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Founded in Trieste, Italy, Illy marketed a unique blend of coffee drinks in over 140 countries and in more than 50,000 of the world’s best restaurants and coffeehouses. The company wanted to expand the reach of its own franchised coffee bar, Espressamente, through international expansion. Ilan Alon, Professor of Strategy and International Marketing at the School of Business and Law at the University of Agder, breaks down how he translated his international consulting and field work to the classroom for his best-selling case, The Espresso Lane to Global Markets.
Resources mentioned in this podcast:
- Stephen King's nonfiction work, On Writing: A Memoir of the Craft.
- Alon's related case, Ruth's Chris: The High Stakes of International Expansion
Transcript
Hi, I'm at Quinn. Thanks for joining us for the first episode of Decision Point. Today we welcome Ellen alone, professor of strategy and international marketing at the School of Business and law at the University of Actor. We discuss his case, the Espresso Lane to global markets. Originally published in two thousand and twelve, the case featured world renowned Italian coffee producer eally. We get into the complexities of the case, Ellen's fieldwork, case writing tips and more. Enjoy. Thanks very much for joining us today. I want to dive into a little bit about the background of the case, talk about it in today's context and talk about the process that you went through. So let's start with you know, this case, Espresso Lane, has been a best seller for a number of years since it was published in two thousand and twelve. What do you think back what prompted you to write the case and how did you originally connect with ely? So I I used to teach in the mid school of Management and trees and as part of my teaching I also engage with the local businesses. Trees is a small city in northern Ealy, close to the Slovania Gratian border, and a very international city which has a number of multinational companies. When introduced to Eli, I discussed with them the internationalization options of given I've given some lectures to their managers. So they decided that they want to do a project to better understand what the best international markets for them and one of the best modes of entry and modes of engagement different markets. So it really started out as a consultancy project for Eli, which is a medium sized family enterprise that has been around since before World War II and it's very well known for its quality and probably Eli's considered one of the best coffees in Ita, leave, not the world. No, that's that's great and I love to hear that. You know, it's started with the with the idea of one part of a project, and then went into a case, and that's a great way for for those considering offering a case. How do they get involved? Think about the research projects or consulting projects that you're doing, because that can turn into a great a great narrative. So that's very cool to hear. Exactly. That's what's Nice about these consultancy they already start with the problem statement, right, so it's good and and and also it's very relevant right, and what's even nicer about it is that the teaching note can be quite instructive because personally you have experience with this company, so you could tell the stories you know behind the scenes and, second of all, you could enrich others, including all the fact of the might be using the teaching notes to better teach this kind of a case. Yeah, I love that idea of accessibility. It does lend itself to an now the number of different areas and I want to dive into the dilemma based by Christoph. He's the managing director of Espresso Mate and that's ely's franchised coffee bar. Can he talked a little bit about that dilemma or that decision point that you mentioned? So, first of all, the expressmente brand has really evolved from the Elie manufacturing which is the bread and butter of this company, and this was a way to go downstream, closer to the customers, and it started with experimentation with Elie bars in try es in Italy, later on in a few airports. And I yeah, there was to really emulate the starbucks success for eally, because it is a better coffee than starbucks. Yet doesn't have the wide reach and accessibility that starbucks does. So initially in the s the company really tried to expand everywhere, sort of the starbucks model, but really quickly came into trouble because of the differences that exists their unique brand, their niche strategy, and and realize that it needs to really instead of thinking of internationalization just adding flags, it really needs to focus on the flags it finds most profitable. So in this way they can concentrate the limited resources of a family businesses into those markets that are most profitable and develop those markets first, followed by secondary and thirteen markets, which will kind of a give them a strategy forward in the global market. I love this. Again it comes back to that accessibility to to the student, to faculty deciding to choose this case. That is such an important thing for the student who's sitting in the chair as the decision maker, to walk through, going okay, let's not we can't just go global with everything. We have to be thoughtful and in the way that we go for it and how do we do that? So I really, I really love that part of the case. And the main reason, by the ways, that companies have limited resources so if they stretch them to thin, then they're becoming effective everywhere. So it's really it's really quite appropriate and thoughtful to use your resources and most the most efficient plain. I should say that one of the reasons I think