With only months left to go, all eyes are on China for the staging of the 2008 Olympic Games in Beijing. Will they be as successful as the lucky date set for the start of the Games (08.08.08) augurs for the Chinese?

To discuss this theme, IESE welcomed Gerhard Heiberg to its Barcelona campus last fall. As chairman of the Marketing Commission of the International Olympics Committee (IOC), Heiberg addressed a private gathering of MBA students as part of the Global Leadership Series that the school regularly organizes. Asian students, in particular, were interested in his insights and experiences of operating in China, and whether he thought, as many do, that the Olympics will mark a turning point and open up China to the world.

Heiberg, who has visited China regularly since 1976 and is now there at least once a month, said the one interesting development that he has seen, which is both promising and scary, is the newfound self-confidence that the Chinese have acquired by hosting this world-class event. “The country has united around this event. They feel a strong sense of pride and ownership, of finally coming into their own,” he said. “But more than anything, China has shown that it wishes to become part of the international community. Clearly, they have global ambitions.”

Membership in the international community, however, carries greater responsibilities for the Chinese – as well as bigger headaches for Heiberg. He is no stranger to controversy: He joined the IOC after staging the Lillehammer Winter Olympics in 1994 in his home country of Norway, at a time when there were concerns surrounding the integrity of the organization. He took over as IOC marketing chief in 2002, the same year as the bribery scandal of the Salt Lake City Winter Games. Now, he must balance the “clash of interests” between Western human rights groups on the one side and his Chinese hosts on the other.

“We don’t have the power, nor is it part of our mandate, to force compliance on human rights in China. We don’t feel that calling for boycotts is the right way forward,” he explains. “At the same time, we have pushed the Chinese for compliance in areas where it is in our charter, such as environmental concerns, and in allowing free access for the 25,000 foreign journalists expected to come and travel around China during the Games.”

So what will happen as a result? Democracy? Revolution? Heiberg was more cautious about the future: “My best bet is that we will see a slow loosening of freedoms as is already happening,” he predicted. The Chinese have gained more wealth, an improved standard of living, job mobility, freedom to marry whom they want, and passports to travel, and this will be the level of democracy they can accept for now, he believed. On the reverse question of whether China will change the nature of the Olympics, he said: “We’ll have to see.”

One thing is for certain: The 2008 Beijing Olympics, showcasing a 5,000-year-old history and culture in never-before-seen venues, may well amount to the best Games ever. “China will not simply go back to the way it was before the Games,” said Heiberg. “We believe that they have started a process that cannot be stopped. They have seen the possibilities and will not want to turn back. It will be interesting to see what happens.”
After his talk, Heiberg, as a longtime friend of IESE and member of IESE’s International Advisory Board for around 20 years, took time out to share further insights about the Games, the impact of technology on the marketing effort, and the new tools required by leaders today, in this exclusive interview with IESE Alumni Magazine.

How do you choose the official sponsors for the IOC in general and for the Beijing Games in particular?
It’s important to find companies that are international and share the same ideas and values as we have in our Olympic charter. We have found 12 international sponsors with the same principles and background and are interested in using the five rings to promote their products and services on a global basis. We have programs going with these people and it works very well. These include Coca-Cola, McDonald’s, General Electric, Samsung, Kodak, Johnson & Johnson – notice all these companies are in different product categories; none of them is competing with each other.

In the same way, the Chinese sponsors are in other business categories not in the 12 – banking, for example, or China Mobile or Haier, a household electrical appliances producer. We see to it that there is only one company in every business category, so that there will be no confusion, and these are exclusive.

The good thing about this arrangement is that the sponsors can then talk together much easier, exchange information, help each other out, even do some marketing together, because they are not competing against one another.

There was some skepticism in the beginning over whether Chinese companies, unaccustomed as they are to a global marketing effort of this magnitude, would be able to rise to the challenge. What is your impression now?
These companies in China didn’t know anything about sports marketing or sponsorship or marketing abroad at all. We have had to educate them and encourage them to communicate with the other international companies I mentioned – that they meet together on a regular basis, that they exchange ideas and programs, that they work well together.

I feel that Chinese business and industry have listened to the IOC and have really taken this on. They learned very quickly what this was all about, and they are really using the Olympic rings and our logo to promote their brands. This aspect has been very successful, and they are keen to continue down this path.

What mistakes have you seen Chinese companies make in trying to take advantage of this opportunity?
We see what we call “ambush marketing,” which means that there are some companies in China not understanding what this is about, and they use the Olympic rings or the logo of the Organizing Committee without having the license or permission to do this.

When this happens, it’s our job to be some kind of “police” – to give the official sponsors protection, so that they know, in my category, I am protected; other people cannot go out and use the Olympic logo. Companies being associated with the IOC or the Olympic movement must be confident that they have protection in their product categories.

So, for example, we have Bank of China using the Olympic logo and the rings everywhere in China right now, and it will be the only bank allowed to do this. So, if other Chinese banks start using the logo, we immediately start running after them, and we tell them to stop, and if they don’t stop, then we will sue them. Bank of China needs to feel that whatever it does, it is fully protected. And the same goes for Coca-Cola: Pepsi cannot use the Olympic logo or rings or anything associated with the Games.

What kind of longterm profits can Chinese companies expect from their association with the Beijing Games?
They are trying to use their association with the Olympics as a tool to promote their products, their services, and in that way get more established, in the beginning, in China, and then afterwards, also, outside of China. A lot of Chinese companies see this as the time to go international, and the Games enable them to make a name for themselves outside of China and to start getting a foothold abroad. In this way, they will have their profit. All of them have different goals in this, but they all do it because they want to get their brand more established, not just in the short term around the time of the Games, but in the long run, as they begin exporting to the world rather than simply remaining the world’s factory. We will see more of this in the future.

