Harvard Business School 9-899-105

Rev. April 27, 1999

A Note on Case Learning

In March, a salesperson for Dominion Motors & Controls (DMC), calling on the Hamilton Oil
Company (HOC), DMC’s largest customer for oil well pumping motors, discovered in tests started
the previous October, that the DMC product was rated third against two competitive offerings. The
tests were conducted by John Bridges, HOC’s chief electrical engineer, to determine the specifications
of a motor that would be most economical for the application. Tests indicated that the ideal oil well
pumping motor would be in the 3-5 horsepower (HP) range and would have a starting torque in
excess of 70 pounds-feet (pfst) to energize pumps in temperatures as low as -50 degrees Fahrenheit.
(Starting torque is the twisting or turning power of the motor which enables it to overcome initial
load resistance.)

A motor meeting such specifications would have to be custom designed. (So far, it may be
noted, the Canadian motor markets had been served by general purpose motors meeting National
Electrical Manufacturers Association (NEMA) code requirements.) Among the available brand
offerings, Bridges was believed to have ranked the Spartan 7½ HP motor with 102 pounds-feet of
starting torque as the preferred unit. Universal’s 7½ with 97 pfst was second choice; DMC’s 7½ with
89 pfst was presumably third on Bridges’ list.

Until these tests were performed, Hamilton had been using DMC 10 HP motors with 105 pfst.
According to the DMC salesperson, Bridges was scheduled to report his findings to HOC top
engineering and purchasing personnel in May.

One factor that had apparently inspired the chief electrical engineer’s initiatives was a
determined drive on the part of Canadian electrical utilities to curtail the practice of overmotoring,
that is, using larger motors than were required for a particular application. Overmotoring resulted in
the inefficient usage of electricity. To discourage the use, say, of 10 HP motors where 7½ or 5 HP
units would do the job, the Canadian power companies had recently announced a rate change.
Henceforth, the base rate for 5 HP motors would be $125 per month, $161.25 for 7½ HPs, and $200 for
10 HP units.

Options

DMC executives had to decide what action, if any, the company could take to maintain its
share (50%) of the Canadian oil well pumping market. Options under consideration included the
following:

This note was written by E. Raymond Corey, Professor Emeritus, Harvard Business School. The author expresses his
appreciation for the very useful suggestions of colleagues Professors Frederick E. Webster, Jr., of the Amos Tuck School,
Dartmouth College, and Professor Howard H. Stevenson of the Harvard Business School.
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899-105 A Note on Case Learning

1. Reduce the price of DMC’s 10 HP motor to that of the 7½ .

Such a price cut could be delayed until the results of Bridges’ tests became generally known
and if they impacted DMC sales. Not a long-run solution, it could buy time until DMC could run its
own tests and decide on a product-line change, if needed.

2. Reengineer the DMC 7½ to give it a starting torque equal to or greater than

that of the comparable Spartan motor.

Such a motor would have to have a higher temperature rise than specified by NEMA
standards, but special high temperature insulation could be used to avoid any safety hazards.

3. Design a 5 HP motor with the starting torque of a 10 HP unit.

This motor would exceed NEMA specifications and could be priced below the 7½ HP motor.
This would seem to be exactly what Bridges wanted and probably other customers, as well. It would
take five months, however, before production could begin, and by that time the selling season would
be well over.

4. Attempt to persuade Bridges that conclusions based on test results unduly

emphasized obtaining the maximum available starting torque.

All 7½ HP motors tested had starting torques in excess of 80 pounds-feet and would meet the
most extreme temperature conditions. But, as one DMC executive noted, “All engineers love big
margins whether they use them or not.”

Hundreds of oil producers operated in the Canadian oil fields, but only about 25 of them had
50 or more wells. In all, there were approximately 5,500 producing wells in Canada at this time.
According to industry estimates, about 1,000 new wells would enter production each year for at least
the next five years.

Relevant current cost and price data for DMC motors in the 5-10 HP range are included in
Table A below.

Table A Costs and Prices of DMC Small Integral Motors

Prices to Large
Horsepower Total Cost Users, Resellers
5 $517 $1,045
7½ 663 1,200
10 908 1,580

*****

This is a brief synopsis of a real-life situation. You’re asked to read it so that I may refer to it
illustratively in the discussion that follows. Actually, you may want to stop right here and develop
some ideas of your own about the DMC dilemma before reading further. You may wish, as well, to
discuss it with some of your classmates.