this particular case has gotten a lot of traction is both because the company really allowed me to use a lot of proprietor data. I mean we have sales data, we have market share data, we have I mean not just the kind of the second are data that you can get out there, you know, and in different sources, but company specific data. And this allows this case to use more advanced techniques like the post and consulting matrices, G matrices, you could, you could go beyond kind of the normal environmental analysis with generic numbers and really look at what is the very lens of this particular company for that particular mock. So could you talk it? Let's dive into that a little bit. How did you manage to get access to this, with this just kind of a company culture to be that open and forward with giving you this information, or what did you have to do as an author to work with a company to get access? Because I think for those just starting out they'd love to know, you know, how the heck did you manage to get to get access to this? So again, it's started as a consultancy project. When we finished a consultancy project and we had a product that they were happy with, then we said, well, what can we do? What else can we do to promote the early brand through all the channels and maybe want ways to tell the story, and they just happen to agree. Just you just need one manager to say okay, now, if the storyline is written about the manager to some extend, low replying that manager and he's a her decision making, I think they're just more open to it. Whether that's a company culture, I'm not sure. But the fact is that some manager pushed it through legal to get a so you have that Interni champion, working on your behalf. You almost have, I mean I think, I think you almost have to, and I think you have to commit the company to exposing a few words in a sense of saying, look, we're not going to just say that you're everything is is, you know, green and Dandy and blue skies, and we're going to we're going to talk about a few of the problems that you had that are really relevant to many other companies and you feel, for example, I think that another company in the field might read this report and learn quite a lot of competitive intelligence about the company. But at the same time, the Elie brand being so many cases being sold out there. I don't know if you have the latest numbers, but thousands of cases of it's sold and those cases are creating and good will, those cases are creating water mouth, those cases are creating brand awareness. So I think there's some value to the company to do this kind of overage, not to mention their social responsibility and engagement students. And on the fact you mentioned brand awareness and and that's something that I'd like to ask your thoughts on, because the case provides a really easy jumping off point for students to think about different markets, India, UK, etc. Coffee obviously recognizable. The brand of this company recognizable, as the ubiquity of the brand and the product make it easier to discuss the market selection or does it? Or does it present certain challenges? What do you think they're I think that really the brand of the case, the brand that we discussing in the case, is an important fact. They're in adoption. I mean, if I'm going to write a case about Elie or Tesla or, I don't know, one of the big fortune five hundred companies outside maybe the oil companies or the mining company. But even then I think that there's going to be more interest just because of familiarity of the faculty or the students with this. See what I'm saying? So so I think there is a normally, if you write about small companies that I would very interesting case, you just have less adoption. As it is, presents itself a little easier to do that, to sell the the the case because of the recognition there just that. That's great, a very great point. We just had some research done it. I be publishing talking about what cases cell we're going to release more of it it but definitely recognizable brand and industry that the student is relatable to, which is those are two fact two factories that we see have huge impact on adoption because no question like consumer brands, for example, are going to be more interesting than a business to business. You know, something that maybe the company students are not really involved with a day to day yeah, when you don't have to explain what the company is or or their background is, students you can immediately go into the learning mode and students have a kind of a head start in that and the practice of whether it's online or physically in the classroom. The your ability to contribute really increases with that brand awareness, industry awareness. Could you talk a little bit about the mode of entry and the complexities the case introduces here, because that's one of the things that I love about the case and why faculty pick it up. So talk a little bit about Moti entry. I'm not sure whether they pick it up at the international market selection or the motive entry, because this case really has both. And if you look at another best selling case that I had, which was the Ruth Chris Teak House case, that too was a simple, short international market selection study that came out of consultancy as well. So I think people are interested in international market selection, Preston. Second of all, of course, the next step is okay, you select the country, but how do you enter them? And the complexities there are a bit different, because then you have a range of options from, I guess, exporting of the beans to licensing of the or franchising all the way up to joint venture and full ownership. And and then when you think