Inside the HBS Case Method

Inside the HBS Case Method

September 1, 2019 0 By Stanley Isaacs


[BIRDSONG] [MUSIC PLAYING] When you’re first
approaching a class– it’s 8:30 in the morning,
I’m walking off to class, I’m about ready to teach– the first thing I’m thinking
about is, where are they? What’s going to be on
the students’ minds? The morning, for teaching, is
an important period for me. I have to go through my
whole pre-teaching ritual. I have my pre-teaching trance. If you watch professional
baseball players, most really good baseball
players, when they come to bat, they do the exact same movements
as they prepare for the ball. I’ve taught here for
22 years, and I’m still nervous every day I
walk into the classroom. I still don’t know exactly how
the discussion will play out. The 10 minutes before class
are a really fascinating time. Because you’ve got
about 15 things you want to get done
in those 10 minutes. Just before class, I’m usually
brushing up on case facts. You know, I just need to be
firm in my particular opinion. Because there are
89 other opinions that are going to come
out during the classroom that I need to either agree
with or disagree with. I might skim through
some of my notes or think about whether,
in my learning team, somebody brought
up an issue that I hadn’t thought about before. Second thing I’m
thinking about is, how am I going to get started? What’s the opening question? But equally important,
who’s the opening student? Who’s going to be
the first person who I ask to lay out the issues? And as the second hand
passes the 12 on the clock, we get going. All right. Good morning. Our first real taste
of competitive dynamics is the case on Holland Sweetener
Company in the aspartame business. Your role is that
of Winfried Vermijs. You’re the CEO of Holland
Sweetener Company. You’re entering the
market for aspartame. For the first
time, you’re facing NutraSweet with competition. And you’ve got to
ask yourself, how do I think NutraSweet
is going to respond– with a price war or
with normal competition? What do you say? To me, the reason that
this method is so effective is that it really mirrors
what managers do in real life. We put the student in
the seat of that manager or that employee
confronting a problem. It’s fun, right? There’s a lot of the
active engagement. It’s hard, in a lot of
ways, as well, though. Nothing is spoon-fed to you. You’ve got to be prepared. And you’ve got to come
ready to play every day. The most fulfilling
classroom experiences at HBS you can tell come
with intense preparation from all sides. It’s crucial. If you aren’t prepared
for the class, you can’t engage as much. You can’t have a kind of
friendly, dynamic discussion with all your classmates. Individual preparation
is a solo affair. You go through the case,
try to master the details, develop the supporting analysis,
come up with recommendations. I’m trying to develop a ritual. I think getting a bit
of an overview at first and then trying to fill in the
details is definitely a better way than just starting
at the beginning and trying to read all the
way through to the end. Sometimes just working
back-of-envelope numbers, sometimes getting into in-depth
detail, creating full write-ups that then I bring to my
learning team in the morning. I really try to really imagine
myself as the protagonist. And it really does require a
concerted effort to do that. The day before a
case, you’ll find people in Spangler or
in Baker or in the dorm lounges saying, oh, what
was your opinion about that? Or what did you
think about this? So it’s really kind
of an open dialogue. We have a folder
for each of you– the overview, a one-page
summary, a board plan, and then at least
my shot at the– Faculty prepare far more
for a case discussion than any individual student. I find it takes me five,
10 times as much time as it typically takes a student. There are cases that I’ve
taught numerous times. And I get as excited
about it the 10th time I teach it as I do the
first time, maybe more so. Because I know what
the possibilities are, and I know what the richness is. Here, we’ll be getting the
students, particularly, to be better at analyzing
individual competitors, understanding the generic
threats to the company’s success, and we’ll
be introducing them to tools, particularly
the tool of game theory. I usually put them in the
position of Wolfram Vermijs and try to get you to think
about, will it be a price war? The thing that’s
always impressed me is the extent to
which there are actually debates in teaching groups, that
here, a set of people trained in the same disciplines
around the same materials can have very different
views about the best way to orchestrate a case or
even different answers to the question, what’s
this case really about? I expect students to give their
heart and soul to the case. Most importantly, I
expect the students to put themselves in the shoes
of the protagonist of the case and ask themselves
seriously, what would I do? And I want them to think very
seriously, what would they do if they really had that
situation in their lives? These are questions where there
are different perspectives. You can marshal the
facts in the case and reach very
different conclusions. So part of what students
do is they decide, day in and day out. And they get in the habit
of making decisions. [DRAMATIC MUSIC PLAYING] NutraSweet patented the use and
blend of this sugar replacement called– The learning team experience
has been absolutely invaluable to the case method. I’m not sure I could have
made it through first semester without it. Because I assume
that there would be 5% reduction in
the US price, then HSC will always want to enter. And NutraSweet– We hold ourselves to
pretty high standards as far as being able to come
up with our rationale for why we would do what
we are going to do. I’m still not buying it. I just don’t get the fact
that if, for Coke and Pepsi, a competitive
advantage of the stuff that everybody’s buying
now is with the NutraSweet label on their can, they
have no other option to go to anything else
unless they completely change off of our product. What we then try
and bring to it, again, is a different
perspective, a different viewpoint, hopefully
a different approach to looking at the same information. It’s a competition. The fact that they were neck
and neck in the diet industry and used that to really fuel a
rivalry that used NutraSweet. We have someone in
our learning team who’s from Argentina
