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Cola, Not Cold War: Post-Soviet Professors Take U.S. Marketing Lessons

July 19, 1992

BOSTON (AP) _ Sitting in a Harvard University classroom, a group of Eastern European academics recently launched into a lively discussion about two long-time enemies.

The topic? Not the Cold War, but the cola war.

The battles between Coke and Pepsi, the success of Wal-Mart stores and the changing menus of McDonald’s restaurants are among the subjects being taught to these professors who were weaned on the principles of centrally planned economies.

The purpose is to create a new breed of business teacher who can carry lessons home and help accelerate the arduous journey toward market economies.

″People are enthusiastic to make change, but they don’t know how to change,″ said Iryna Filippova, a student at Harvard this summer and a faculty member at the International Management Institute in Kiev. ″They must be taught properly.″

Harvard Business School teamed up on this project with four other prominent business schools at Stanford University, Northwestern University, the Massachusetts Institute of Technology and the University of Pennsylvania.

Rather than try to teach thousands of potential business managers, the schools decided it would be more efficient to teach the teachers, who can then spread the knowledge.

More than 120 professors from Eastern Europe are participating in the two- year program. First they attend executive education sessions to learn the general workings of a market economy, studying the interplay of pricing, advertising, production and finance.

Then these faculty go back to their countries to conduct research and see how their new knowledge can apply at home. Finally, they will return next summer to the consortium schools for more specialized studies in areas such as marketing and strategic management.

″It’s such an enormous task when you talk about what needs to be done in Eastern Europe,″ said Nancy Hartigan, asssociate dean at Northwestern’s Kellogg Graduate School of Management.

″The cynical side of me says we’re taking a thimble of water to the desert,″ she said. ″But you have to start somewhere.″

The professors-in-training acknowledge they must change their ways of thinking to understand how businesses operate.

″We were ready to analyze the case studies, determine the pros and cons. But we weren’t ready to make decisions,″ Filippova said. ″We are academicians. We are not managers.″

″They don’t have a lot of intuition,″ said Ben Shapiro, a Harvard Business School professor.

″It’s the kind of thing you and I developed when we ran a lemonade stand,″ he said. ″When you are selling lemonade for 50 cents, and someone down the street is selling it for 25 cents, you begin to understand what pricing is like.″

But what the visitors lack in intuition, they make up for with enthusiasm. In interviews last week, several participants bubbled with excitement while describing the program.

″What we find here is academic Disneyland,″ said Peter Eckstein, an associate professor of economics at Humboldt University in Berlin.

Likewise, there is a strong hunger back in their countries to learn how to run a business, the participants say. Zbigniew Turowski, vice dean at the Warsaw University of Technology, said his school is about to launch a business education program and received applications from 10 times the number of people than slots were available.

One important difference between East European and Western economies has been the whole process of buying and selling, Shapiro said.

In a centrally planned economy, selling is easy and buying is difficult. But here, it’s the opposite: buying is easy and selling is difficult.

To illustrate the lesson, Shapiro took the visitors to a shopping mall and asked them to notice all the dress stores. ″How can they all exist?″ he asked. ″Each of them differentiates themselves, creates value in a different way.″

Other field trips have been to supermarkets, Gillette Co.’s razor blade plant in Boston and a McDonald’s restaurant.

Now, Eckstein says, when he walks into a McDonald’s, he has trouble concentrating on the menu.

″Look what’s going on here,″ he says. ″Where’s the bottleneck?″

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