Regular readers of my blog will have noticed that it has been a few weeks since my last post; like many in the UK I was distracted by the Olympics for a couple of weeks (not necessarily a good thing when studying for an MBA though!). So I thought it would be interesting to write a post about the Olympics, both from a personal viewpoint, and also that of an MBA student.
For two weeks the UK had “Olympic-fever” – it dominated the media both in terms of news coverage, and the 24 channels set up by the BBC to showcase the events. It all started with the opening ceremony, which as you would expect both had its supporters and its critics; personally I thought it was a great event that gave some interesting insight into our country to the rest of the world. We then moved to the highlight of the Games, the athletes and sports. It has been wonderful to see the intense competition following many years of dedicated training, and the look of pride on the faces of the medal winners. It has also made me very proud to live in the county of Yorkshire, as this is where a number of high-profile winners are from (such as Jessica Ennis); apparently Yorkshire would be 13th in the medal table if it were a separate country! However, looking at the results another way, Great Britain would drop to 10th in the medal table, if you factored in the size of the population – I expect this concept of viewing statistics in a different way will probably form part of the Modelling and Analysis for Management module later this semester.
The Economics of the Olympics
The economic benefit of the Olympics to the UK has been widely debated over the last few years – especially given the cost is expected to be around £9bn. One factor that will have a big impact on the return to the UK economy is where the £9bn is actually spent; if this is invested in UK products and services then this should have an overall positive impact on the UK economy given the multiplier effect, but if it is spent importing goods and services then the return will be far lower.
One likely benefit to the UK economy is through increased tourism from abroad (exogenous demand). Initially this will be mainly distributed towards the Olympic region in the South of England, although more traditional tourism venues such as theatres and museums have suffered a slowdown of business which could offset some of these gains. Moving forward, there will hopefully be an increased level of tourism on a continued basis as London has been showcased to the world during the Games, although the real benefit of this to the UK economy remains to be seen.
There is lots more to consider here, but as this isn’t an assessed assignment as I will leave it at that, and look forward to following the media coverage as we reflect on the economic legacy of the Games over the next few years.
Marketing the Olympics
The Olympics probably involved one of the biggest marketing initiatives ever seen in the UK. One of the main needs that had to be addressed was the need for participation, and so significant efforts were made to allow everyone to be involved in some way, either as one of the 70,000 volunteers, 8,000 torchbearers, watching the torch relay, or watching the ceremonies and sports in-person, on TV, or online.
A few interesting observations I had about the marketing of the games are:
- The use of social media heavily featured throughout the games, with a particular focus on Twitter (they were often referred to as the Twitter Games – read here to see how Twitter led to arrests, account suspensions and athletes being sent home). I particularly liked how accounts were set up for the Twitter Cameras – cameras with personalities that shared photos via Twitter.
- Tickets were made available for the games and intended to be as inclusive as possible by having a random draw with many different price points. Although a good approach to ensure fairness to the millions of people who wanted to attend, this proved frustrating when there were empty seats at the start of the games. There is an interesting article in the Economist that discusses an alternative approach to this challenge.
- Sponsorship forms a key part of the Olympics, with some very clear winners such as Adidas. An interesting approach was taken by British Airways, the official airline partner of the London 2012 Olympics, which was encouraging people to ‘Don’t Fly‘. However, it was not all positive, with issues relating to Visa being the only permitted payment card for the games, and McDonalds and Coca Cola criticised based on the healthy image associated with the Games. Sponsorship is a great opportunity to market to a global audience, but potential consequences obviously need to be managed very carefully.
Running the Olympics operation
The Olympics is probably one of the most complex operations to develop and run – see one perspective of Operations Management’s ‘Four V’s’ below:
- Volume – 200+ countries, 14,700 athletes, 70,000 volunteers, 10.8m tickets, and almost 1 billion viewers worldwide. Could it get any bigger?
- Variety – From 10 second races to multiple events spread over many days, tennis courts to the ocean off the coast of Dorset, and of course the British weather (which could potentially be the definition of variety!)
- Variability – Probably the only factor that is consistent, the variability could be defined as ‘maximum utilisation’ – with the exception of the empty seats mentioned earlier.
- Visibility – The whole world is watching every activity, and with increased media and social networking coverage, any operational challenges will be immediately visible.
The Operations Management process (shown on the right) has four key phases. Whereas most organisations follow the cycle on an ongoing basis, the Olympics will probably be quite different (although I have not performed any research into this, so may be wrong!). It appears that there will be a 7 year design stage, then 4-6 weeks focussing on delivery, with very limited opportunity to develop and re-design the operations processes. However, there have been a number of high-profile challenges that became apparent just prior to or during the delivery phase, such as the G4S staffing issues, and empty seats. Both of these required LOCOG to very quickly develop and redesign their processes to adjust the ‘deliver’ stage – no easy feat when the whole world is watching. I’ve not seen enough of the details on how well they did (I was more interested in watching the events!), but expect this would be a great operation to analyse when it’s over.
To support this analysis and future learning, the Olympic Games Knowledge Management (OGKM) programme was set up at the Sydney Olympic Games in 2000. Designed to share best practices and lessons learned between the different Olympic host cities, this is a great example of the how organisations can learn from each other, although there is a good article from the Harvard Business Review that discusses some of the challenges of this approach.
That’s the end of a rather long post, but hopefully you found it interesting. Moving back to my MBA studies, I am now working on completing lessons 1-4 of the three modules before Warwick Week 2, which takes place from 6 – 8 September. In addition, we have also recently received our grades for the Accounting and Financial Management and Economics of the Business Environment modules, both of which I am very pleased with; this has motivated me even more to try and maintain these grades with the second semester modules. Better get back to those textbooks…