Elasticity of demand, market saturation, and competitive differentiation are all topics one could expect to learn in business school or an economics course. It’s a lot less normal to learn about these concepts on HBO, much less from a West Baltimore drug kingpin.
But that’s exactly what The Wire delivered through the iconic character Stringer Bell, played by Idris Elba. He did it so well that Yale School of Management professor Florian Ederer has used Bell’s story to help explain competition to his MBA students, in slides he shared online Friday morning, one day after the 20th anniversary of the show’s debut.
“I used them in class to illustrate common fundamental questions and principles of competitive strategy, and try to bring them to life with different examples of business situations from The Wire,” Ederer tells Coins2Day.
One of the clips from the series that Ederer shared with his slides shows Bell trying to expand his drug-dealing horizons by taking a college economics class. In the clip, he asks his professor, Mr. Lucas, “What are the options when you’ve got an inferior product in an aggressive marketplace?” Bell and his professor talk through three different options, and Bell ultimately ends up working with his team of gangsters to rename and repackage a product, in this case a drug, that wasn’t selling well before.
Ederer, whose course is titled Competitive Strategy and has the highest enrollment of any elective offered in the Yale School of Management’s MBA program, says there is a great lesson in horizontal versus vertical differentiation here. Horizontal differentiation refers to differences in taste and vertical differentiation is “when something is clearly of better quality.”
Bell’s professor first suggests buying up the competition, which Ederer points out is horizontal integration. But that isn’t a viable option in Bell’s situation because the competition, after all, is rival gangs.
Lucas’s next suggestion is to lower the product’s cost, unaware the product in question is a street drug known as “death grip.” But Bell implies that his overhead is too high to endure the losses and potential hit in credibility. “Price competition has already squeezed any remaining profit margins,” Ederer’s slides explain.
The Wire’s classroom conversation ends with the idea of rebranding—Lucas cites the example of WorldCom, which renamed itself to MCI and was eventually acquired by Verizon. Bell proceeds to parlay this message to his team. After realizing they are unfamiliar with the telecom company, he uses an example more familiar in their world to explain concepts of differentiation and rebranding. In this case, the example was how someone with a criminal record might lie about their name if pulled over by a cop. Together they set their new market strategy and positioning for “death grip” by changing colors on the containers of the drugs they sell so that it seems different from the inferior version.
Ederer says these economic principles apply “just as much when we study the competition between Google and Amazon. He adds, “I think it’s a strong pedagogical device to show people that a lot of this is general.”
As for changing the packaging on the drugs, Ederer says it speaks to consumer perception. “It’s not so much about real differentiation” he says, but “perceived differentiation, which is brought up beautifully.”
In the end, he said in a recent Twitter post that he’s sad that few of his MBA students have seen The Wire, and that campus climate has changed so much that it’s “no longer optimal to show clips of this masterpiece in class.” He added that he still shares the clips as “optional reading” and occasionally gets emails from former students saying they watched the show because of him.
The Wire is one of the most lauded television shows in history, praised for its honest portrayal of some misunderstood worlds, including gangs, police departments, public education, and city council in Baltimore. The show did not win any major awards but is still revered two decades after its initial release.
The University of Chicago’s law school has also hosted a symposium using the show to teach criminal procedure, and Ederer notes that many of his colleagues in other fields share his passion for the show and how it’s applicable to many different subjects.
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