Managing Innovation at BrewDog: A Detailed Report on Strategies

This report examines BrewDog's innovation strategies through the lens of disruptive innovation and the three horizons theory. It begins by defining innovation and outlining the principles and processes of both theories. The report then applies the three horizons theory to BrewDog's historical development, detailing the company's background, business model, and evolution. It further explores how the theory can be applied to BrewDog's future development, considering potential pathways for growth and innovation. The analysis suggests that BrewDog could benefit from using disruptive innovation theory to enhance market share and expand its business, emphasizing the importance of capturing a larger market range and enhancing the customer base. Desklib provides students access to a wealth of solved assignments and past papers.

Managing Innovation
Report on BrewDog

Table of Contents
INTRODUCTION...........................................................................................................................3
Innovation theories.................................................................................................................3
Application of the Three Horizon theory of Innovation in the historical development context....7
Company background.............................................................................................................7
Historical Development..........................................................................................................8
Application of the Three Horizon theory of Innovation Theory in the future development context
..........................................................................................................................................................9
Future Development...............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
Innovation is defined as the procedure under which new ideas and innovative ideas are
introduced by thinking in extraordinary manner. Innovation is implemented by emphasising on
individual problems and solving them by the new innovative idea or feature. This report is made
on BrewDog which is largest company among beer sellers in Scotland. This report is based on
presentation of various innovation theories with reference to the company’s scenario. The
theories which are included on this report are disruptive theory and three horizon theory.
Disruptive theory is based on formation of new market and formation of new value added
networks. Three horizon theory is used basically in determining the value rendered by the
products and services which is having some predetermined perception in customer’s mind. If the
answer is no then company is supposed to offer some new products and offerings in the market
so as to add more business value. Both theories are greatly based on introducing new alterations
within existing product and offering innovative products in the marketplace so as to solve
problems of individuals. This report is going to cover the presentation of both the theories as in
favour of historical and future development. (Hamada, 2018)
Innovation theories
Disruptive innovation: This theory is associated with formation of a new innovative
business idea which assists to aim at new market so that to enhance customer base in the
marketplace. This is measured as no so much expensive method for that business entity which is
preparing a new innovative product to be launched in the market and wants to enhance their
customer base. The approachability level is very huge which is helpful for the businesses to
achieve high market competitive edge within the industry just by offering some new feature in
the current market. The effect of this within sectors is substantial which is advantageous for the
businesses to attract larger number of audience and to have competition with current market
competitors. With the purpose of gain huge market portion this theory can be used by BrewDog
as by offering new variety of beverages at a brand new location. With the use of this theory they
can capture new market share, new customer and new competencies in the marketplace which is
beneficial for them in expansion of their business successfully in the new market. (KRAVETS,
KOSORUKOV and UTYUSHEVA, 2017)
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Principles of Disruptive innovation theory: Some specific principles are mandatory to
be concentrated by whole the business as in the process of business development, which are
explained as under:
 Letting go the past: This principle says that each and every business organisation is
required to acquire knowledge from their past and let that go. So the persistence of
growth is required to be emphasised so as to get market sustainability. (Hossain,
2017)
 Encouraging courage: For the purpose of accomplishing business development is
very essential for all the business entity to show their courage as because the race is
won by the one who is slow and steady. For this objective the businesses are required
to examine major concepts which are given by their in house workforce and best from
the sum is chosen so as to have business growth.
 Embracing failure: As per this principle, if the business has confronted breakdown
then that it should be treated in an appropriate manner. All the previously faced
blunders should be avoided in the next project so as to get success.
 Doing opposite: This principle says that numerous activities which are required to be
executed by the organisation which may have opposite impact. These factors are
dependent on prospects and expectations which are keeping restrictions.
 Imagining the possibilities: It is important for overall businesses to examine their
opportunities for taking appropriate decisions to get future succession in the business
over the marketplace.
 Rejecting limits: This principle stats that as in the process of development of new
product or any service in the marketplace it is very essential for the businesses to
expand their limits and break their limitations. This is helpful in development of
business in order to have future growth. (Larsson and Larsson, 2017)
Process of disruptive innovation theory: With the purpose to apply this innovation
theory in the business, these steps are required to be followed:
 Identifying key markets: This is the foremost stage of disruptive innovation is
businesses are supposed to examine their major marketplaces where new innovative
product is going to be unleashed. After this the best market will be designated as on the
origin of having maximum obtainability
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 Selecting market segment: When the market is decided for unleashing the new
innovative product thereafter the management of the business is further chooses their
target segment within the market. Segmentation will be on the basis of geographic,
behavioural, psycho-graphic etc. (Löfqvist, 2017)
 Deciding the new innovation: As after choosing target segment for which innovation is
going to take place, the major ideas for the product is chosen from the pool of ideas
which are given by in house workforce. Under this stage, various ideas are analysed and
the best one is selected.