Getting Started

When you pick up a case for the first time, skim it. Flip through the pages, asking yourself
what this one is all about. What seem to be the issues? What kinds of questions is the professor

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A Note on Case Learning 899-105

asking in the assignment sheet? Is this a “problem” case, or a learning exercise, such as computing
financial ratios? And who am I, that is, with whom in the case should I identify, if anybody? In the
DMC case, that might be the CEO or the Marketing VP.

Defining the Problem(s)

The next step is to read the case carefully. If this is a problem case, try to be reactive to what
you are reading. That is, as you go along, do some underlining, make notes in the margin; note with
question marks points that you’d like to probe further. The object of the exercise at this point is to
become immersed in the data you’ve been given, and, if it is a problem case, to define the issues. I’ll
suggest that defining the issues is the most crucial step in dealing with business problems whether
neatly encapsulated in cases or encountered in much less structured forms in real life. Unless, the
problems are perceptively defined, any further analytical work becomes an exercise in futility.

In a case study context, the “action” issues are typically stated early on in the first page
and/or at the end of the case. In the Dominion Motors case, for example, the fifth paragraph in the
case synopsis above reads, “.... executives of DMC had to decide what action, if any, the company
could take to maintain its share of the oil well pumping market.” The case goes on to outline four
possible courses of action with a fifth option suggested by the “if any” clause, that is: do nothing.
Action issues require answers.

As you go through the case, be sensitive to other issues, explicitly stated, or inferred. In
DMC, one such is that the star salesman seems to have been asleep on the job not to have known that
Bridges was conducting his tests.

Often action problems and others have to be treated in the context of some broader issues. In
DMC, for example, it would be important to note that this little crisis raises a fundamental policy
question: should DMC now lead the Canadian electric motor industry into designing and producing
special-purpose motors? In some cases, what management identifies as an action issue may be a
symptom of a more fundamental concern, e.g., “How can we improve our advertising ratings?” may
only be answered through a reexamination of the overall brand strategy.

By now you have your arms well around the case data and a good grasp of the issues to be
dealt with. Set up an outline. On the top of each page of a scratch pad list a question from the
assignment sheet and add another sheet for any other issues that you think should be covered.
(While the professor’s discussion questions must be covered, it should not be assumed that the
assignment lays out the core problems, thus relieving you of the work outlined above.)

Using the Evidence

Now, go back over the case sorting out the evidence, by topic, on your scratch pad. List pro
and con arguments. Do whatever calculations the issues call for, e.g., the relative profitability of each
of the motor-design options in the DMC case.

A couple of comments about using case evidence: First, beware of hidden assumptions. For
example, it shouldn’t be subconsciously assumed that oil well pumping motor requirements for new
fields will be the same as for existing fields, that is, units in the 5-10 HP range. It turned out later, in
fact, that the new fields needed more powerful motors.

Second, don’t look at the numbers and expect them to talk to you; you have to ask them
questions, like, “How much could users save in power costs if they replaced their 10 HP motors with
special purpose 5 HP models?” “How much revenue will DMC sacrifice if it drops the price of the 10
HP motor to that of the 7½.”

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899-105 A Note on Case Learning

Third, facts, by themselves, don’t mean much; what we need to know is their significance.
For example, in DMC, the change in the power rate is a fact. It is significant because it will alter the
calculus in making motor buy decisions, and it underscores the electric utilities’ determination to stop
the practice of oil producers overmotoring. These are both important considerations in confronting
the issues.

Finally, you may often wish you had more data; there just isn’t enough, you say, to come a
conclusion. That’s life. Business managers are often called on to make decisions under conditions of
uncertainty. Case problems are no different. So rather than plead inadequate information, make a
reasonable assumption and state it clearly and explicitly. This is accepted practice.

Stages in the Learning Process

Case method learning should be seen as an exercise that moves through stages. Individual
preparation serves two learning purposes. First, it prepares each participant to contribute in
discussion group meetings. Most important, it prepares participants to learn from what others say.
To gain the full benefit of the interchange of ideas around a case problem, you must have a good
grasp of case facts, and you must have your own ideas. Thus primed, you can react to what others
say. That’s how we learn.