and who works in a sugar factory in Argentina. Just like every
case, it turns out there’s someone that has some
direct personal experience. We have people from
different backgrounds. So there are a
couple finance guys. I’m a marketing person. There’s somebody from
a tech background. So it’s very helpful
to bounce ideas off of each other in the mornings. And we’re really
prepared to have a debate and have a discussion in class. You could do something
about our signaling effect. If you don’t send a right
signal to the market, to this new entrant,
then you’ll probably have many new small
entrants in the future. So probably– It’s not uncommon that
someone will say in class, when I first read the
case, I thought X. But after talking with some
people in my learning team, I’ve actually evolved my
thinking to the following. So I think in the
learning teams, we want students to engage
some of the same muscles that they will in the
classroom, to say, here’s an opportunity for me
to go out on a limb, all right? I have this idea, and
I’d like your feedback. As Winfried Vermijs,
looking at your competitor, looking at NutraSweet, how do
you expect they will respond– with a price war or
with normal competition? What do you say? Zhalisa. I actually think that they
will respond to the price war. OK. Why? Particularly, if you
look at Europe and Canada kind of in a vacuum,
you would think that they’re going to lose
money in the short-term. I have the case in front of me. I have the write-up
in front of me. And I’m really looking at,
what are the key points? In my head, I’m already
thinking, all right, top three things that I want
to get across in my 30 seconds. And exactly how’s a price war
going to accomplish that end? The knowledge that you
might be called upon to make an intelligent, cogent
argument in front of people whose opinion you care
about does motivate you in those off-hours. Who sees it very differently? Yes, Mark? What’s going on? I think they’re very confident
in their brand and strategy. They don’t want to turn this
into a commodity product. We accept everyone’s backgrounds
and everyone’s perspectives to the point where we can
actually hear them out. And I feel like everyone
does a really good job of listening to the point
where they can think about it and say whether they
agree or disagree and then coming up with a
compelling reason as to why they agree or disagree. Kara, in or out? This is where I think
the behavioral issues are overwhelming. They’re going to continue to
fight because they’ve already invested in this. So I think they’re
going to just keep throwing good money after bad. And I know I cannot compete
with NutraSweet on price, but I might be able to
compete with them on brand. So what I would try to do is
try to do some customer research and try to really get
the HSC product out there and really get it
to the point where there’s some critical mass
as far as brand recognition, and then approach Pepsi
and say, hey, Pepsi, here’s an additional level
of aspartame that you can have to compete with Coke,
who’s using the NutraSweet. Kara, why don’t you
role-play Pepsi? How do you respond to Phil? Well, I have a
couple of problems. One, your product
isn’t branded yet. And it takes– Oops. –quite a bit of– [LAUGHTER] I see that you’re trying to give
me a point of differentiation to go after my competitor. But to be honest, I just
don’t have the faith in you yet to be willing
to take that gamble. That hurts. I think fun is one of the most
underrated aspects of the case method. Learning shouldn’t
always be difficult. Learning shouldn’t be painful. There’s a certain element of
joy that comes with learning. Jen, you had another proposal. Yeah. So I’m going to go to Pepsi. I’m going to say, I’m only
going to work with you. If you just work with me,
then I’ll lower your price. And you’re going to get
the competitive advantage from working with me,
whereas NutraSweet’s not going to have to match
that because they’re just working with Coke. That sounds a little bit better. I’ve found that I learn
a ton from my professors, but I really learn the most
from my fellow section mates. You never, ever, ever,
ever, enter a price war if you don’t have credible
low-cost position. If you ever do that
and I learn about it, I will deny that I ever knew you
at Harvard Business School, OK? Never, ever. And very important
what Samir is saying. They enter that
in the advantage. There was not a superior gap
between cost and what’s to pay. That was a major
lesson of the case. And in addition,
it drew on concepts we had built up over the
previous half dozen cases. So it showed that things
had kind of come together for a set of people. We’ll continue to look
at competitive dynamics on Thursday when we look
at the fascinating battle between British Satellite
Broadcasting and Sky Television. Thanks. [APPLAUSE] [MUSIC PLAYING] My favorite classes are those
where the debate is still raging 20 minutes after
class, and we can’t stop it. They really give a lot
in those 80 minutes, as far as listening and
vocalizing your perspective. You really start to see why
the case method works so well. Because you’re surprised
with how much you remember from the case but also from
what people’s responses were to the case. And there are very
specific situations that any manager is
going to experience at some point in their career. We teach people, in
many ways, the courage to act under uncertainty. The facts in the case
are always limited. The amount of information
you have at hand is, by design, quite compressed. You’re working under
great time pressure. We’re asking people to
learn how to take a stand. It’s not a passive process. And frankly, management’s
not a passive process. They get to try out many
of the component processes of management in the classroom. And they get to build muscles
around things like judgment. The answer to most
questions is it depends. If one can leave
here understanding under what circumstances
you would go left and under what circumstances
you would go right, then you’ve got a
depth of knowledge, and you’ve got it in your
gut, as well as in your head. I think Harvard Business
School is the finest teaching institution in the
world, and I don’t just mean among business schools. Teaching is in the
fabric of the culture. We go back in a long tradition. It started, probably,
even before Socrates. But we can certainly
go back to there. We want to continue
in that tradition. Some things never get old.