As an evolution of video game technology, the idea of virtual worlds in business generates mixed reactions to their possible use and efficacy. The younger generation, fully familiar with consumer virtual worlds and video games, immediately sees the application to the business problems they tackle today.

Many managers are also quickly energized and excited by the possibilities. But making the decision to pursue a virtual world solution creates some challenges for management, instructional designers, the Information Technology (IT) staff, and the developers of virtual worlds themselves.

The benefits of virtual worlds are well documented in articles in trade magazines, blogs, and vendor sites. My purpose here is not to duplicate that documentation. Instead, I present a number of management considerations that bear on the business value and potential return on enterprise adoption of virtual worlds as a venue for learning.

Each new technical medium runs into common obstacles as well as unique barriers to its adoption. But attitudes change when proven value or competitive advantage are achieved. The value of virtual-world technology will evolve as business models continue to become more intensely collaborative internally, externally, and globally. Even regulatory legislation is a factor: greenhouse gas (GHG) emissions are already driving increased interest in better virtual meeting technologies.

However, as with any disruptive technology there may be far more significant opportunities. While sustainability is a fresh driving force, we also waste our workforce’s talent in innumerable ways, much as we waste natural resources. In particular, there may be an opportunity to rethink the values and processes for decision-making, meetings and their attendance, learning and development, and how managers and individual contributors spend their time in an increasingly technology-rich, collaborative world.

The barriers to exploring, embracing, and building business value on the disruptive platform of virtual worlds are more than just the technological obstacles. They include management inertia, the cross-functional nature of a virtual world solution, generational differences in comfort with technology, sponsorship, and prejudging the value (and cost) of a video game-like environment. All of these play in tangled roles.

My focus here is on 3-D immersive solutions. While simple virtual worlds built with 2-D technology, where the technology challenges are less complex, have business application benefits, the barriers are the same, and the solutions are less engaging. In 3-D immersive worlds, you can, through your avatar, freely explore the environment, interact with objects, and communicate with others through their avatars. “Immersiveness” is a critical measure of the value of these virtual worlds, with the potential to deliver the visceral reactions and the full spectrum of emotional and intellectual engagement for the situation at hand. Immersiveness is at the core of what we will eventually know as Web 3.0.

Virtual worlds and personal technology evolution

What’s going on? We are in a time of transition for technology-based applications. On the one hand the personal computer is becoming smaller, lighter, and more dependent on the network. The broad market has been moving to smaller, mobile, less expensive devices, and for years desktops have been losing market share to laptops. Devices are quickly moving beyond laptops, to netbooks and smart phones, pushing data and computation onto Internet servers, and into cloud computing and SaaS (Software as a Service). They are heavily dependent on robust communications technology.

At the same time, personal computers are becoming more powerful, particularly in graphics processing. Graphics processors are easily the most expensive component of a gamer’s computer today. On this end of the spectrum, the processing technology is as critical as the communications technology. Both are necessary to create the engaging, immersive, and stunning virtual world, and of course, gaming experiences.

Virtual worlds clearly work best with high-end graphics and high bandwidth – which for good reasons (such as cost) are less common in the corporate world. This is but one of the corporate technology constraints that has created some of the difficulties keeping virtual worlds from gaining acceptance. In many corporations, a lack of investment in client technologies has led to an infrastructure built on old technologies, and on new technologies with minimal capability.

The predominant graphics processing for laptops is “integrated graphics,” where computational and graphics processing and memory (RAM) share the main CPU. While more than good enough for Internet browsing and PowerPoint, it has been inadequate for processing the intense requirements for virtual worlds. Integrated graphics continues to evolve rapidly; but many who experience a graphics-intense program with inadequate technology don’t go back to try virtual worlds. This was a concern with the early Second Life corporate mini-boom two years ago. In addition, unless you are a technology aficionado, figuring out what is adequate technology isn’t easy. Graphic processor manufacturers utilize confusing product naming conventions, making it difficult to discern the actual capabilities. To their credit (and survival), virtual-world vendors are continually working to engineer their solutions to work with less powerful client technologies.

