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The Class: Reputation, Regulation, and Communications—How Media Influences Business

Guy Rolnik is clinical associate professor of strategic management

The Background

Booth students in growing numbers are interested in taking the entrepreneurial route, setting up their own companies. I did that myself. Eighteen years ago, after being a financial journalist and editor for 12 years, I founded TheMarker, which quickly became the leading financial and economics newspaper in Israel. After five years, Haaretz, which is like the New York Times of Israel, terminated its business section and launched TheMarker as a daily print newspaper. Most of media is going from print to digital, but we started as an online outlet and expanded to also include a daily print newspaper. We were able to buck the trend and grow revenues and circulation through a more innovative approach at a time when established, quality newspapers were suffering greatly all over the world.

The second part of my entrepreneurial story is that I spent a great deal of energy and time encouraging ideas and policies having to do with promoting competition in Israel and reforming the capital markets, which suffered from a concentration of a few large holding companies and monopolies.

In my teaching I blend my experience in the political economy of regulation and my knowledge of the business model of the news media with the economic literature and frameworks. All these come together in my class, Reputation, Regulation, and Communications—How Media Influences Business.

The Approach

In the past decade, an asset class of companies has emerged and is entering established industries, offering better products and services by changing regulation in a way that brings more competition.

When students enroll in an MBA program, however, most of the courses deal with market forces: investors, the stock market, consumers, the labor market, talent, and so on. One significant force that looms large in almost any industry is the role of nonmarket players, mainly the government and legislators, who set the rules of the game and enforce them. Another significant player that influences all stakeholders is the news media.

“This is a different game with different challenges.”

— Guy Rolnik

My course begins by looking into the extensive impact that regulation has on companies and then dives into the political economy of regulation—the politics and the economics of regulation. A special role is reserved for the news media because of its dramatic influence on the public at large, as well as on voters, decision makers and, of course, politicians and regulators.

In my lecture course, students use case studies to build regulation and communications strategies that deal with these dynamic nonmarket influences.

The Lab Component

Case studies are an excellent way to highlight a variety of communications and regulatory challenges. Most, if not all, companies keep that part of their strategy close to the chest, however. It is rarely the case that you can get reliable information and get the thinking of companies and their playbooks when it comes to these issues. 

For that reason, I added a lab version, which puts students to work directly with startup companies. The class is run in cooperation with Tusk Ventures, a VC firm founded and led by Bradley Tusk, a venture capitalist and Uber’s strategic consultant in its startup phase.

Uber would be the most famous example of a company that, in many ways, played the regulatory game. I would argue that the regulatory game might have been more important for Uber than the technology game. In the case of another Tusk client, FanDuel, it meant working to make online fantasy sports gaming legal in 12 states. Another case is Lemonade, a disruptive insurance company that needed a news strategy to deal with insurance regulators. What we’ve seen recently is numerous companies that are taking the same route, not just creating new technologies but disrupting a market with an idea that existing regulation does not cover.

We go through Tusk’s portfolio of companies and identify those that would be of interest to my students and which are willing to work with Booth students.

The Hands-On Experience

My students get to work with companies that are already thinking thoroughly about media and regulatory issues. The startups that students work with are usually entering heavily regulated industries such as transportation, financial services, and pharmaceuticals. They learn at this point that nonmarket forces can be very different and sometimes more difficult than market forces. This is a different game with different challenges. Students will usually work with companies that have already secured the seed and the A round of financing and are before or after B round.

What students get is a deep understanding of the importance of regulation and communication, the tools to deal with those two challenges, and a close, hands-on engagement with real companies that face those challenges.

The companies that collaborate with our class get two things. First, they get the intellectual power of our very smart Booth students. Second, a group of energetic people looks at the challenges and the marketplace with fresh eyes. Unlike large companies that have many consultants and many resources, younger, nascent companies don’t have those resources. They are happy to work with Booth students, who have amazing reputations.

The Classwork

This is a highly participative class and so participation accounts for 30 percent of the grade. I invite guest lecturers, as I do in the nonlab version of the class. Guests come from the finance, pharmaceutical, health insurance, advertising, and chemical industries, and from large, high-tech companies.

A series of five 400-word memos on the assigned readings accounts for another 20 percent of the grade. The lion’s share of the grade, 50 percent, comes from the strategic communications plan the students create for a Tusk startup company client.

The Final Project

Since teamwork is an essential skill, I split the students into groups of five or six. They work together on one company and one specific challenge for nine weeks. In week six they present preliminary findings to the class and to Tusk Ventures’ Chicago office experts. In week ten, they present the final project to the startup company itself.

The strategic plan addresses a specific nonmarket issue, usually one that combines a media strategy that will support the regulatory goals of the company. Students look at both the “inside” game—interacting directly with regulators—and the “outside” game—influencing regulation indirectly by getting the message to the media. 

Since these are startups, this is usually not a long-term strategy—much shorter than 10 years—as the environment changes fast. 

From the Students

Emily Blumenthal, Full-Time MBA Student: My background is in public policy, and this class was a great way for me to think about regulation from the private sector perspective and explore how it impacts business strategy. We got to see these dynamics play out as we worked to unpack the challenges facing a tech startup navigating a regulatory hurdle. My team and I laid out the regulatory and competitive landscapes within which our client was operating, and we did scenario planning for them as they formulated their strategy pending a regulatory decision from the federal government. I got a tremendous amount out of the course. It expanded the range of stakeholder interests and factors I consider when weighing both policy and business strategies.

David Hanna, Full-Time MBA Student: Registering for Professor Rolnik’s lab course last fall was among the best decisions I made all year. The lab component of the course provided me with hands-on experience helping a nascent technology startup navigate a challenging political climate in the cosmetics industry to protect its business model and growth trajectory. The critical lessons learned from this course both in the classroom and in the field will undoubtedly stick with me as I navigate my own career.