You noted in your talk that the IOC is not a political organization, yet politics are involved. Could you reflect on the challenges that you face today – not just the greater politics involved, but the ethical considerations, the environmental concerns, the media criticism, the scrutiny that you are under now, which is much different from when you started?
We feel this strongly, and we feel it stronger than ever before, especially being in China. We also feel that everything happening negatively in the world – Darfur, Burma, Tibet – the world considers that China holds the key. As a sports organization by nature, we feel that we cannot get involved in talking to the Chinese about these matters. We don’t have the qualifications, nor are we equipped to do this. This is not our line of business. We do not want to get involved in the internal politics of China. What China does abroad, we cannot say we are for this or that view. We have an agreement with the Chinese authorities on how to do the Olympic Games involving the media, the environment and so on. But this is what we should stick to. We have nothing against Free Tibet trying to push its own agenda or Human Rights Watch or Falon Gong, but they will have to do that through the United Nations or direct with the Chinese authorities themselves. We cannot be used to promote the agendas of all these other NGOs. That would be impossible.

Speaking more generally about being a business leader today – especially being at IESE where they develop future business leaders – do you see that leaders are being prepared for these kinds of challenges: not just the ability to take decisions, but taking a decision and then being able to defend it in an intensely critical environment like you have just described?
When I did my MBA in the ’60s, this was not on the agenda. Today it’s on the agenda! When I have my meetings here at IESE, I understand that this is an integral part of the studies here. This social aspect of running a business is becoming more and more important. It’s not only a question of pointing at the bottom line and saying that the surplus is such and such. Fine, but you have to have other responsibilities besides. There is a social dimension to doing business that is becoming more and more important.

That’s why I’m very happy that at IESE Business School, this aspect of leadership is important. They are good at getting the students interested in this, getting them enthusiastic, getting them to understand the value of trying to do something in this area, and to be aware of what’s happening. You have to not only read newspapers, but you have to talk to politicians, to artists, to people from other parts of society in order to know what’s happening. Because these things will ultimately influence your job, especially as the CEO.

What other things do you think make IESE unique in its focus?
I think IESE is good at knowing what’s really happening in society. We mentioned previously the environmental considerations, but there are other political aspects which have also gained currency. I think IESE is good at integrating this wider dimension into its business education. IESE sends the students out, not just outside the classroom setting, but outside of Spain itself, in order to take part in what’s really happening in the world. IESE has many associated schools abroad, and they give and receive a lot from these schools, which is good for the students here. IESE exposes students to many new possibilities, whereby they will be much better prepared for business realities. You need much more than the subjects as they are. You cannot sit there and say, “I’ll concentrate on sums,” or “I’m only involved in data management,” or whatever it is. You need a much larger aspect if you are going to be a leader. IESE understands this, and they are very good at this. So when students leave here, they have a much broader understanding of what’s happening across the global business world today.

How has technology changed the area of marketing?
A larger and larger proportion of the preparations and running of the Olympic Games is technology. Take one example: traditionally we make the most money by selling TV rights. Yet here technology is changing all the time. In the old days, we used to sell everything to a TV company. Now, we have mobile phones, the Internet. So the question is, what should we do with our TV rights? Should we separate them, saying we’ll sell something to the TV company, something to the Internet companies, something to the mobile phone companies? Should we pool them? We have a lot of challenges in this, and nobody has the right answers, because technology changes all the time.

How can you safeguard exclusive rights in single product categories, as in your Bank of China or Coca-Cola example, when you are dealing with multimedia companies, which by nature have so many interrelated, crossover interests?
That’s why you have to define it upfront. If we sell rights to NBC in the United States, what’s involved in this? Do they get the rights also to mobile telephones and to Internet, or should we treat each thing separately and say to NBC, we’ll sell those other rights to other companies? So far we have sold all the rights up to and including 2012, but now we are talking about 2014 and 2016, and nobody knows today what kind of technology you will have in those years. At least we have to try to figure out how it will look, and then make a decision when we go into talks with, say, NBC or EBU in Europe: What are we selling? What are we giving them exclusivity on? What will we protect for them? This has to be 100 percent clear, otherwise they get into trouble, we get into trouble, and you will end up suing each other, which we do not want.

Let’s talk about your home country: Norway always seems to take top honors in numerous international rankings as the best place in the world to live, do business, be happy, etc. What are the best-practice lessons we can draw from the Nordic example?
[Smiles] First, we are very lucky, because we have most of the raw materials – i.e., oil and gas – that are needed. So, having the right raw materials helps.

In terms of running a company, what I think has been the Scandinavian advantage – and I say Scandinavia because it’s the same in Sweden, Finland and Denmark – is the way we operate, where the workers are also on the board. We try to include all the people in the company in the decision-making. This is difficult, but it makes life and work much more interesting for the people involved in the company. We call it industrial democracy. I can’t speak for the United States, Austria or China, but this model has worked very well for us in Norway and Scandinavia. When people feel they are not only working, but that they are involved in the decisions – they know what’s going on, they can vote against it if they choose, but at least they can accept this is a democratic process – then they tend to feel much happier, which may be why Norway also scores high on the “happiness index.” This practice was started in 1973 in my country, and all I can say is, it has worked very well for us.