On the information technology security front, anything that penetrates the corporate firewall creates a headache for IT. In response, some corporations are beginning to explore technologies outside the traditional realm of IT’s locked-down standards. Applications running on iPods, cell phones, and Sony PlayStation® Portable (PSP) are emerging. This is reminiscent of the challenge that PCs presented to IT, when technology applications were served from locked-down mainframes and minicomputers.

Lack of innovation

The current economic downturn has certainly forced cost cutting, and it has lowered innovative efforts and risk tolerance. This is true at the personal level, where promoting a new business tool without attaching a strong ROI business case can generate career risk. It is also true at the management and business investment levels, where for many years the combination of learning and new technology has had less than stellar results. But innovation may also now be suppressed far earlier – possibly due to fatigue from re-engineering, and memories of the dot-com bust.

Economic downturns can create opportunities for transformative business value, but many virtual-world applications are sponsored in the Human Resources/Training realm, where most corporations look first to reduce expenses. Today, it seems innovation has been outsourced and is thriving in the start-up and technology world, but its (re-)integration has become a difficult task for both the corporation and the innovative supplier. It’s an unstable relationship, in which technologies embraced by consumers, and hyped by the media and the vendor, rise dramatically but then fall into oblivion. We’ve already seen the wild swings of MySpace and Second Life, and now even Twitter is beginning to feel the pain of being a once hot, “had to have” technology.

We live in a throwaway technology world – why? In business it’s because the tools are not connected to fundamental business needs, and the firm lacks the innovation to commit the tools, the risk, and investment to develop the business value. Vendors lack the business or management savvy to create the valuable solutions that the enterprise really needs. Due to investor funding practices, start-ups tend to become more purely technology-oriented, creating a scalable tool that is wandering about looking for a problem. Now, couple that with a diminishing population of corporate visionaries and early-adopters, and you have the Catch 22. It is extremely difficult to sell innovative tools, or even solutions into a hyper-pragmatic world, until that solution has been proven multiple times – in a firm’s specific industry.

Learning and development: desire is not enough

While for the most part Learning and Development specialists and departments (L&D) are excited about the possibilities of utilizing virtual world technologies, there are a few cultural challenges that can, and do, get in the way.

First of all, sometimes the desire may not even be there. L&D has a rich tradition of classroom and people-based training, á la university. After a mostly disappointing adventure with technology in e-Learning, and a few hiccups in the implementation of a LMS, it’s understandable that there may not be a lot of support for introducing to management a technology that further distances personal interactions and represents a big leap forward for workforce technology. This is especially true if you grant that e-Learning represents a change as big as the introduction of PCs, cell phones, or Internet access.

Another cultural dilemma is that L&D, as a support organization (cost center), has no leverage to sell a business solution to business peers who have an ROI. Except in some very special circumstances, L&D has no:

  • decision power,
  • financial resources, or
  • political power.

While many may disagree strongly with this assessment, the reality is that L&D “takes orders” from its business counterparts, and is generally not treated as a business peer with a seat at business strategy or operations tables. While this is unfortunate, a transformation of the L&D business relationship into a valued peer relationship can be achieved. It requires a lot of relationship work and guidance – for those who in general have supported and delivered exactly that for the rest of the organization.

Among all of the business units and functions L&D probably has the greatest cost sensitivity with the least amount of risk tolerance to deliver or extend services. While upwards of $750,000 may be spent for executive education or classroom simulations, the tradition of e-Learning keeps expectations of the cost of technology-related solutions at up to two orders of magnitude (100x) less. This is below a minimum threshold for virtual world applications.

Of course if L&D had business value credibility with business colleagues, then with a true ROI analysis (and not a pseudo-analysis simply calculated to pass some arbitrary hurdle rate,) the decision on virtual world use could and would be compared to any other corporate investment and expected return.

Where is the demand?

As with some other innovations in their early days (for example, FedEx’s overnight shipping), no one is really asking for virtual worlds. There is lots of selling going on, but little buying. Many of what are described as business cases are quite weak. They generally describe a somewhat vague, more futuristic value, or a simulated pilot, or were heavily subsidized by a systems or platform vendor.

