According to BBC News:
And of course there's plenty of other examples,
It's tempting to dismiss these stories as human stupidity, but I think we've all made mistakes from relying too much on automated processes. But this reinforces a main part of the Case Method - that good managers should be careful not to rely too much to theoretical frameworks. The very ambiguity that students find discomforting is a deliberate attempt to replicate real life, and although mental models are presented they are not overpresented as they are in most programs. Indeed this is why there's such a volume of cases - there are no neat solutions or single way of solving a problem. Students are confronted with deceptively similar examples of actions that lead both to success and failure in different contexts. Utililse your model, but don't rely on it. Exercise reason by all means, but not at the expense of reason.
Currently the microeconomics textbook that I recommend to students is Luke Froeb's co-authored, "Managerial Economics: A Problem Solving Approach" (see here for a great video). The framework used throughout the book is very Austrian, in that it focuses on the knowledge and incentive mechanisms that coordinate behaviour. He presents a superb problem-solving process:
This first step is crucial since it grounds organisational behaviour in a methodological individualism. Indeed this is something about the Case Method that I've only just realised - they almost always have a central protagonist. Whilst the macroeconomic cases tend to focus on country risk assesments (as is unfortunately an inevitable aspect of macro study), the vast majority of other cases are from the persepctive of an individual decision maker. Students aren't lulled into attributing explanatory power on non-human actors - they are grounded in choice.
The "Case Method" is a form of case study. It presents a central narrative grounded in history. Indeed I've been amazed at the amount of time and money that goes into producing them - not only in terms of editing and testing, but the research. Multiple interviews are involved, as faculty build a deep and non-trivial account. To this extent the approach bears a strong resemblance to the tradition of analytic narratives made famous by the likes of Robert Bates, Margaret Levi, and indeed Pete Leeson. What are analytic narratives?
Also, I don't think I've linked to Levi's "Analytic Narrative Approach to Puzzles and Problems(.pdf)" or her class syllabus before.
What's the best way to classify the functional areas of a general management program? We need 4-8 mutually exclusive and jointly exhaustive "top level" areas, and a relatively clear way to incorporate more focused topics as subcategories. Here's my proposal:
Prior to writing up the above, I had a look at how other organisations go about classification. In my experience I haven't seen any business school that does it in a logically robust way. Here are some (unsatisfactory) examples:
Harvard Business School Publishing
I've always believed that students should learn not to fear ambiguity. When I first started teaching I would - like any other freshly-minted PhD (technically I was pre-minted) - compensate for my lack of confidence by packing course material full of content. I had only 30 hours to teach a course that covered Micro and Macro economics, and created all my material from scratch. I was used to students complaining that we were covering too much, and they were right. But I was uneasy about the complaint that "things weren't clear". The message I tried to give was that I wasn't intending for it to be "clear" as soon as the lecture ended. For me the lecture was one stage of the learning process, which is complemented by wider reading and contemplation. I asked them to give me the benefit of the doubt, and reserve judgment until the end of the course. I'm not sure how accurate this was, but I do remember once after class when a student broke into tears at the thought of having to understand everything I'd been saying. Over a year later I spoke to her at graduation and (probably out of politeness), she said that she had indeed learnt a lot and as the course went on things began falling into place. I'm sure others remained in a perpetual state of confusion, and that's my error.
However the message I try to give is that entering the classroom is not like entering a pit lane. You don't drive in, get your tyres changed, and then go back out onto the track. You are supposed to be confused, because you can't learn anything unless you leave your comfort zone and travel into a state of ignorance. The feeling of your brain hurting is a good sign.
The Case Method is fundamentally ambiguous. It deals in ambiguity. It takes complex situations and weights up conflict. There is never a "solution", and students leave class with many unanswered questions. Most Professors here refuse to summarise at the end of a session, and actively avoid a "takeway". If you end class with a neat summary the student will consider the learning process over. You want them to continue thinking about the topics. You want them to be agitated, and restless.
Most nursery tales end with the line, "and they all lived happily ever after", and students want that in their lectures. They want the "so what" so that they can file it away and think about other things. The best novels and movies tend to be open ended, they tend to leave things unanswered. They stay with you. That's how class should be - one stage on a journey of discovery. When I get home I'll delete the "summary" slide for all my presentations. That's something for the students to discover for themselves.