 Introducing new product in the market: Under this stage, all the related verdicts are
taken as for the unleashing the product into marketplace.
Advantages and disadvantages of disruptive innovation:
 Advantages: By using this theory, the business will be competent to introduce their new
product into the target market within their target segment. Huge customer can be attracted
with the assistance of this theory and it will be helpful in widening the market capture of
the company.
 Disadvantages: The uncertainty of not buying the product by customer is always exists
so this cannot be ensured by this theory. In order to capture huge market size by a new
product it takes time.
Three horizons: This is the major theory of innovation and it is utilised by businesses so as to
get to know about the value of growth contributed by their manufactured product and rendered
services. So by this theory it can be examined that their products or services are adding some
value to the customers or not. This theory is having three horizons which are explained as under:
 Horizon 1: This states that businesses are supposed to develop and use all their products
and services in an effective manner. As per this horizon, businesses are required to put
their emphasis on their progressive innovations so as to modify their current offerings
(Madhusudan and Panneerselvam, 2017).
 Horizon 2: Under this horizon, organisation may expand their business with introducing
new offerings to their customers through which more value can be given to the customers
and in house workforce due to which the overall value for the organisation can be
enhanced.
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 Horizon 3: This horizon is dependent on considering new innovations and products that
may be helpful in providing revolutionary benefits to the company in future.
It is mainly focused with exploration of new offerings which may change the company in
future.
BrewDog may utilise this theory as in the process of their new innovation in their
offering so as to manipulate their existing market with their new products and capture
larger market. With the help of this theory the business will be able to touch high
business heights in the marketplace.
Principles of Three horizons theory: Numerous principles of this model are explained as
under:
Exploit all the existing resources: As according to this principle, all the business which
are adopting three horizons theory are required to properly examine that all the procured
resources are utilised in an efficient manner so as to get high productiveness within the business.
(Montoya and Kita, 2018)
Create value for the clients: The product should be designed in such a manner that it
should offer value to customers in order to increase business performance.
Make assumptions of future: This principle says that, future expectations should be
made by the businesses so as to get to know about their future sustainability in the marketplace.
Procedure of Three horizons theory: The steps which are required to be undertaken while
applying this theory are explained as under:
 Defend and maintain core business: This is the foremost step in three horizons theory
in which the company is required to ensure that their core business is maintained with
their new product so that growth can be attained in near future.
 Nurture emerging business: Under this step, business plans to unleash their product into
the market so all the market conditions are to be analysed and it is to be examined that
this product is fostering the market needs in systematic manner. With the help of this the
business operation are maintained in an effective manner.
 Creating a new innovation: Under this stage, the businesses are supposed to
communicate their new business idea which is laced with high innovation which will be
unleashed in the marketplace. Under this stage, new and innovative product is introduced
which is helpful in gaining organisational growth. (Pedersen, Gwozdz and Hvass, 2018)
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Advantages and disadvantages of Three horizons theory:
 Advantages: It is advantageous for the business as in provide innovations in their current
products by using them in a systematic manner. With the help of this the managers try to
keep record of demands of their customer so that to attain future goals and growth
 Disadvantages: As in the process of apply this theory, it is important for the business to
take care of each and every situation of business which may be face by them in future and
affect the business in an adverse manner. It is not easy to forecast the future possibilities
in an accurate manner so the risk level and improbability of growth is very high.
From the above two theories it can be concluded that BrewDog is suggested to use disruptive
innovation theory due to which the business may enhance their market share and meet business
expansion. Major benefit of this theory is that the business will be able to capture huge market
range due to which customer base will be enhanced. (Peisl, Selen and Raeside, 2016)
Application of the Three Horizon theory of Innovation in the historical
development context
Company background
The BrewDog is a pub and brewers chain which was formed in 2007. Founder of this company is
James watt and Martin Dickie. At current scenario these founders do not even hold 46% shares
in their company. BrewDog is having headquarter in Ellon, UK. The company is having their
business in local and international market as well. BrewDog has started their business with
brewed beer and then they took entry in international market and enhanced their number of
employees and took their business to high heights and renowned themselves as a multinational
company. The company has entered into production industry by opening up new production in
brewery. They introduced innovation in this as they started serving alcoholic and non-alcoholic
brewery to their customer so as to get high market capture and high customer base (Saji and
Ellingstad, 2016). The company supplies their products in bars and pubs but they saw increasing
demand of their customer for food products so they introduced two menus which is burger and
pizza. The UK based company Watchdog imposed allegations on BrewDog that they are
violating labelling code of conduct in their products. BrewDog refused these allegations and
gave statement that watchdog was imposing expansion of SME’s. The owner of BrewDog took
entry in a TV show in the year 2013 with American television network which stopped to
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broadcast after three years. After this BrewDog lunched their own TV network named as
BrewDog which used to telecast some specific unique and original contents..