On the other hand, in the military and in medical, first responder, and disaster training, there is a lot of demand. Much of the technology we see offered to corporations has been developed, tested, delivered, and refined for these purposes. When death is a possible outcome, investments that can save lives are made without question. Training for a subway fire, bioterror response, or discerning civilians from militarized insurgents are such cases. Effective and very real scenarios are created with virtual world and video game technology tools.

For most businesses, saving some travel costs or reducing green house gas emissions just doesn’t create that same sense of urgency. But one could imagine corporate failure in a poor economy as a matter of life and death. Does a crisis really create transformative business opportunities, or does it just create defensive walls until the worst is over, or bankruptcy ensues?

A few years ago, fueled by IBM, businesses flocked to Second Life (SL). While some established outposts on their islands, little actually occurred beyond the public relations announcements of the islands’ openings.

Second Life was not designed or built for corporate applications. But it has been of great value in exposing a vast segment of the population to an advanced technology experience. Many of these Second Life residents have never played immersive video games. At most they may have encountered such environments only in a Hollywood movie. Fortunately, SL has evolved in user interface, stability, and hardware requirements, but two years ago, for most business visitors, it was at best frustrating and at worst a disturbing experience. IBM’s early promotion helped make SL less of an odd or irrelevant technology, and it generated much enthusiasm for SL. Gushing Business Week articles aside, SL was a turnoff for many who entered, and that experience may even now be delaying any valuable introduction of 3-D technology solutions to corporations.

We know that adult entertainment is one of the successes of SL, so therefore we also know that virtual world technology will eventually have great success with general business applications. As in almost every other Internet technology application, Second Life was tested, vetted, and stressed in the adult entertainment industry, from e-commerce to live chat to video streaming. These are things that we all take for granted in business today.

Where should the demand be? Try to get beyond an L&D context. It’s fine to pilot virtual worlds for conferences, classrooms, and onboarding as a way to reduce travel expense and greenhouse gas emissions. But, until you innovate use of this technology for competitive and business process and model improvement, it may only come across to decision-makers as a fancy WebEx.

Management, and generational work ethic

Let’s face it; virtual worlds can look like your children’s video games. Many in management consider such applications a waste of time, despite unprecedented results in military, health, and academic applications.

There is a pervasive sense that virtual world solutions would become a distraction to getting work done, much as some critics of Second Life see it as a distraction to Real Life. That has a lot of truth to it. Management is constantly working to balance rules and procedures with less restrictive environments to promote opportunities for personal high performance.

Of course, it’s not just virtual world technologies that management sees as unproductive distraction. Many corporations ban access to personal e-mail and social media, and some censor Website access and Internet searches. While restrictions may be for good reasons, they still show a fundamental mistrust of the workforce. For many of the younger generation, these technologies are their lifeblood (especially outside of work) and their tool for solving problems quickly and efficiently. At work they find that they must adhere to a different and somewhat debilitating set of rules. Many therefore try to increase the amount of time they work from home where Internet access is unrestricted, and where both the communications and computing technologies usually are superior. Security concerns aside, the younger generation argues that IM, texting, and Facebook are just updated and more powerful versions of the coffee break, water cooler, and hallway conversations.

Ease and fear of use

There are two fears that come into play regarding virtual worlds. One is the physical. For many, becoming adept at maneuvering their avatar and interacting with the environment and with others is a difficult process. Anxiety, frustration, and time commitment (especially for those not familiar with gaming) are barriers not easily overcome. In Second Life it still takes 30-60 minutes of training to become minimally functional in the world. Platform vendors don’t make it easy either – just look at basic avatar movement. There are few conventions for the keystrokes to create avatar movement, to interact with objects, to communicate with others, and to change the camera angle. While the arrow keys do represent somewhat of a standard for movement, they are not in a convenient position on the keyboard (if you use the mouse with your right hand.) W-A-S-D keys are more convenient for controlling avatar movements, but different platforms use them differently: turning to the right vs. shuffling to the right. Then throw in the Q and E keys, the shift key (sometimes used for running), the space key to jump – or was it to stop? – right click or maybe left click to interact with an object …. And we haven’t even started talking about changing our avatar’s appearance and getting dressed. Too often the difficulties of getting around get in the way of the value of the application. Too often we spend time in-world just keeping a group together, as individuals struggle to avoid walking into walls or falling off of cliffs.

