Innovation Theory Application: BrewDog's Development Report

This report provides a comprehensive analysis of innovation management, focusing on the application of the Blue Ocean strategy to BrewDog, a multinational brewery and pub chain. The report begins with an introduction to innovation management, defining its principles and processes, and explaining the Blue Ocean strategy. It then details the advantages and disadvantages of this strategy. The core of the report applies the Blue Ocean model to BrewDog, examining the company's background, historical development, and future development plans. A business canvas model is used to analyze BrewDog's key components. The report concludes with an evaluation of the company's innovation efforts and provides relevant references. The analysis covers BrewDog's growth, its innovative approaches to product development, and its ability to adapt to changing market demands, making it a valuable case study in business development.

Managing Innovation

Table of Contents
INTRODUCTION ..........................................................................................................................3
INNOVATION THEORY ..............................................................................................................3
Definition, Principles and Processes of theory...........................................................................3
Evaluation of the theory..............................................................................................................6
APPLICATION OF INNOVATION THEORY .............................................................................7
Company background.................................................................................................................7
Historical development...............................................................................................................8
Future development.....................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Innovation management involves the process which help in managing innovation in
organisation so that the company processes, products or services can be improved and made
more effective which help in achieving organisational goals in an efficient manner. Innovation
management help the companies in grabbing the opportunities which are present for the growth
of company both in the internal and external business environment so that with the use of
innovative and creative thinking new products can be introduced (Agnihotri, 2016). Innovation is
a process of improving and modifying already existing products or services so that they can be
made better. With the help of innovation changing customer demands can be fulfilled effectively
and also it help in increasing the cost and time effectiveness of company so that it can gain a
competitive advantage in market. There are many concepts and theories of innovation which can
be used by companies like Blue ocean innovation, diffusion innovation and disruptive
innovation. In this report blue ocean innovation model is chosen which will be applied on
BrewDog so that the development of innovation in company can be studied in detail. The
principles and processes of theory selected will be discussed along with its evaluation. Further
the historical and future development of innovation will also be discussed in this report.
INNOVATION THEORY
Definition, Principles and Processes of theory
Blue Ocean strategy is a strategic organisational approach and is about acquiring the
markets where there is no or less competition so that new demands in market can be created.
This enables the company to manage prices as per market demand without being under any price
pressure from their rivalries. This strategy help in increasing the market share of company by
offering customers with products and services which fulfil new demands of customers. High
profits can be earned with this strategy as high prices can be charged by companies due to new
and unique features which are offered through innovative products. A pure blue ocean has no
competitors in market which means that prices can be set without the constraints of competition.
Also the company can decide where to offer its products and how to expand in market so that all
the potential market can be captured and company profits can be increased (Akbany, Sitalaksmi
and Mgt, 2019).

Principles of Blue Ocean Strategy:
The principles of this strategy must be applied while application of this theory by
companies so that they can minimise the risk of applying the Blue Ocean strategy while
maximising the benefits of its implementation: Reconstruct market boundaries: With this principle the managers of company can
identify the ways in which new market demand can be created across the industry
domains so that the new ways of creating demand can be evaluated. This principle help
companies in making competition irrelevant by looking across the six conventional
boundaries of competition so that commercial advantage can be achieved (Biemans,
2018). Focus on bigger picture, not on numbers: This principle help the company in planning
process which can help in bringing valuable innovation in its products or services so that
the opportunities of blue ocean can be effectively captured. With this principle the
number of innovations are not focused instead the quality and value of such innovating
are focused. Reach beyond existing demand: This principle help the managers of company to better
meet existing demand of customer and reaching to a large market segment so that market
size can be maximised and company sales can be increased. Through this principle small
target markets can be increased by meeting their demands in an efficient manner. Right strategic sequence: It is important that the businesses not only create maximum
value for customers but also build a viable business model so that the risks can be
mitigated. Right strategic sequence is important so that all the strategies which help in its
growth and expansion can be applied in an efficient manner so that more number of
customers can be attracted (Brinkhoff, Suwala and Kulke, 2016). Overcome organisational challenges: In order to effectively apply the blue ocean
strategy it is important that the hurdles which might be faced by companies are overcome
like availability of resources, motivation among workers and managers, political hurdles,
time management etc. By dealing with these challenges, organisations can be encouraged
to apply the strategy efficiently by involving all the employees and engaging in effective
implementation of strategy in company.

