Chapter 2: Value Creation
Pricing Russian Technology
1
Naum Staroselsky emigrated to the U.S. in 1974 from the then Soviet Union after 16 years as a
Soviet expert on turbine controls. Staroselsky’s specialty is the technology of gas compressors—
big-ticket, industrial-strength machinery used to pressurize and move gases though gas pipelines
and within refineries and steel mills.
Naum Staroselsky realized that what goes on in the guts of a compressor can be mathematically
modeled. It’s all physics. The variables are many, and the interactions complex, but ultimately
the conditions leading to a surge can be described by a handful of equations. That was an
important discovery. Soon after Staroselky arrived in the U.S., he started Compressor Controls
Corp. in Des Moines, Iowa. By 1978, Staroselsky and his fellow Russian colleagues had
perfected their first surge-controlling machine. Initially, their mathematically controlled version
was little better than the mechanically controlled versions that eliminate only about half of all
• How would you determine the value of this product?
• What price do you think Compressor Controls should charge for this product?
Optional Additional Questions
• How close to this value would you predict that customers would pay?
• What might keep some customers from paying the full economic value?
• How would you communicate that value to customers?
• What might keep some customers from paying the full economic value?
• How could you reduce those effects?