Podcast Transcript
Brian Kenny: The marriage between King Ludwig I to Princess Therese of Saxe-Hildburhausen in 1810 may have been the best wedding ever. The party went on for 16 days, and all of the citizens of Munich were invited. In fact, it was so good that they repeated it the following year, and every year since. What began as a royal wedding celebration has become the largest public festival in the world. Today we'll hear from Professor Juan Alcacer about his case entitled The Munich Oktoberfest: From Local Tradition to Global Capitalism. I'm your host, Brian Kenny, and you're listening to Cold Call.
Professor Alcacer teaches in both the MBA and Executive Education programs at Harvard Business School. He's the author of numerous cases, articles, and books on corporate strategy and international business, which are both important themes for the case we're going to be discussing today. Juan, welcome.
Juan Alcacer: Thank you. I'm very glad to be here.
Kenny: This case, I thought, was really illuminating—not just for getting a better understanding of the history of the event and how it came to be, but just the amazing statistics and things that you bring into the case that show the scale of it. Maybe we should start at the very beginning. Could you just set up the case for us?
Alcacer: Yes, so the context is that Oktoberfest, or the idea of Oktoberfest has been transplanted to many other countries. We have Oktoberfest in Beijing. We have Oktoberfest in the United States, in Brazil, and they're very, very successful. If you think about Oktoberfest as a product, it has many of the characteristics of a global product. The question is, is it a global product? To what extent is the local content versus the global content important as a product, and to what extent are the designers or the creators of the product actually benefiting from the product? The idea of the case is to take a step back to look at the Oktoberfest, not only the one that's happening in Munich but that the concept of what was created in Munich has been translated to many other countries and is very successful. The question is: why is that successful and to what extent are the city of Munich and the originators of the idea benefiting from that?
Kenny: I think many people, including me, might be surprised to know that it's been exported on such a large scale to so many places. My first frame of reference is always Germany, Munich, but we'll get to that a little bit later. Why did you decide to write this case?
Alcacer: We have a very active German club here, our students here go every year to Oktoberfest, it normally falls around (or just before) Columbus Day, and for a few years I was teaching in the fall and I was teaching just after they came back from Oktoberfest. The year that I decided to write the case we had over 200 students going to the festival.
Kenny: Two hundred out of, for listeners who don't know, we've got a student population of about 1,800 here.
Alcacer: Yes, so it's a good number. I was teaching at 8:30 am just after they came back from that and I was just teaching and I saw the faces of everybody. They were there in the classroom and they were trying to do their best in the class but you could see that they were totally jet lagged and they were not there really. At some point I started to think, “Well, how do I do this because every year I'm having the same problem?” Two of my students that were taking that class actually were the organizers of the trip and in the second section I was teaching I basically stopped the class and I said well let's talk about the Oktoberfest. Why did you guys go to the Oktoberfest, what do you find interesting about the Oktoberfest? We basically abandoned the case that we were doing and we started to talk about why is this a global phenomenon?
Kenny: That's a real cold call right there.
Alcacer: Absolutely, but it was out of desperation in a way because I was not getting traction, so it was just a way to say “Okay, you are here, obviously you went to Oktoberfest, this is a global class, let’s try to talk about it.” It was a very interesting discussion, I had no teaching plan, I had no idea what I was doing. We talked about many different issues that are very relevant for the context of global strategy and these two students decided to write an IP, independent project, with me the following semester. Basically we decided very early on that it would be about Oktoberfest. They are two German students and we have a great time learning about Oktoberfest. I hope that they learn a lot about the process of writing a case and so far I've been using it a few times and it's unbelievable how many audiences find different things in the discussion that are very relevant. There are normally two types of issues that I address with the case. One is this idea of: what is a global product? And when the excessive use of a global product actually kills the product. The other one is to what extent having all these copycats all around the world are helping or hurting the Oktoberfest.
Kenny: Right, and how do you maintain the integrity of the original event if you export it to Beijing or someplace?