 Build execution into strategy: By building execution into strategy the employees of
company can be efficiently motivated to participate in implementation of Blue ocean
model. This will encourage mangers of organisation to use resources in an efficient
manner so that thy can be utilised in managing risk and applying the strategy so that it
can be used to the greatest advantage of company.
Processes of Blue ocean model:
In order to effectively apply the Blue Ocean model following steps or processes must be
followed so that the desired results can be achieved:
 Step1: It is important that a strategy canvas is formulated by the company so that an
overview can be created on how the company can go about innovating its processes,
products or services so that a competitive edge can be achieved in market. In this step the
key attributes of company products are listed so that they can be compared to their
competitors in market (Chen, Jiao and Zhao, 2016).
 Step2: In this stage one of the attributes that are listed in first step is raised so that it can
be made better than the products of competitors so that a value can be added to customers
because of this attribute.
 Step3: In this step the attribute which is not effective and do not add any value to the
company products are reduced so that the cost and time of including that attribute can
also be reduced which is important in cutting the overall cost of raising one of the
attributes.
 Step4: At this step one of the attributes can also be eliminated so that the waste stages
and non-value adding stages can be reduced which can help in increasing the overall
value of company products. This also help in reducing the cost of company in
implementing the attribute in its products which are not valuable for its customers.
 Step5: This is the final process of Blue ocean strategy where the idea of creating a new
product or adding value to the product is implemented. This step help in application of
the strategy in an efficient manner so that changing customer needs can be efficiently met
which can help in providing customer with new and better products so that high value can
be created and brand reputation can be increased (Ellinger and et. al., 2020).

Evaluation of the theory
The Blue ocean model is an effective model which can help companies in creating new
demands in market by offering customers with new and innovative products or services so that it
can deal in a market where no or few number of competitors are present. Following are the
advantage and disadvantages of using this strategy by companies in managing innovation:
Advantages:
 Blue ocean strategy help organisations in finding markets which have yet not been
captured so that companies can offer their new products and create new demand. This
help in avoiding the markets which are matured and saturated so that uncontested markets
having no or few competitors can be selected.
 This strategy help in increasing value innovation which is in alliance with price, utility
and cost so that high value can be created for customers which increase the chances of
growth potential of company (Ottosson, 2019).
 Through this model new opportunities in market can be captured and customers can be
provided with products or services which increase their convenience and adds value for
them.
 Through this strategy the companies can offer products to customers at profitable prices
as it it creates high value for them and have no competitors in market which make them
highly competitive. It is based on practical approaches which can help in practically achieving the desired
results so that companies do not have to face losses by applying this model.
Disadvantages
 It is very difficult to come up with ideas which can help in creating new demand in
market and identify markets which have yet not been captured.
 This process is costly as extensive research is required in developing innovative products
and services that can help in creating new demand.
 There is high possibility that the customers might not accept the products as expected
which can lead to the failure of company (Sharma, 2016).
 The risk of other competitors entering market can also increase which will lead to an
increase in competition that will ultimately lead the blue ocean to become a read ocean.

APPLICATION OF INNOVATION THEORY
Company background
Brewdog is a multinational brewery and pub chain which is based in Ellon, Scotland and
was founded by James Watt and Martin Dickie in the year 2007. The company was initially
found in Fraserburgh in 2007 and their first bar was purchased in 2009 in Aberdeen. The
company is one of the fastest growing companies in market an was also awarded as the Top 100
employers by Times. All the bars of BrewDog also offer food and the production output is about
220,000 hectolitre capacity. The company also offer various types of ales and lagers and in 2019,
its Punk IPA was awarded the best selling craft beer in the UK. In 2011, the company was
described as 'one of the prime movers' behind the campaign which changed the law in Britain
related to new beer measures (Strauß, 2020).
The company ships its beer in 65 different countries and provide a variety of beer as per
customer demands. It employs about 1000 employees across all its branches and has about 52
pubs in UK, 26 in other countries along with 2 breweries in Elton. The company also opened the
world's first craft beer hotel and a beer museum in the year 2018.
The business canvas model of Brewdog so that all the key components of company can
be studied is given as follows:
Key partners
 Consumers
who are
also
investors
 Brewdog
has over
46,000
investors in
its 'Equity
for punks'
campaign.
 Raw
Key activities
 Beer
productio
n
 Finance
 Customer
service
 Sales
 Executio
n
 Retail
Value
proposition
 To
manufactu
re craft
beer for
people.
 To attract
more
number of
customers
 Variety
and taste.
Customer
relationships
 Reliable
beer
 High
quality
 Ratings
and
feedbacks
Customer
segment
 Consumer
s who
have high
taste on
beer
 Millennia
ls
 Vegans
Key resources
 Crowd-
Channels
 Online

material
providers
 Distributor
founding
tactics to
raise
capital
 Healthy
relation
with
investors
 Awards
 Bars
 Discounts
on
BrewDog
bars
 High
quality
beer
 Best
quality of
food to
customers.
shops
 Catalogue
 Open
crowd-
founding
 Social
networks
 Prospectus
 Bars
Cost structure
 Marketing
 Raw material
 Machines
 Salaries and benefits
 Factories
Revenue stream
 Sale of beers
 Sale of beer on festivals
 Sale of merchandising
Historical development
From the above analysis it can be seen that BrewDog is highly efficient in providing high
quality products and services to its customer so that high value can be created for them and more
customers can be attracted through innovative products of company. Thus it can be said that the
company has always been active in innovating its products and services so that customer
demands can be efficiently met and opportunities in the market can be grabbed that can help it in
becoming highly competitive in market. Following are the historical development through which
the company can effectively innovate its products ad create new demands in market by the help
of Blue Ocean model: Creating uncontested market space: It is related with creating new demand in market by
analysing the taste and preferences of customers so that they can become the first
company in market to be able to deal with the new demands. It is important that rthe

