Teaching AI Skills Through Capstone Simulations

• To be competitive in today’s workplace, graduates must know how to leverage AI in every business function, particularly strategic decision-making.
• When students use AI in team-based simulations, they can gain additional insights by analyzing how their peers employ technology to create financial benefits.
• During simulations, students also can improve their skills in areas such as decision-making, problem-solving, communication, and data visualization using AI.

 
Recent studies show that college students generally feel positive about using generative artificial intelligence (GenAI) to support their learning, but they have some apprehensions as well. Those conclusions are explored in a 2023 survey of almost 400 undergraduates and postgraduates at Hong Kong universities.

For instance, some students are concerned about the accuracy, privacy, and potential ethical violations of GenAI. Others worry that GenAI could impact their career prospects by diminishing the value of their skills and expertise or displacing them from their jobs.

However, most professionals believe that workers won’t be replaced by AI—they’ll be replaced by workers who know how to leverage AI. To remain competitive in the new business landscape, students must master AI-related skills such as prompt management, and they must learn how to use AI in virtually every business function.

Business graduates who understand how to use AI in strategic decision-making could even have an edge over experienced professionals who are currently in the workplace. That’s because very few of today’s executives currently are relying on AI in strategy discussions, according to a 2023 report from McKinsey & Company that features an interview with senior partner Yuval Atsmon.

Atsmon notes that, among respondents to a survey about using AI at work, only 7 percent say they rely on it in strategy or financial planning situations. By contrast, he says, “in areas like marketing, supply chain, and service operations, it’s 25 or 30 percent.” By failing to incorporate AI into strategy decisions, he says, business leaders lose the ability to understand root drivers of performance or anticipate future scenarios. He adds, “Both diagnostics and prediction are areas that AI can greatly improve today.”

For all these reasons, it is our role and responsibility as business faculty to provide students with safe spaces where they can become adept at using AI conscientiously. Part of our job is to help students understand the ways that generative AI can supplement—not replace—human capital and creativity. We want them to view AI not as a threat, but as a tool that enhances their learning and helps them accomplish their career goals.

A Practical Application

At Mercer University’s Stetson-Hatcher School of Business in Georgia, we prioritize active hands-on learning over passive theoretical learning. We believe that if we encourage students to leverage AI to solve complex interdisciplinary problems in a controlled learning environment with defined end-state goals, we will accelerate the pace at which they learn the new technology.

Business simulations provide users with opportunities to combine interdisciplinary subject knowledge from fields such as management, marketing, operations, finance, and accounting. As students incorporate existing knowledge into their decision-making processes, they also create new connections between business functions.

If we encourage students to leverage AI to solve complex interdisciplinary problems in a controlled learning environment, we will accelerate the pace at which they learn the new technology.

Therefore, in Mercer’s MBA capstone course on strategic management, our faculty allow students to use GenAI as a supplemental tool during their semesterlong simulation projects. In the capstone simulation from Capsim Management Simulation Inc., students are assigned to fictional companies that manufacture and sell a variety of sensors to five different market segments.

Throughout the semester, they compete in teams for profitable market share by making decisions about product offerings, marketing mix, distribution channels, production capabilities, human resource policies, and financial actions. Competitive positions are measured by a scorecard that includes metrics such as ending stock price, contribution margin, customer awareness, and employee turnover.

To further enhance the active learning experience, we encourage students to leverage AI for their simulation performance. They can consult any type of generative AI, but we suggest ChatGPT. Our intent is to enable them to practice using it to solve problems the way they would in the real world.

At the beginning of the simulated competition, students are prompted “to consider the potential benefits of integrating AI into your learning and decision-making processes during the course of the Capsim simulation.” Students pose specific questions to the AI tool, then evaluate and iterate upon the answers that result. This enhances the realism of the simulation.

We suggest different categories of questions but allow the students to consult the AI tool for any purpose/function they prefer. On a discussion thread, students share the questions they have asked and their analyses of the AI’s responses. Then they read the posts of other students in the class and respond to at least one of them. This provides an opportunity for peer learning in a constantly changing context.

