THE CASE STUDY AS A CORNERSTONE OF WESTERN
BUSINESS SCHOOL EDUCATION
By Dominic Basulto
The case study has its roots in the beginnings of
American business school education. Case studies were created as the
best way to delve to the essence of corporate affairs and simulate the
thinking of top-level managers. The most case study-intensive schools
(Harvard Business School and Virginia Darden) employ a mix of 75% case
study/25% lecture. While other leading business schools are not as committed
to the case study, it is still a fact that all business schools commit
at least 30-35% of their classroom time to the evaluation of business
cases. After all, the graduates of the leading MBA programs are expected
to become the future business leaders and key-decision makers in an
unpredictable, increasingly global, environment.
The standard case study combines academic theory with
real-world relevance, such that business school students learn theoretical
problem-solving skills within a quintessentially business context. Harvard
Business School is the acknowledged industry leader, selling approximately
5 million case studies a year to outsiders. Whereas most cases produced
by American B-schools are paper-based, the new generation of business
school cases from European schools such as London Business School and
INSEAD are taking advantage of multi-media resources.
DIFFERENTIATION FROM RUSSIAN EDUCATION
From the Russian perspective, the case study is probably
one of the most challenging aspects of a Western MBA program. While
the Russian educational system promotes the idea of the pure lecture
format and the notion of the "omnipotent professor," the American
model calls for active participation of all classmates and the expectation
of significant feedback to the professor. Oftentimes, one's grade in
a class is 50% determined by remarks made during case discussions, and
the need to be prepared for class against the legendary "cold call"
by vituperative business school professors can not be underestimated.
During the discussion of a case study, the professor may only speak
for 20 minutes out of a two-hour class; the role of the instructor is
similar to that of an orchestra conductor, who can manipulate the abilities
and background of each student, obtain the full participation of the
class, and finally arrive at the final "most correct" conclusion.
This is why the need for a diverse, experienced peer group becomes paramount-
being surrounded by classmates who can offer first-hand accounts of
different industries, firms, and sectors allows for the richest, highly-textured
case discussions. If the case discussion involves, for instance, the
Japanese acquisition of real estate in New York City during the 1980s,
and the classmate sitting next to you worked for either a Tokyo investment
bank or a NYC real estate developer, there is obvious value-added.
NUTS'N'BOLTS OF THE CASE STUDY
Since no business school is 100% committed to the
case study as an instructional tool, a lecture usually precedes any
case study discussion. The professor in a basic corporate finance class
would present the key underpinnings of, say, the Modigliani-Miller Theory
(which deals with the optimal capital structure of a firm) for two hours,
and then divide the class into teams of 3-5 students. The students are
then given approximately 48 hours to meet, discuss, and analyze the
case until the next class meeting. Since the M&M theory deals with
the optimal capital structure of a firm, the case could offer one of
a number of scenarios, such as the evaluation of a potential debt offering.
The case is written in such a way that a number of answers are possible-
and the accompanying charts & statistics can be manipulated in a
surprisingly robust number of ways. The only common denominator is the
underlying question, in this case, "Should the firm make the debt
offering?" Almost all cases presuppose the need to "run the
numbers" and meet with other members of the case study group. At
the next class meeting, the group of 30-50 students file into a special
classroom comprised of tiered rows of assigned seats arranged in a horseshoe
shape around the professor. The professor will then randomly choose
one student to present the "facts of the case." The next two
hours largely follow a loosely-adapted Socratic method, whereby the
professor quizzes students on the key facts of the case, testing the
understanding of the basic facts before leading students to state and
defend the underlying assumptions of their conclusions. As in business,
there are often no "right" answers- only a consensus of what
the "right" answer should include. Since the case is based
on an actual event at a real company, the professor often informs the
students at the end of the class what the actual response of the firm
had been and whether it was successful or not. Some MBA programs with
strong links to industry go one step further. The professor may announce
the "surprise" appearance to the class of the actual CEO of
the firm, who will recount his precise reasoning process and whether
his actions were effective.
"CRACKING THE CASE."
Since the typical 2-year MBA program consists of anywhere
between 8-12 core courses, and 10-12 elective courses, there are obviously
a large number of cases- finance cases, strategy cases, marketing cases,
as well as cases on more specialized topics such as derivatives, corporate
governance, or venture capital. The important skill becomes to reduce
anywhere between 5-20 pages of text and a collection of charts, graphs,
and tables into a final overall conclusion that is supported by a coherent
theoretical basis. For instance, the key point of an investment case
might involve a consideration of the Markowitz efficient frontier, while
a strategy cases might revolve around the prudent application of such
frameworks as the "Porter Five Forces" model or the "Value
Net" model. While most cases can be simplified to a "model"
or a "framework," the most challenging part becomes the determination
of the correct parameters or interpretations of these models and frameworks.
While any business school student may know the rudiments of the CAPM
asset-pricing model, it is only the graduates of the leading finance
departments who can most precisely determine the values for such parameters
as beta and think fast on their feet about real business problems and
how best to apply a theoretical model to day-to-day issues.
In conclusion, young Russian professionals preparing
to enter a competitive Western business school either in Europe, Canada,
or the U.S. should realize that the case study is the preferred method
of instruction at the leading MBA programs in the world. Moreover, most
multinational financial services companies and strategic consulting
companies now use mini-case studies during the interview process in
order to determine the most qualified candidates, so the ability to
"crack a case" becomes a sine qua non of obtaining multiple
job offers. Most business school web sites will have hypertext links
to case studies and other educational-related sites also have information
on the basic frameworks and models used in case discussions.
Dominic Basulto is a 1998 graduate of Yale School
of Management and currently works as a consultant for Pericles ABLE
(American Business and Legal Education) in Moscow. Pericles offers a
full MBA advising program.