I've just realised that many readers of The Filter^ won't be familiar with what I'm referring to as "The Case Method". This is distinct from "using case studies", and is the pedagogical device that sets HBS apart. Stemming from the Socratic use of dialogue, the Case Method was pioneered through Law Schools, I believe. The basic idea is that students prepare for class by reading a relatively open-ended "case", 5-15 pages long, including lots of exhibits/data, threded together with a historical narrative. The instructor then leads an 80 minute class discussion, with the deliberate aim of encouraging dialogue and representing views from different positions. Typically the context will be a pressing business problem, and there is no clear "solution".
Resources from Harvard Business School explaining the case method:
Note also that this isn't a cult - there's plenty of objective discussion about the merits of alternative pedagogical techniques (e.g. "The case against the case method"). The impression is one of genuine and reasoned commitment, not irrational fervor.
One of the most common things I've heard on this program is "it works with Harvard students, but it wouldn't work with my students". This is typically in response to issues such as ensuring punctuality, preparation, and participation. A third of my entire research outlook is devoted to the idea that using national stereotypes as an explanatory variable is unscientific - cultural concepts are universal. I've slowly realised that the reason many HBC initiatives wouldn't work with other students, is not because of the students at all, but because of the local institutions. We all accept that if we take a student from India and put him in the HBS environment, he would "follow" the case method. In which case the reason it's hard to spread adoption is not because of the students, but because of the institution. There is indeed a cultural constraint, but it stems from organisational behaviour and not personality types. But if we are leaders (and I define leaders as people who manage organisational culture), we can implement a system that would make the case method work. It's tough, but as with any corporate transformation, it's attainable if you fix incentives.
Perhaps the biggest criticism levied at Harvard Business School (and MBA programs more generally) is focusing too much on "business" and ignoring (or at least downplaying) wider social and ethical considerations. Although I've only been here for a week, we've received the full course materials for the MBA program and spent a lot of time analysing course content. We also had a Q&A session with Dean Jay Light where the topic of ethics was prominent. His response was interesting on two counts. Firstly he was bullish, and refused to concede that Harvard MBA's are off ruining the global economy. He encouraged people to look at the CVs of the people at the centre of the biggest ethical scandals, and argued that Harvard isn't the problem. Secondly he was humble and honest about the need to inject the right attitudes into their students. Indeed throughout the course mindset and attitudes are given far greater importance than knowledge and skills. To this end he pointed to the major revisions that were made to the program post Enron, and accepted the need for business schools to continue to confront ethical problems. In the courses we've been exposed to, ethical concerns have never been swept under the carpet. Indeed there's an entire module, "Leadership and Corporate Accountability", devoted to such issues. It is during this module that the students are exposed to a diagram showing three lenses - economics, law, and ethics. The faculty are consistent and clear that they are producing future leaders that hit the "sweet spot", section 1 in the above diagram, the "zone of sustainable activity".
Earlier this year I took part in a cross-campus discussion team at my own institution, where the objective was to outline the manner in which we should treat ethical issues. My thoughts then haven't changed: if business schools teach ethics, it should be taught by specialists. The reason I try not to stray into ethical issues is because the subject matter falls outside my area of expertise. I am more concerned about teaching ethics poorly, than not at all. And by "poorly" I mean merely paying lip service.
Consider the framework above. I've been trying to think of actions/activities that constitute the various possible segments. Here's the best I can do:
I'm not sure whether you'd agree with the above, but being able to think of examples are key in order for the framework to make sense. However the problem stems from the following: In any business school we teach students how to establish if a venture increases shareholder value. We also teach students how to ensure that they're fully compliant with the law. In short, they have the diagnostic tools required to understand whether they are satisfying the "economic" and "law" requirements. But does any business school actually teach ethics? The BB&T decision about Kelo (linked to above) is for me a foundational example here. Does any business school discuss this? Do they assign Atlas Shrugged so that students are exposed to a system of ethics that goes beyond mere lip service?
In the particular case that we discussed today, the conclusion actually confirmed the notion that behaving ethically and increasing shareholder value are consistent. We looked at the Marriott case where the board are faced with a decision about whether to split the company in two (but whilst this would boost the share price it would severely harm bond holders). Ultimately the "ethical" solution is the one that reduced the backlash they'd face in capital markets and maintains their reputation as a family-owned service company. Regardless of moral conviction there is an invisible hand argument at work.
I sympathise with business schools, because we face incredible external pressure to confront ethical issues despite our lack of training in this area. My message to students is quite simple - create wealth whilst respecting the rights of others. Do we actually need anything more than that?