about. Well, what is this company capable of doing given their size? Where are the most likely to succeed without major adaptation, and what is the level of risk and return to they're looking to take in each one of these markets? And so this offer as a whole, a whole new dimension of analysis, which is oftentime, by the way, a separate chapter from the International Market Selection and international business and international market lesses. That's great. Now this is a question that I love asking and getting the insight from the author on. Is that you know, the case was written in two thousand and twelve. You you've taught it countless times. You've worked on the teaching note. Have you had any particular challenges or surprises when you've taught the case? I love getting this insight. The listeners like that like to hear about this as well. First of all, this case is a very complex case with quite a lot of numbers. So the challenges that I think in general, will you give students cases and he present them with some information is a they assume they need to use all the information and be they only use the information presented. So it's they make two kind of strategic errors in their analysis of the cases. Again, if I may go back to let's say the Ruth Christ Teak House, another best selling case oftentime, the students don't even specify the role of regulation and meet exports when they're thinking about the right markets, right. So they just think within the box. And the whole point is that we need to teach students, I think outside the box, right, that's that's the whole point, right. So, so I think that that's really the surprising part. Second of all, they think there was only one way to present it. So, for example, it's very hard for them to concept your light at BCG Org Matrix when the market share is very small. They don't know how to draw the line, where to draw the line right. They can't take it from most students a step further of extripolation and and and and insight that you can get to this particular data set. So what's really helpful for me is when I show them in the end what I'm doing in how I analyze it, a just blows them away because they realize, you know, even though they use a lot of the common vocabulary, a lot of the existing models, then not using them effective. How do you encourage students to think outside the box. You mentioned that. You know, it's often students just analyze or look at what's presented to them. In our job as educators is to really expand that thinking, to expand the questioning as well. How do you get the students to break three of those of those boundaries that are sometimes selfimposed? Well, I I think that one way to do that is to simply show it to them, right, show them that they're they're missing or using too much, using data they may not need. For example, in the case of Elie, what is really the value of the hofsted data? Right, I mean, like how does power distance impact our coffee drinking behaviors? Right, I mean, I don't know. Maybe you could tell me. I don't really I mean I get extrapolated, I can make an explanation, but is it really relevant? Is Individualism really irrelevant variable, or do you use this hoftable measures as simply as a way to kind of gage the cultural distance on the composite or in the on the total level of the country, simply to get a proxy for okay, in trying to understand, for example, what is the role or need for adaptation? Right. So, so, a lot of times it's simply having the briefing after the student do the analysis and present their findings, to be able to come and take them through the briefing. Of Okay, here's the way I looked at it. I'm not saying I'm right, I'm not saying all my ass as a correct but but at least you could see how, you know, a professional assessment of this situation from an experienced, I'd be consultant with little you're opening the door and you're showing them that here's an here's another perspective. And I guess as you're working through the whole course, when you look at over the course of time, as you continue to show these different viewpoints, these different perspectives, the student starts to think, okay, there's more to a case or there's more to a discussion in the classroom than just what I'm seeing written down on paper on the screen. So it's so I guess that's a long term play for us to continue that reinforcing of other ideas in perspectives. To some extent I think what the student sees is that they are they are thinking within the box, they're thinking within a mindset of a case like a simulation in a sense seem relations also a lot of fun. Right. Students Love them, professors like them, but they make a lot of assumptions about reality that we don't see. So we think, yes, if we, if we do, you know, x, like, I don't know, raise the price, we will get wise an outcome. Reality works very different, right. I mean apple raises the price regularly and just still gaining market chair. Right. So, so they thedeah. Is that a case? By showing the limitations of the case, I think you are expanding the mindset of that's great. So for those that are, you know, considering adopting this case or any others, build in a time to go through this with the students, the limitations. I really like that. I wanted to revisit its, show the limitations of the case and be open with that with your with your student. Yeah, so let's go into the writing side of this. We've talked about how this works in the class, some of the different ideas the the christoffs point of view here. What challenges that he had to face for those faculty, for those authors who are thinking about writing a case, maybe it's their first one or there they're just going on to