Alcacer: Yes and there are many people behind the festival and to what extent…. Who is supposed to be making money out of this? Is it the beer tents, is it the city of Munich, is it the people that are basically doing the rides in Munich? So there are many constituencies. It's a very interesting conversation about to what extent you really have to be profit-oriented in these type of activities.
Kenny: Let's talk about some of the numbers that you present because I want people to understand just the scale of this thing in Munich. Really amazing. It started as 16 days, I think now it's 17 days in length. They have 14 tents but when we say tents, these aren't....
Alcacer: They are really like constructions so they are very big. It's not the typical tent that you imagine. They take almost a few months to get everything ready. When you see them, it's a building. It's a structure.
Kenny: The case says that they seat 114,000 people at a time. There are a total of 6.4 million guests that go through the 17 days. And I loved this one, 7.9 million liters of beer and over a half a million roasted chickens, so you don't want to be a chicken anywhere near Munich during Oktoberfest…280 tons of garbage a night.
Alcacer: Yes.
Kenny: Now did you get to go to Oktoberfest?
Alcacer: No, actually I haven't been. I'm planning to go in the near term. I interviewed many people during the process of writing the case but I haven't experienced Oktoberfest.
Kenny: As we talk about the question of how to export this kind of a product, in the city of Munich how do they organize this thing?
Alcacer: They don't. Actually all these Oktoberfests in the different parts of the world, you have two types. One type is basically German expatriates that for instance move to the United States or to south of Brazil. There's a huge German colony or group of people in the south of Brazil. They brought their traditions and they're creating their own Oktoberfest, so those are more of preserving your heritage type of festivals. Then you have new festivals in Southeast Asia where there is not any German population whatsoever and there it's more about this idea of “Let's go and go to a place, drink, get together, enjoy, and have this German experience even if we are in Beijing or in India.” You have these two different ways that these different copycats have been created across the world.
Kenny: Now in the case of the latter example, the one in Asia for example, are those beer tents staffed by people from Germany? Do they bring in Germans to do music and create the experience?
Alcacer: Yes. What you have for instance in the one in Beijing is that some of the beer tents that are present in the Oktoberfest festival, they also have subsidiaries. They open tents in Beijing. You see that the globalization is going not through Munich or a very centralized entity, but through the members of that Oktoberfest. In the case of China it's very interesting. It's very important for the Chinese consumer to have the sense that this is the real Oktoberfest, so they were willing to pay whatever to get the rights to claim that they were the real Oktoberfest, but the city of Munich is not in the business of creating money. They don't care about it.
Kenny: Should they be?
Alcacer: That's basically one of the questions that we have during the class is: should they be? And you have a very interesting discussion. Some people will say well that's revenue that can be used for schools, that can be used for many things. Some people say, “Well, local governments should not be in the business of making money overseas.” It's a wonderful discussion that gets to the basics of actually what is for profit or not and to what extent you can make money out of traditions. I remember in one of the times that I taught this somebody was saying, “When do you stop?” For instance if you have this Venice hotel in Las Vegas that is with the Venetian theme, to what extent these people should be paying royalties to Venice? We get to the issue of property rights, so to what extent you can make money out of traditions. You also have the clear example of the elimination of foraging for some products in Europe like champagne or Roquefort cheese or something like that that are very protected. They are also tradition but there is a legal framework that protects the product that nobody can copy, so nobody can produce champagne outside the Champagne area in France. In Spain we have to produce and we have to call it Cava, the Italians have to call it Prosecco, so there are some traditions that there has been the development of the legal framework that protects them, but some other ones like Oktoberfest are not protected.
Kenny: Do you teach this case in the Executive Education program as well?
Alcacer: Yes. They are very interested in a particular question during the case, which is to what extent having copycats helps you or hurts your product. When you look at academic research in this area, there are some academics that are saying that by the Chinese or other producers in other parts of the world, when those producers are creating copies of the products they create basically free advertising for the product. Everybody knows that a Gucci bag that you are buying on the street for ten dollars is not real but it creates the aspiration that eventually you're going to buy the Gucci and creates more of this idea that the Gucci bag is going to be very appealing if you are rich. Some people see that as a way to create free advertising for your products. So the question is to what extent the Beijing festival—everybody knows that it's not the real Oktoberfest, but if you like it, in the future if you have to decide where to go, you may decide to go to Germany during the Oktoberfest just to go to the real Oktoberfest to have the real experience.
