Understanding the Global Business Environment – Executive Education – Harvard Business School

Richard H.K. (Dick) Vietor is Paul Whiton Cherington Professor of Business Administration
at the Harvard Business School. A member of the Business, Government, and International
Economy department Unit (BGIE), he researches energy and environmental policy and
teaches in the MBA program and the Advanced Management Program (AMP) within HBS Executive Education. Here he shares his thoughts on the effectiveness
of AMP and his holistic approach to helping senior executives understand the relationship
among business, politics, and the economy.

What role do your sessions on the international political economy play in AMP?

AMP participants are business executives who are familiar with topics like marketing,
finance, and organizational behavior, but most of them know very little about how
nations are run, and they don’t think much about the environment in which they do
business. At AMP, we examine the global business environment, looking at individual
countries as well as their global interconnections.

Through AMP, these executives come to understand a lot more about the world economy.
By the program’s end, they can look at a nation’s economy and really think about its
business climate, how it might change in the next four to five years, and whether
it makes sense for them to invest there or not.

Which aspects of the business environment do you explore?

We discuss macroeconomics as well as politics and the social environment. For example,
during a recent discussion on India, we talked about the factors that are expanding
opportunity there and about the challenges businesses face. India has a new prime
minister, Narendra Modi, who is working to make the country grow again at more than
7% annually; this presents huge opportunities. But we also talked about social factors
such as the castes, different languages, religious frictions, corruption, and the
legal environment. We examined foreign direct investment, the opportunities presented
by India’s new middle class, and the challenges presented by the lack of infrastructure.
For anyone thinking about investing in India, or for Indians trying to grow their
economy, it’s important to understand the entire spectrum of issues—positive and negative—that
can affect businesses. At AMP, executives take away a broad picture of what it would
mean to invest in a country, and a way to think about the questions that are important
to ask.

What is “country analysis” and how does that help AMP executives learn?

The idea is to analyze a country the way you’d analyze a company. We look at national
economic strategy, economic performance, the major institutions that govern the economy,
and the social and political context. We try to understand whether the government’s
strategy fits the context and how it’s likely to affect performance.

For AMPers, this is a helpful way of thinking about a less familiar place. It can
also get them thinking more deeply about how their home countries are doing. At the
same time, they begin to think about the interconnections between countries. For example,
we talk about the current account deficit in the United States and the current account
surplus in China, and they develop a deeper understanding of how these countries are
locked together in a globalized economy.

How are your class sessions structured?

I teach 13 cases, each focused on a different country, such as Japan, Saudi Arabia,
the United States, China, and South Africa. The focus of our discussions varies depending
on the issues impacting the business environment. For example, for South Africa, we
talk about labor relations; for Europe, we talk about debt crises. Each case has one
or two political or economic themes—important concepts I want people to absorb. I
want the participants to think very hard about the different parts of the world, including
their own. One participant, a U.S. utility executive, recently told me after class:
“This globalization stuff is incredible. I’ve never learned anything like this.” I
love hearing that kind of feedback.

How do you want AMP participants to apply their learning after leaving your program?

My first goal is to help these managers understand the political economy they’re operating
in—their domestic economies and the global economy in which they’re doing business.
They should know what the government is doing with its budget, what’s happening with
inflation and unemployment, and the current trends in direct investment inside and
outside the country. Their businesses are all contributing to unemployment, to inflation,
to GDP growth, and to investment flows that come in and out of the country. If they
understand what’s happening in the global economy, they should be able to make better
decisions for their firms.

In addition, I want them to take responsibility for making a difference—especially
in their own economies. Participants in AMP are often C-level executives making important
decisions for their companies. They don’t realize it, but they should be a big deal
in national policy. I end my last session on this theme. The executives that come
to AMP will understand these topics better than other executives, so they should take
some responsibility for improving the policies of their own government. If I can get
them to see that and to understand how their country fits into the world economy,
then I’m happy.

What is the typical dynamic in your classroom?

AMPers are smart people, so I try not to lecture. If they read the cases and look
carefully at the numbers, they begin to be able to see the meaning by themselves.
That’s the trick. By the last class, if I have taken them to a point where they can
do the analysis and see the important points by themselves, I’ve achieved my goal.

In class, I take a more directive style. I ask a lot of questions. I really like AMPers
to argue with each other. The first goal of a case method teacher is to get people
to respond to questions. But the ultimate goal is to get them to discuss the case
with each other, with the instructor shaping the direction.

Does everyone participate in the discussions?

It can be intimidating to come to HBS. You’re here with a big group of other smart
people—CFOs who know more about finance than you do, marketing executives who know
more about marketing, Europeans who know more about the European economy. Every day,
these people are stretching you.

Some people are quiet in class, and we warn people that we might cold-call them. We
want them to do the work and be prepared to contribute. It’s part of the learning
process. The peer pressure in the classroom actually grows throughout the eight weeks.
People begin to feel more responsible for saying something intelligent.

What do you gain from interacting with the participants?

AMP is a fantastic experience for me. I build my own expertise because of the global
diversity. For instance, when I teach Australia, I draw on the experience of the Australians
in the room. I’m going to learn something every day.

In addition, all of us on the faculty enjoy meeting and spending time with the AMPers.
We’ll go out for drinks or have them to our homes for dinner.

But there’s another benefit for me. When I want to develop a new country case, I can
call or email half a dozen AMP alumni from that country and say, “I want to do a new
case on your country. I’d like to meet with your prime minister, your energy minister,
your finance minister, and the head of your central bank.” The AMP relationships help
me get those appointments. For example, I just wrote a case on Colombia. With the
help of an AMP contact, I had an hour-and-a-half meeting with President Santos. I
saw five cabinet ministers and the heads of four government agencies, as well as some
business leaders. That’s just unbelievable.

What’s the benefit of AMP? Why should executives spend eight weeks away from work?

The program used to be 13 weeks. We gradually shortened it, but we’re not willing
to shorten it further. Most other graduate schools have shorter programs. But we can’t
accomplish our goals in less than eight weeks.

We tell participants, “This eight weeks is going to change your life.” It’s true.
You’re not going to be the same person when you leave. The first two or three weeks
will be very hard, but you will have a great experience. People in your living group
are going to become some of your best friends. AMP centers you, helping you understand
where you are in business and where you want to be. AMP gives you an incredible number
of tools. Finally, AMP provides you with a global network of people you will be connected
with for the rest of your business life.

How does AMP change participants?

AMP is an amazing, transformational experience. Around the fourth or fifth week, people
begin to feel different, and by the last week of the program, they’ll say, “I’m different
now.” Participants go back with ideas they didn’t have before, whether they’re marketing
ideas or organizational ideas or macroeconomic ideas. Everyone’s outlook becomes much
more global. Everyone becomes citizens of the world in a way they weren’t before.

When they go back, many participants are promoted or change jobs or take on more responsibilities
for charitable efforts. They do all sorts of things because AMP has pushed them to
reflect and grow. I get emails every day or two from different AMPers who have just
been promoted or have started a job or a business that they think is a better fit
for them.

At the end of the program, participants evaluate the faculty. “Transformational” is
a word participants come up with in about 70 percent of responses. It’s amazing. No
one asked them to say that.