Notable Benefits

Toward the end of the competition, we ask students to once again reflect on their AI experience. We have found that, when students use AI during simulation projects, they enhance their learning in six ways. Most notably, they improve their decision-making abilities as they analyze the potential outcomes and consequences of different scenarios, and they enhance their problem-solving capabilities as they brainstorm potential solutions to common problems such as customer dissatisfaction.

While students find AI to be a powerful resource in the decision-making process, they quickly realize that they cannot blindly follow the AI’s suggestions. Instead, they have to rely on their own decision-making and assessment skills to evaluate the tool’s feedback and choose which of its suggestions to take.

Many report that they use AI as the starting point for their team discussions and build on its feedback. As they develop their prompt management skills throughout the project, students discover that the more precise they are with their prompts, the better responses they will receive from AI. They also find that general questions lead to general answers; accordingly, they learn to deepen their critical thinking to better define the problems to be solved.

While students find AI to be a powerful resource in the decision-making process, they quickly realize that they cannot blindly follow the AI’s suggestions.

There are four other benefits that come from having students use AI during business simulations:

They strengthen their strategy development skills as they brainstorm ideas and evaluate courses of action.

They enhance their communication capabilities as they facilitate collaboration and workload distribution in team interactions.

They improve their learning and adaptability skills when they adjust strategies based on competition and customer feedback. They can analyze the performance metrics of the teams they’re competing against to see how the tool can be deployed to create financial benefits. This experience improves learning outcomes.

They develop their data analysis and visualization skills as they generate reports; improve business metrics; and analyze market trends, competitor behavior, and financial data with the goal of making more informed choices.

Some students are overwhelmed by the breadth of the possible uses for AI. Others are intimidated by what they perceive to be a complex tool. Still others don’t think it is useful and actively avoid using it entirely. But when they’re working in the fictitious realm of a simulation, all students have an opportunity to apply AI tools within a safe environment as they work toward a specific goal.

The Student Perspective

One MBA student who recently found great value in using AI in the semesterlong simulation is Gregory Williams. Williams, a co-author of this article, is also a consultant at Microsoft. He argues that deploying AI in the classroom is integral for real-world preparedness because it bridges the gap between classroom learning and corporate expectations.

He also believes that AI can significantly enrich the learning experience by providing real-time data analysis, predictive analytics, and decision-making support, allowing students to engage in deeper, more strategic thinking.

Deploying AI in the classroom is integral for real-world preparedness because it bridges the gap between classroom learning and corporate expectations.

Williams proposes that, in addition to using the technology in capstone courses, universities take these three steps:

1. Invest in AI infrastructure. Universities should provide access to AI technologies and databases that reflect current industry practices, so students have a chance to work with tools used in the corporate world.

2. Provide mandatory, comprehensive AI training. Topics should include data security, ethical use of AI, and practical applications of AI in business decision-making. Williams believes that this training will demystify AI for students, meaning they will see it as a standard tool rather than a potential avenue for academic dishonesty.

3. Revise honor codes. Schools should specify what is allowed in terms of AI use and what constitutes a violation. This clarity will empower students to use AI without fear of unintended consequences.

Where We Are Now

In the past, business school graduates worried that their technical skills weren’t as advanced as those of engineering graduates. Today, they worry that their AI-related skills might not be strong enough to make them competitive in the job market.

Because AI can play such a vital role in the corporate sector, it is critical for business educators to actively encourage the use of AI in their classrooms. When schools align academic standards with industry practices, they will dissolve the barriers that inhibit the use of AI. Furthermore, they will foster environments where academic and corporate competencies are seamlessly integrated.

If we can supply students with hands-on learning opportunities in the classroom, we can ensure that they will feel less anxiety and more confidence about using AI tools in the workplace. If we want to develop business leaders who use AI responsibly, we need to create a curriculum in which students learn to embrace technology, not fear it.