Kenny: Are there any officials from Oktoberfest, the real Oktoberfest, who travel to these other events to advise or ensure that they're….
Alcacer: As individuals. They cannot do it as representing the city, and that's when you start seeing that some people are making money out of the idea of Oktoberfest, and the question is to what extent if individuals are making money, why not the city or the organization behind Oktoberfest is making money?
Kenny: By licensing it or doing something along those lines?
Alcacer: Yes. There are many issues that there is not a clear cut answer, which is probably one of the good things about our case. I don't want them to come in one way or another but I want them to perceive the nuances on all these issues about property rights, what makes a global product? When you start asking the students what do you think they are selling? Why do people go to the Oktoberfest? You have all these sets of very different answers. Then you get to the issue that, okay, suppose that you want to make money out of this, why don't you extend it four more days? Why don't you bring more people from overseas? Why don't you start making more advertising for that? Imagine if you are going there because of the German flavor and when you go there it's basically the same thing that you will see in Cancun and any other touristy place, why would you go to Oktoberfest? There's a tipping point that if you try to make it too successful from a global perspective and you have many global consumers, you may kill the product. It's again this balance. We always think that a global product is something you can sell exactly the same in every different country and that may not be the case.
Kenny: It gets down to an experience as well so is there another experience that you can think of that has tried to export on this kind of a scale?
Alcacer: You can think about other festivals that are out there. You can think about, for instance, Carnival. It's an experience that was created in Europe in the medieval times. It was the last time before Lent where you can do very bad things and then you have the 40 days of Lent that you have to repent.
Kenny: Everything is forgiven.
Alcacer: Yeah everything is forgiven and that was the reason that many people used masks because you could do bad things and everybody was the same, the rich people and the old people and the poor people were basically the same. The city of Carnival is very appealing so you have many different incarnations of Carnival in different parts of the world. You have the one in Rio that is very different to the ones that you see in Europe or you see in Spain or in Germany.
Kenny: I'm thinking about the National Football League and their efforts to try and bring that game to other countries, but in a very controlled way, and how they're struggling to do that. I guess this is another question that would probably come up in the case: are you better off to let a thousand flowers bloom or are you better off to try and maintain control of the experience in some way?
Alcacer: It's interesting that you bring the NFL case because I wrote a case about the NFL asking precisely that question.
Kenny: We might have to do that as a Cold Call.
Alcacer: Yes I would love to and it's this idea of:how do you globalize a sport? The NFL is so successful in the United States but has had such a hard time exporting this overseas. When you see why some sports are successful from a profit perspective, so for instance when you look at baseball and how baseball has been making money globally. The way that it has been always exported has been by bringing players from other countries and trying to create a fan base back in the original country. In the case of the NFL the problem is that nobody else plays American football. I need to have the teams in Europe that play American football so that I can bring the German star for that league to the United States, and that's very hard.
Brian: It sounds a lot more complicated than bringing a festival to another part of the world.
Alcacer: Absolutely, and once again in the case of Oktoberfest, they were not doing it. They just realized that it was all over the place.
Kenny: It just happened.
Alcacer: The question is to what extent I tried to co-opt that success and tried to get some ranks out of that, or to what extent I should worry that it's damaging my brand, or to what extent I just let it go.
Kenny: We're going to have to have you back after you've been to the festival I think. And next time we’ll be talking about the NFL case.
Alcacer: I would love to.
Kenny: Professor Alcacer thank you for joining us today.
Alcacer: Thank you, it was a pleasure.
Kenny: You can find the Oktoberfest case in the HBS case collection at HBR.org. I'm Brian Kenny and you've been listening to Cold Call, the official podcast of Harvard Business School.