their second one. What did working on this case teach you go back in time to when you were writing this. Were there any major Aha moments or teachable moments that you think this is something somebody else needs to be aware of? So this particular case is unique, like every case, but this particular case is unique in which in the way in which the writing happened because, as I as I told you earlier, the original writing was a consultancy report to a problem that they had relating to international marketing, international market selection, modes of entry, etc. Optimization broke and and I produced, I don't know the first version, maybe a fifty page sixty page report with exhibits, with evidence. Research exceeded and when the manager came back to me with the report, he basically highlighted all the things that were relevant and interesting to him and in drafting the case, I literally picked up the stuff that he highlighted and made that the case, because it a lot me, gave me an inside into what he thinks. Out of this fifty pages is important in the case in you know, for this for his decisions. So I was kind of I almost got a reverse engineered, you know, the management thinking in the state which I think, as there's A. There's a couple things that stand out there. One that again the importance of having a great partner at the at the company that really walked along with you this whole process. And then there's another thing that I wanted to highlight, and we've heard this a little bit from other writers, and there's a great book, it's actually by Stephen King, called on writing, and you mentioned that the first draft was fifty pages with lots in there. That is such a great thing to do. Get everything down on paper. You don't have to write the final copy first time. Get everything down that you can think of and then you can start that editing process and weeding it down and showing it to others. I love that. Has that of all sent writing this case due to the ones that you're writing now and other best sellers? Or do you still do that? You still get locked down on paper? As at work, you know, everybody looks for the Cookie Cutter Formula and I can tell you again that every case is like a child, you know, it's a world to itself, and I could talk about this particular case and how it worked, but if we take other best selling cases that I've had, also with Ivy by the way, you will find that actually each case evolved from a different point of view in a different way. So I can't say that there is one way to do that. Take, for example, the the Ruth Chris Steakhouse case as a as another example. That was a very, very short case and I think the reason it became a best seller is because it was like a, I don't know, seven pages long and it had a lot of it really had a content of three hours or two and a half hours. That is professor can can teach with. Even though it was extremely short, it was very clean and in contrast, the Espressmente eely case is a very long and dense and full of information and allows you to do all sort of analysis and reach all sort of conclusions, both right and wrong. Right. So I think professors like both cases exactly for the fact for the reason that they are a very different in what they provide, but they provide value to that professor and that set of students. So you know, and it was written in this way, it was written to to be very focused on a particular problem in the national market selection. So the value and making sure that there's a focus to the case and and let that actually drive the creation process. Is what I'm hearing. Is that is that kind of what you're trying to say about the different types of cases in the process. So I had a professor in Harvard Business School, friend of mine, of colleague, a case writer, once told me that you have to start by looking at what chapter it's going to be in, what topic it's going to be in the you teaching for which you're writing this case. I think a lot of people who are inexperiences writing cases think it's a story. Think is the storytelling about a company? Description of a company? No, this is a description of an event. Normally it you know, in the same thing. By the way, if you write academic papers right, the first thing you have to do in the introduction is build the tension, right. You need to build a tension. Company is going in a particular direction. Boom, events in the world of change in some particular way. The changes the business model, the changes things that the changes the behaviors that they chose before, and they require them to make some kind of a change. That's what a good case does right, because it allows you to think about change manage it. They allows you to think about strategy, it allows you to think about critical decision making skills, and that's the point of cases. So a good case to start with a problem in the same way that a good paper starts with the research question. Right. You need to think about what is the problem you're solving with this case, and this also gives you the day, the indication which what kind of external data you need to get, because every problem requires different types of tools and solutions and data. So to some extent this is the disservice that we do to our students because we say to them, well, here's the problem, and then we tell them here's a solution, I'll try to figure out how to get some, you know, from the solution to from the problem to the solution. Yeah, you see what I mean, because the data you choose, the collect the some extent is already brought of the solution. Now, hear what I wear, what you're saying. How do we break out of that leading what? So maybe, maybe, I don't know, but one way to think about it