Historical Development
BrewDog is a British beer manufacture company who serves their beers to their customers by
supplying them in pubs and they mainly deal in ales and lagers. BrewDog was introduced to
public in the year 2007 and their owner opened their first bar in the year 2009 in Aberdeen and
after that they opened 78 bars though out the world and all are at prominent location. In the year
2015 the company got award in regional selective assistance and within this year only they
propounded their plans to enhance their operational size and enhanced their workforce and
recruited almost 130 employees. Further after some year 22% of BrewDog was acquired by TSC
consumer partner. By having enhanced profits and high productivity they further planned to open
their new production house of bewery in greenfield, Australia. In 2019 they opened their first bar
at dubin, Ireland so as to open up their branches across all geographical locations throughout the
world. And recently in the year 2020 they opened their first alcoholic free bar in London, UK.
BrewDog has changed their production of Aberdeen as due to pandemic COVID-19. As market
is having shortage of hand sanitizer, which contains alcohol as their ingredient. So they
established their one unit into production of hand sanitizer so as to support world in this
pandemic situation (Sambaluk, 2018).
The UK bars of BrewDog provides food to their customers as well with two major food
options, pizza or burger. But company is having major production of brewed products which
alcoholic and non-alcoholics. The company has used proactive approach of marketing which
provides them additional market coverage over the global market. The BrewDog is having
extraordinary organisational structure through which the idea of needs and demands of customers
has evolved. This model helped them to find out new market capabilities and additional
competitive edge into the market. BrewDog is adapting innovations in their products so as to
acquire distinct position in the marketplace and to provide products to their customer as per their
needs and demand. With the help of three horizons theory, the major innovation embraced by
BrewDog is providing them priority over introducing new and innovative products within
marketplace. The company started to serve brewed beer in bars and pubs so as to capture larger
market. the company moved their foots into international market and released their bar opening
throughout the world and at prominent locations (Thompson, 2016). The company increased
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their employees’ base and introduced new production houses in Australia and got an award for
their best performance. The company BrewDog is moving forward to provide innovative
products and to expand their business with the help of having charge over their current business
models and products. In earlier time the company only used to serve beers to their customer but
as after introducing innovation they started to serve non-alcoholic drinks to their customer as due
to change in customers taste and preferences. They have wide range of products in non-alcohol
segment which gave them specific identity into the market due to which their customer base has
increased immensely(San Juan, 2020).
Application of the Three Horizon theory of Innovation Theory in the future
development context
Future Development
BrewDog is a determined company which highly rely on innovating their products and
expanding their business into new markets. This company is continuously examines and assess
the markets and other segments through which they can have new market capture and new
business growth. BrewDog is having their business operations throughout the globe and they
have huge customer base which are served by variety of products made by the company. The
company started their business operation in the year 2007 and by today’s time they have high
market share, high range of products and high customer value as well. Along with this they serve
in each segment of the market which is adding high customer base to their database. The
company in initial days used to manufacture only brewed beer and has only single product in
their offerings. But in recent times they have wide range of products as they have non-alcoholic
and alcoholic drinks in their offerings which gives them high market coverage. The alcoholic and
non-alcoholic drinks do have taste of brew in it. The company uses three horizon theory of
innovation due to which they are willing to expand their business into new sectors and regions of
the world. The theory of three horizons is used by the company in current time. As of now the
world is suffering from pandemic COVID-19, which has become the main cause of decreasing
the world’s economy. Every business is having negative impact of this virus and it got spread
around the world in a very less time (Smith, 2018). All the countries around the globe re trying to
deal with this pandemic and they are taking corrective measures thereon. BrewDog is a company
who majorly deals in liquors and alcoholic products as due to changing situation of the globe and
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economic crises they took this situation as an opportunity. So for this purpose BrewDog has
stopped their production of Aberdeen which is a sub unit of beer and converted that into
manufacturing unit of hand sanitizers. As in current scenario COVID-19 is spreading in the
world and which is causing thousands of death every day around the globe which is an outbreak
in the world. The main precaution of this virus is to use hand sanitizer on continue basis, so the
demand of sanitizers got increased immensely and due to which their supply got affected which
created disproportion in demand and supply of hand sanitizers (Schoemaker, Heaton and Teece,
2018). The demand of sanitizer is so high in the market and supply has stopped due to which
markets are running out of stock for sanitizers. BrewDog introduced hand sanitizers which
contains their brewed beer and they started to manufacture its production. The company is using
three horizon theory of innovation and changed their beer production unit into sanitizer
production unit. By this they enhanced their CSR hold over the market as this strategy is a CSR
supporting strategy. The company is helping the economy and population of UK by their
production. So it can be concluded that new innovations are required by the businesses so as to
enhance their operations. This is possible with the use of numerous theories that is helpful in
having new idea in the process of innovation.