Group discussions are informal give-and-take sessions. Come in with your own ideas and
go away with a greater measure of understanding. In such a context, you can pool your insights to
advance your analysis. Further, small group discussions provide opportunities for some participants,
who may be uncomfortable talking in a large classroom setting, to express their views and get
feedback.

Given the time constraints, it may be useful to name one or two group members to lead the
discussion on each case. Other group members are then required to read the case thoroughly and
have some ideas, but need not do as complete analysis as the case discussion leaders. In this way,
each member will focus primarily on one case a day but prepare the others sufficiently to understand
the issues and engage in the discussion.

The ensuing class discussion should go far to advance what may be learned from any one
case but may not necessarily complete the task. Informal after-class conversations, subsequent classes
on the same topic, and relevant readings on the general topic may all add to an understanding of the
issues. In class, the instructor may skillfully orchestrate a broad exploration of the case, encouraging
participation, challenging assertions, directing attention to areas not yet covered. In the end, the
instructor is likely to make a “summary comment” to indicate what he or she thinks are the primary
lessons to be drawn from the case. He or she may also add a “what happened,” often sparking
renewed discussion about the wisdom of actions taken and what further can be learned.

It is axiomatic that what students gain from a class discussion is directly dependent on what
they put in—individually and collectively. No matter how good the case or skillful the professor,
nothing happens without a quality discussion.

How much each individual gains is dependent, as well, on how well he or she listens.
Listening means not only hearing but mentally responding to what is being said—taking in others’
contributions, weighing them, and being willing to modify one’s views accordingly. Few would
disagree. But often one’s ears become disengaged when one’s hand goes in the air, a human
phenomenon to be aware of and guard against.

It is important to remember that the object of case learning is not case solutions, with success
measured in terms of how many the student “got right” or “got wrong.” The object is to build a body
of knowledge and concepts that become one’s stock-in-trade as a manager, to be applied in practice.

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A Note on Case Learning 899-105

This is done over time, case by case, through pedagogical stages, and by class members and
instructors working together. In such a process, each participant takes responsibility both for his own
learning and for contributing to that of others.

The responsibility thrust upon students to think independently, to speak in small group
meetings and in class, to question assertions, and to be challenged on one’s own ideas may all add up
to a most uncomfortable and, indeed, anxiety-ridden learning experience, especially at the outset.
The only way to deal with such discomfort is to become involved early on. The longer one waits, the
more emotionally difficult it becomes to speak up.

Often less assertive students are discouraged from participation when the discussion moves
past that moment when their possible contributions would seem to be relevant. But case discussions,
it will be quickly observed, never move in orderly progress from point-to-point. Thus, when called
on, one may well start by saying, “I’d like to go back to our previous discussion on _________.”

Case learning may be an abrupt change from previous learning modes based on lectures and
readings. But for many, once accustomed to the give-and-take of student-student, student-teacher
interchange, the exhilaration that comes with deep involvement in the learning experience and the
sense of constant discovery are well worth any initial trauma.

Why Am I Doing This ?

If case study learning is exceedingly demanding, one should certainly have a sense of the
expected rewards. There are a number.

First, over repetitive case experiences, one develops structured, disciplined, and ingrained
decision-making processes that find application in any problem-solving situation. (Sometimes to
one’s spouse’s annoyance!) One learns quickly to define the issue, gather and use the data, and come
to reasoned conclusions. Along with this come a propensity always to question what one observes
and a resourcefulness in probing for information. At the end of the data trail, one learns to live with
whatever uncertainty remains.

Cases teach, as well, that there seldom is one right answer. There may be several viable
options, and success often depends on how the manager acts on the choices he or she makes.

The case learning experience also has significant attitudinal consequences. On the one hand,
the manager learns neither to accept the conventional wisdom at its face value nor to yield one’s own
independence of thought to the pronouncements of those in authority. On the other, the experience
teaches a healthy respect for others’ ideas and the value of listening. Kept in balance, both take the
kind of self-confidence that case learning tends to generate. Repeated exposure to case studies
develops confidence, as well, in one’s ability to recognize opportunity and to take action.