten years, any organization that does not have a Web 3D presence will be losing market share rapidly.

So, whether organizations like it or not, they will be expected to have a virtual world presence. Those that are entering the field now have an opportunity to explore and build with slightly more leisure”.

He further adds, “One of the greatest difficulties organizations face is in deciding what kind of presence to have and how to use the technology to maximum benefit. In a couple of years’ time, the costs of development would have increased significantly, the time-frame would be shorter, and I expect to see many organizations throwing money at the technology in an attempt to catch up. And a lot of this money will be wasted, since not enough time would have been devoted to thinking through how best to use it”.

Given the foregoing, the road ahead wasn’t any less challenging than what it was when the Babson class started its journey this spring. But everyone agreed they had covered a lot of distance. And while there may still be many more external dragons to slay, the bigger challenge, perhaps, would be to conquer the internal demons.

Obviously impressed with this new format of learning, Schlesinger, Babson’s new president, said “if the aim of getting me to attend this class was to sell me the concept, then consider I’m sold. I’m an experiential learner and this is the best way to get me interested”. “But” he couldn’t help add “give me something to hold in my hands so that I can read and learn more about second life.”

Finally, as the clock read 2100 hours (ET), it was time for the Spring-2008 EPS7551-B91 class to bid farewell to each other. Everyone promised to stay in touch in-world, wherever they may be in RL after graduating, a month from now.

And even as Lundquist “teleported” himself to yet another island in SL to continue his exploration, he knew he had many more miles to cover before he could claim “victory”. But at least a start had been made…

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