CONCLUSION
The above mentioned report is based on BrewDog and this report deduce that innovation
is acts as a tool which can be used by businesses so as to get enhanced operations and better
market competency. This report provides the deep knowledge about innovation which includes
all the procedure of developing the product into the market with the thought of delivering those
product or services which are useful to the customers and adds value to customer. Theories of
innovation are developed and provided by so many researchers which is helpful for the company
so as to evolve themselves as more productive and innovative in the marketplace. Two theories
of innovations are defined in this report which is Disruptive theory and three horizon theory.
Both the theories can be used by the companies as in their process of innovation. Three horizon
theory defines that company is required to keep their current business models as along with their
new innovations, which helps the business to get more efficiency and sustainability. The
disruption theory states that new innovation should be introduced in the current offerings of the
company and that should be offered to new market so as to get high market value.
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REFERENCES
Books and Journals
Hamada, K.S., 2018. A conceptual framework for disruptive innovation in advising. Journal of
Academic Advising, 1.
Hossain, M., 2017. Business model innovation: past research, current debates, and future
directions. Journal of Strategy and Management.
KRAVETS, O.J., KOSORUKOV, O. and UTYUSHEVA, L., 2017. SPECIFIC FEATURES OF
GRAPHICAL-ANALYTICAL REPRESENTATION OF A PROCESS MODEL OF
MANAGING INNOVATION ACTIVITY IN THE FRAMEWORK OF SOFTWARE
DEVELOPMENT FOR IMPORT SUBSTITUTION PROJECTS. Journal of Theoretical
& Applied Information Technology. 95(14).
Larsson, J. and Larsson, L., 2017. Success factors for managing innovation projects in
production. International Journal of Manufacturing Technology and Management
(IJMTM).
Löfqvist, L., 2017. Product innovation in small companies: Managing resource scarcity through
financial bootstrapping. International Journal of Innovation Management. 21(02).
p.1750020.
Madhusudan, C. and Panneerselvam, R., 2017. Disruptive Innovation-A Review with Particular
Reference to India. Asian Journal of Management. 8(4). pp.1370-1378.
Montoya, J.S. and Kita, T., 2018. Exponential Growth in Product Performance and Its
Implications for Disruptive Innovation Theory. International Journal of Business and
Information.
Pedersen, E.R.G., Gwozdz, W. and Hvass, K.K., 2018. Exploring the relationship between
business model innovation, corporate sustainability, and organisational values within
the fashion industry. Journal of Business Ethics. 149(2). pp.267-284.
Peisl, T., Selen, W. and Raeside, R., 2016. Predictive Crowding and Disruptive Innovation: How
to effectively leverage crowd intelligence. The Journal of New Business Ideas &
Trends. 14(2). p.23.
Saji, B.S. and Ellingstad, P., 2016. Social innovation model for business performance and
innovation. International Journal of Productivity and Performance Management.
Sambaluk, N.M., 2018. Managing Innovation. Paths of Innovation in Warfare: From the Twelfth
Century to the Present, p.171.
San Juan, D.M., 2020. Responding to COVID-19 Through Socialist (ic) Measures: A
Preliminary Review. Available at SSRN 3559398.
Schoemaker, P.J., Heaton, S. and Teece, D., 2018. Innovation, dynamic capabilities, and
leadership. California Management Review. 61(1). pp.15-42.
Smith, R., 2018. the BrewDog business story. Research Handbook on Entrepreneurship and
Leadership, p.403.
Thompson, C.J., 2016. Disruptive innovation: the rise of distance education. Clinical Nurse
Specialist. 30(4). pp.238-241.
Online
Principles of disruptive innovation. 2020. [Online]. Available through:
https://www.industryweek.com/innovation/article/21963160/disrupt-or-be-disrupted-
eight-principles-of-disruptive-innovation
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