is maybe to give problems for which the solution is not been the data have not been collected, the solution is not been so, for example, we might say in the abstract, let's look at Home Depot and let's say, let's look at home deeper today. So go to the Internet and see what kind of countries are and then tell me what countries this should go into and what kind of data I need to collect in order to know what are the best countrious for them. So in this way they're out there, I don't know, searching for GDP when in fact they need to search for, I don't know, Dude yourself culture. Yeah, that's that's one thing at it reminded me of is that, having said in case classes, is that it's the process. It's not always about a right answer or, you know, getting to be getting to that end state. It's the process that is the learning point sometimes for cases. That's that's a great reminder for authors. I think another great reminder is that students always get a satisfaction when, and I think it's very important, especially even if it's an all the case, students can research and say, well, what actually happened? Right, what actually what did the company actually do? And sometimes, I would say, students may even cheat a little during the research project and see what the company actually did, like which markets they went into. Is usually out there right and and they get a lot of satisfaction. Is A lot. We were right. We solved the correctly. And what I always tell them is just because the company did it, it doesn't mean that was the correct thing in prect I've met many companies that have done things that ended up being very bad for profits. You know so. So don't get don't get ahead of yourself. The company doesn't have the magic one either. Right. So nobody has the right answers all the time. What we need to think about is what are the opportunity costs of different decisions? Right? But we need to understand is how taking pathway a's different and taking pathway be. Both might lead you to success, both might lead you to failure. One may give you more success than other. That's all. That's all something that, that's that process, that rigger, that is given to the students as an opportunity and that's what the we're the learning comes out for the student. Yet, like he said, not just finding the right answer. That process is the learning. So let's take this case. Study is an example. In this case study, the company ended up following a strategy that is, I think also in the in the teaching notes. We disgusted, but I also let others discuss it. That ended up being very bad for the decision maker, in the sense that the decision maker ultimately had to leave his job because of the decisions that he took. The question is, did he make the right decisions? Right? Should this company even be in the retail business given their manufacturing background? Right, many of the decisions they made before ended up costing them a lot of money. So obviously, you know, one part is okay, it's a fit with the market, and other part is it's a fit with the company's culture. Right, and the student has really no way to assess that. But really it's very nice to be able to tell the student what happened. They're after and oftentime bad. Yes, this is three. So it's I think it's quite it's quite interesting to disguise that was students, because then they get a perspective. And, by the way, who knows? Maybe crystal made the right decision, maybe maybe the company's wrong. Maybe then, you know, I don't know. We will never know, right because we already made a decision. So we don't know what the alternative outcome would have and what you just said is a reinforcing point of the importance of, you know, you know if you've got ten or fifteen minutes left in the class, the importance of wrapping up maybe what happened, alternative solutions, other discussions, to to tie a bow on that classroom experience for the student. There's a lot that can happen in that last few sections of the class after everybody's gone through their analysis. There's the follow up of what happened, reinforcing where the case maybe didn't look at a point and alternative perspective. So for those that are thinking of picking up this case or others, don't forget that last section of the classroom experience. That's the Aha moment for the students. That's that's when they actually learned right, because before that they're just applying the models that you told them to apply to a setup data you told them to apply it to and they assume they could get a solution or the animal solution. And Aha moment is like a the setup data you use may not have been the best data and be the set of tools that you use may not have given you the right answer and see maybe you even miss apply the tools the way and the and the conclusions that you reached from absolutely well. This has been a great discussion about your process for coming up with the case. You know the importance of a strong partner in the organization. It sounds like you had just a great relationship throughout this whole process. You know some tips and tricks for teaching the case and and some general comments about writing. So I want to take the time to thank you so much for spending some time with us today. You're joining us from Norway, so thank you for spending the time with us and thank you for sharing the insights that you've had as a best selling author across a number of different cases. So thank you again for the time today. Thank you. If you enjoyed today's episode, subscribe to Decision Point on spotify or wherever you listen, and be sure to check out the show notes for links to cases, resources and more. have any feedback, send us an email at cases at IV DOTC A