The other fear is psychological. Your first experience in a virtual world will be memorable – guaranteed. The strange sensation of movement, and familiar emotions experienced through a character is frightening for some. It appears that 2-D applications (for example, those using Flash) are more comfortable for a larger portion of the population. Since 2-D is not immersive, it’s not as engaging, but it is somehow more acceptable because it looks familiar – like a cartoon. Within a 3-D virtual world, it can be scary to be “lost” in the values and context of the environment – but it is precisely the manipulation of this complete immersion where the future benefits for business applications lie. It’s not surprising, therefore, that most current corporate virtual world applications involve avatars sitting motionless, listening, and watching in a conference room or a classroom observing a speaker/facilitator with Office and media applications on different screens.

The vendor dilemma

Corporations are not buying what vendors are selling. As discussed above, there is a disconnect between what the vendors offer and what corporations buy (if they are even buying today). Vendors strive for easily scalable, recurring business revenue models, in part because that satisfies investor requirements for rapid growth. That usually leads to the most likely business model approach: to license technology tools for the client to create the application.

Corporations on the other hand want solutions, not tools. At the same time, they will profess a desire for the tools, once they have a solution in hand, in order to save the expense of edits and additions, and to maintain control. The business imperative for management and organizational focus requires the outsourcing of almost anything that is not directly related to the business mission or competitive advantage. Demand resides in the solution realm, not the tools realm.

The vendors’ back-up plan is to sell a successful custom-built solution that then creates the opportunity for the client to easily develop additional modules and solutions with the licensed technology tool. Of course, this is not what the client is looking for.

Corporations still working-off the e-Learning and LMS hangover are not interested in releasing funds to support a custom-built solution. A successful custom-built solution will require exquisite collaboration. However, most vendors lack the corporate business operations savvy and knowledge (except through anecdotal experience and PR releases). Similarly, corporations lack staff that has good operational understanding of the complexity of the technology or its application to business value. Vague references to World of Warcraft and Second Life conferences will not make up for this lack. Without mutual trust and respect, custom work will not proceed.

What’s missing in the market is a portfolio of proven business value, off-the-shelf, standard products for a series of business functions and processes. But neither corporations nor vendors (and their investors) are prepared to invest to create these products, and it is possible that neither group is capable.

Finally, the vendor’s problem is even worse, because at a tool level, demos and screenshots can look almost identical – whether a tool is $1,499 or $250,000. This hides the fact that there are serious impacts of under-the-cover technology, and functional characteristics can be difficult to discern. More expensive is definitely not always better.

What should you be doing now?

L&D has an opportunity to bring business value, if today’s barriers are deftly navigated. The barriers can be summed up in the interactions of a simple, but disconnected, triad of the platform providers, HR/Learning, and business results.

Of the three, the clear key is business results. HR/Learning must embrace a shift to true talent management and talent preparedness. This requires a shift in language and relationship with business peers. To transition away from being seen as purveyors of compliance or soft skills (even while both are required), change the language and actions to one of business value. Develop and embrace true measures of ROI in a series of hard terms such as “financial results” and “competitive advantage.” Manage the discussion at the business value level, not the tool, or approach level – engage your business peers to put a stake in the ground on collaboration, on activities and investments that improve the bottom-line by transformative amounts, not by a few percentage points.

Only work with vendors when there is not just simple participation, but there is also a true collaboration among the disciplines of the technology, learning/HR, and business expertise – regardless of where they may reside. But make sure that there is a pre-defined and measurable hard value, with value milestones that must be reached early and often.

Build the value of learning and true talent management – regardless of the tools. While, traditionally, ROI for learning is said to be hard to identify, involving business peers to add deeper business expertise can begin the process of creating results that begin to look more like business solutions and less like learning products. The opportunities exist – immersive and engaging virtual worlds have yet to have their corporate business value unlocked.