company created an uncontested market so that people can be provided with beer which
can help in elevating the taste of customers and led BrewDog in creation of its own craft
beer (Van Lancker, Wauters and Van Huylenbroeck, 2016). Making competition irrelevant: It relates to minimising the competition to that extent
where the company do not have to feel the price pressure from its competitors. In order to
make competition irrelevant the company has been innovating its beer such that in 2009
its beer named Tokyo became one of the finest craft beer in industry with natural taste
which also attracted millennials to the company brand. Creation of new demand: With the changing taste of customers and people becoming
more health and environment conscious it has led the company to innovate its beer in
such a manner that along with innovation in taste the craft beer was fused with art and
taxidermy. The beer also was also modified to include some organic elements so that they
can be made healthy and more environment friendly. Breaking value-cost trade off: As with the help of Blue ocean strategy the companies are
able to create exclusivity in market. BrewDog has been efficiently able to innovate its bee
in such a manner that beer which taste better are launched in markets. The company
created Equity of Punks II, which is one of the most liked craft beer helped in adding
high value for their customers. This beer however increased cost of company but as the
sales of company increased it helped it in setting off the increase in prices in an efficient
manner.
 Aligning the whole system to ensure differentiation and low cost: For creating highly
differentiated products by the way of innovation it it important that all the activities and
operations of company are aligned together so that new products can be produced in a
cost efficient manner. BrewDog is highly subjected towards minimising the cost of
innovating its products while also increasing the value of their products.
Future development
BrewDog is one of the leaders in beer industry which offer high quality craft beer to its
customers and is also customer oriented which means that it innovate its products so that new
customer demand can be efficiently met. The blue ocean model plays an important role in the
development and growth of company in market and bring innovation in its strategies so that it
can continue to achieve a competitive advantage in market and create new demands of products

in market. For developing in future it is important that the company continue to add variety of
flavours to their craft beer so that customers can be attracted towards their new and innovative
products so that large number of potential customers can be attracted (Vieira and Ferreira, 2016).
This model help the company in creating new market and expanding their boundaries so
that they do not have to face the burden of competitors so that products can be offered at
competitive prices. New product of company can be marketed by using various online and
offline channels so that a large base of customers can be reached. Initially the company can
provide products at premium prices and after the demand of the product increase along with its
competitors then it can gradually lower its prices. In the initial stages this strategy help in
generating huge profits for company along with building a brand image in market as being the
first to launch differentiated products.
In order to make new products successful it is important to first analyse the company
position in market so that the strategies which can help in capturing the attention of customers
can be devised. Market research must be conducted so that better understanding about changing
customer taste can be developed so that such strategies can be formed which can help in
innovating company products. The company also use various strategies like “Open day” event
which will be organised at one of its breweries where the employees of company will be given
information regarding sales, brewing, exporting etc. This will help in creating a large network of
company so that large number of customer can be attracted towards company.
The company can thus become the first in market to be able to provide customers with
beer as per their taste so that brand reputation of company can also improve. This model help in
developing in future and capturing large markets by attracting customers and increasing its sales.

CONCLUSION
From this report it can be concluded that managing innovation in company is very
important within an organisation as it help in modifying the products and services of company so
that better products can be offered to customers. Various innovation theories can be applied in
company based on their capabilities so that a competitive edge can be created in market and sales
of company can increase. Blue ocean model can be used by companies so that a new market
demand can be created in market so that convenience of customers can be increased by offering
them better products and services. This model needs to be strategically applied in company so
that better position can be created in market and also they can develop their products in market.
Also this help in gaining a large market share so that sales can be increased and organisational
objectives can be achieved.

REFERENCES
Books and Journals
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Marketing .24(6). pp.519-528.
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THE INDONESIAN TEXTILE INDUSTRY CASE STUDY OF LTG (Doctoral
dissertation, Universitas Gadjah Mada).
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innovation in biotechnology. Chinese Management Studies.
Ellinger and et. al., 2020. Applying blue ocean strategy to hire and assimilate workers with
disabilities into distribution centers. Business Horizons.
Ottosson, S., 2019. Developing and Managing Innovation in a Fast Changing and Complex
World. Springer Books.
Sharma, P., 2016. Vini Cosmetics: the blue ocean strategy to unlock new markets and boost
profits. International Journal of Entrepreneurship and Innovation Management, 20(5-
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Strauß, M., 2020. Blue Ocean Strategy in Private Banking: A new business model to win. BoD–
Books on Demand.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy, 90, pp.60-69.
Vieira, E.R.M. and Ferreira, J.J., 2016. A blue ocean strategy in a sport context: a system at isa
tion of liter at ure. In Sport Entrepreneurship and Innovation (pp. 108-136). Routledge.