The integrating course in the business school curriculum, or, whatever happened to Business Policy?

Business Horizons, March-April, 1997 by Philip D. Arben

The Business Policy course was created at the Harvard Graduate School of Business Administration in 1912, four years after the school was formally established. Initially it was an elective for second-year MBA students, and in its first offering some 70 percent of the second-year students elected to enroll in the course. In 1920, Business Policy was made a required second-year course -- a distinction held by no other MBA course at Harvard and one that has endured until very recently.

The developer and first teacher of the course was Arch W. Shaw, publisher and editor of System: The magazine of Business -- which subsequently became the well-known publication Business Week. Shaw had developed a keen interest in the workings of the new business school, and in 1911 he accepted an appointment as "Lecturer on Business Policy."

From its inception as the nation's first two-year graduate school of business administration, the faculty and particularly the school's first dean, Edwin F. Gay, struggled with the issue of not only what to teach, but -- perhaps even more ultimately significant -- how to teach it. Though not all members of the faculty agreed with him, Dean Gay (perhaps surprisingly for someone trained as an economic historian) took the position that the traditional lecture method of instruction was inappropriate for the purpose of training business administrators. In his two-page leaflet of April 1908 announcing the opening of the school, the dean wrote: "Business, as a department of University Training, has still, to a large extent, to invent its appropriate means of instruction.... What, for lack of a better term, may be called the `laboratory method' of instruction must be introduced, wherever possible...." (Copeland 1958).

Later that year, in the school's first catalogue, Dean Gay redefined the term "laboratory method" and referred to it as the "problem method" of instruction, which he stated "will be introduced as far as practicable." The term "problem method" was used to describe the school's primary pedagogical approach until 1921, when the school's second dean, Wallace B. Donham, who was a graduate of the University's law school, officially proposed that the faculty henceforth use the term "case method" of instruction rather than "problem method." Consequently, it was so voted by a majority of the faculty.

In 1912, when Arch Shaw began teaching business policy, the business school had not yet begun to develop written problems or cases. To conduct the course, Shaw enlisted 15 senior company managers, each of whom agreed to present to the class a real business problem that he was then facing or had faced. The course was taught in three class sessions a week. At the first session, the manager would lay out his problem. Two days later, at the second class meeting, the students would submit a written "problem analysis" together with action recommendations. During the third session, the manager would critique the students' analyses and recommendations.

As might be expected, it appears that the quality of the class, from week to week, was rather uneven, and very little information is available as to what business problems were actually discussed. Two that have been reported are a corporate president who was in the process of overseeing the preparation of his firm's annual report, and the head of a Wall Street banking firm who emptied his briefcase in front of the students and proceeded to discuss its contents.

Why Business Policy?

A question that deserves some discussion is why the course was titled "Business Policy" rather than "Business Problems." The latter would seem to describe more accurately what the course was about. Unfortunately, the available contemporaneous materials do not shed much light on this issue, and almost all subsequent writings in the field, to this day, seem to have danced around the meaning of the term "business policy." We know that the decision to name the course Business Policy was made jointly by Dean Gay and Arch Shaw when they were developing the course. Although meanings may vary somewhat, a relatively straightforward definition of a policy is a statement or articulation that is designed to guide or determine how action in a particular area should be carried out.

The answer to the question can perhaps be deduced from a monograph written by Shaw in 1914 and published by Harvard University Press, entitled An Approach to Business Problems. The monograph enunciates a broad range of business problems that are analyzed by the author, leading to what he regards as appropriate solutions or policies to guide future actions in similar situations. As stated by Shaw in the preface:

What have been the materials on which

we have had to draw for ... the book? To

begin with, there were the rules and

guiding policies of practical business

men -- the accumulated knowledge of

years of experience and observation. No

man ever reaches a position of power

and responsibility without formulating