Yale Curriculum: State and Society

You’re the CEO of a Danish energy company looking to expand into new markets in countries with radically different political and business cultures. Or you’re an executive with a major oil company searching for the best way to get crude from fields near the Caspian Sea to the market via countries with varying agendas and challenges. Or you head a growing manufacturing firm and must decide whether the potential rewards of entering into a 50-50 joint venture with a company owned by the Chinese government outweigh the considerable risks. What do you do?

Business decisions are rarely just about costs, returns, and whether the shareholders will be happy in the short term. Especially in a truly global economy, long-term results can hinge on the unique political, legal, and business dynamics of each market. SOM requires all first-year students to take a core course called State and Society, which is devoted to studying and understanding these crucial constituencies. Over six weeks, students encounter a variety of scenarios designed to force them to grapple with the real-world legal, political, and societal issues that confront companies today. “The whole course is aimed at preparing students for senior-level responsibility,” said Doug Rae, the Richard S. Ely Professor of Management, who teaches the course with Constance Bagley, a visiting associate professor of business management who will be joining the permanent SOM faculty in July. “As they take the helm of an organization, whether large or small, they will encounter the relationship between the firm and government, between the firm and the culture, and between the firm and society. The best managers understand this and know how to interact with all three.”

State and Society is one of eight Organizational Perspective courses for first-year MBA students. Rae, who is also a professor of political science, said the course uses case studies to illuminate the intricate web of issues confronting managers both internationally and in their home countries. A leader cannot set effective business strategy without understanding everything from the regulatory and political environments to the structure and tenor of the legal system. Bagley said that through the cases, students come to see how good CEOs approach business problems. “Top executives don’t have a market strategy and then a non-market strategy,” she said. “They have a business strategy, which includes not just an evaluation of the market but the proactive use of politics and legal tools. It goes beyond understanding the rules of the game. By actively managing these aspects, executives can create a competitive advantage and enhance value.”

To enhance the classroom experience, Rae and Bagley brought a number of the protagonists from the cases to class to discuss their situations and test students’ decision–making skills. At different times, students interacted with the CEO of REpower, a Dutch member of India’s Suzlon Group, both the CEO and CFO of Fortune 500 company USG Corporation, a senior executive with Cummins, and the founder of Medley Global Advisors. John Bolton, the former United States representative to the United Nations, spoke about international business and the UN at the invitation of one of the first-year students. Lisa Bates ’09 said the speakers lent invaluable real-world perspective to the case studies. “They allowed us to move out of the observer’s role of just reviewing the spreadsheets and case texts and into the position of the leader in the hot seat,” she said. “It’s one thing to read the case studies regarding multi-million – or billion – dollar investments, liabilities, or bankruptcies, and another to hear from those who made the judgment calls, choosing how to manage complex, costly questions or to make the most of big, yet risky opportunities.”

This is the second year of State and Society, as it was developed as part of the Yale Management integrated MBA curriculum, which debuted in fall 2006. The course was originally taught in the fall term, but the school moved it to the spring to better align it with the required International Experience trips. This January, first-year students traveled in eight groups to eleven countries, where they met with business, political, and cultural leaders. Rae said that because State and Society followed the trips, students came to the class with a much deeper understanding of the issues the course addresses. It’s one way, he said, that the SOM curriculum is bringing the real world into the classroom. “The trips really give the students a knowledge base to come and speak with confidence on a wider range of subjects,” he said. “When Per Hornung Pedersen, the head of Suzlon’s International Group, came to class and was talking about the market for wind power in Romania, there were students who had just come back from Romania and could talk about meeting with the same people that he’s interested in. The debate in the classroom that day was extraordinary.”