Managing Innovation Report: BrewDog, [University Name], [Semester]

This report provides a comprehensive analysis of BrewDog's innovation strategies, focusing on the application of disruptive innovation and the three horizons theory. The introduction defines innovation and highlights the report's focus on BrewDog, a major Scottish beer company. The main body delves into disruptive innovation, exploring its principles, process, advantages, and disadvantages. It also examines the three horizons theory, outlining its principles, procedure, and associated pros and cons. The report then applies the three horizons theory to BrewDog's historical development, providing a company background and tracing its evolution. Finally, it utilizes the theories to recommend potential future development pathways for BrewDog's products and services, considering the company's current market position and potential growth opportunities. The report aims to provide insights into how BrewDog can leverage innovation to maintain and enhance its market share.

Managing Innovation
Report on Brewdog

Table of Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
Innovation theories......................................................................................................................2
Application of the Three Horizon theory of Innovation in the historical development context....6
Company background.................................................................................................................6
Historical Development..............................................................................................................6
Application of the Three Horizon theory of Innovation Theory in the future development context
..........................................................................................................................................................7
Future Development....................................................................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation can be defined as the process of formulating new and creative idea by using
imaginations. It is mainly focused with finding solutions for the issues which are currently faced
by individuals (Acemoglu and et.al., 2014). This report is mainly based upon BrewDog which is
one of the largest beer companies of Scotland. This assignment is focused with application of
different innovation theories. These are disruptive innovation and three horizons. First one is
focused with the creation of new market and value network. Second theory is mainly used to
determine that the products and services which are offered by the organisation are able to deliver
the predetermined value or not. If not, then new offerings are designed with new values of the
business. Both of them are highly focused with making modifications in the existing products
and introducing innovative items in the market for the use of individuals. This assignment will
cover the application of the theories in the context of historical and future development context.
MAIN BODY
Innovation theories
Disruptive innovation: This theory is related to the creation of a new business idea which
can help to target a new market so that number of customers could be increased. It is considered
as the less expensive option for the companies that are planning to introduce a new and
innovative product in the market and enhancing the market share. The level of accessibility of it
is very high which help the enterprises to attain competitive advantage in the industry by
launching something new in their existing marketplace. The impact of it on the sector is
significant which is beneficial for the organisation to attract large number of clients and compete
with existing rivalries. In order to capture large market share this theory could be applied by
BrewDog by introducing an innovative beverage in a new location (Biemans, 2018). By using it
the entity will be able to target new clients and expand business successfully.
Principles of Disruptive innovation theory: Some of the key principles which are
required to be focused by all the organisations while implementing it for business growth are as
follows:
 Letting go the past: This principle states that every organisation should learn from the
past and let it go. It is required to be focused for the purpose of attaining growth in future.
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 Encouraging courage: In order to attain growth it is very important for all the
organisations to have courage because slow and steady wins the race. For this purpose
companies should analyse key ideas provided by employees so that best one from then
could be selected for attaining growth (Chen and et.al., 2016).
 Embracing failure: According to this principle, if an organisation have faced any failure
then it should deal with it properly. All the mistakes which were made previously should
be ignored to attain success.
 Doing opposite: This principle states that there are various activities which should be
performed by organisations oppositely. These are dependence upon expectations, keeping
the boundaries etc.
 Imagining the possibilities: It is essential for all the companies to analyse possibilities
of growth and then formulate a decision for future so that business could be developed
(Principles of disruptive innovation, 2020).
 Rejecting limits: This principle of innovation states that while planning to introduce a
new product or service in the market it is very important for the organisations to go
beyond the limits. It will help to attain growth and develop business.
Process of disruptive innovation theory: In order to apply it within the business the
organisations will be required to follow following steps:
 Identifying key markets: It is the first stage of process of disruptive innovation in which
the organisations are required to analyse the key markets where innovative products
could be launched. Afterwards, one of them will be selected on the basis of availability of
growth opportunity.
 Selecting market segment: When a specific market for introducing an innovative
product is selected then the management of the company is required to choose a target
segment. It could be geographic, behavioural, psycho-graphic etc.
 Deciding the new innovation: After deciding the market segment for which the
innovation will be made then one of the key idea of innovative product is selected from
all the suggestions which are provided by staff. At this stage, different ideas are evaluated
and then one is selected to introduce.
 Introducing new product in the market: It is the last stage where decisions for
introducing innovative products are taken.
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Advantages and disadvantages of disruptive innovation:
 Advantages: By using it the organisations will be able to introduce innovative products
in a new market. With the help of it, large number of clients could be attracted to
strengthen the market share. Disadvantages: The risk involved in it is very high because it cannot assure that the
customers will buy the innovative product which will be introduced in the market. The
time which is required to introduce such type of product is very high (Mao, 2017).
Three horizons: It is one of the main theories of innovation which is used by
organisations to make sure that all the services which are offered by them are able to provide
growth to business or not. With the help of it, it is determined that business if providing value to
the customers or not. There are three different horizons of it which are as follows:
 Horizon 1: It states that organisations are required to exploit all the current offerings
properly. According to this horizon organisations should pay attention towards
incremental innovations so that current products could be modified.
 Horizon 2: This horizon demonstrates that business could be extended with the new
offerings which are able to provide value to the customers as well as organisation.
 Horizon 3: It is mainly focused with exploration of new offerings which may change the
company in future.
BrewDog can implement this theory for the purpose of introducing a new innovative
product in the market by exploiting existing offerings properly. With the help of it the
organisation will be able top attain growth in the market.
Principles of Three horizons theory: Several principles of this theory are as follows:
 Exploit all the existing resources: According to this principle, all the entities which are
planning to apply three horizons theory should make sure that they use all the resources
properly so that productivity of business could be improved (Prokop and Stejskal, 2017).
 Create value for the clients: While designing an innovative product it is essential for an
organisation to make sure that such items are designed which are providing value to the
customers. It will help the company to enhance performance.
 Make assumptions of future: This principles states that all the business entities should
be able to make assumptions of future so that it could be determined that the innovation
will be able to sustain in the market or not.
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Procedure of Three horizons theory: All the steps which are required to be focused
while applying this theory are as follows:
 Defend and maintain core business: It is the first stage of three horizons theory where
the company will be required to make sure that it is defending and maintaining the core
business so that growth in the future could be acquired.
 Nurture emerging business: It is the second stage where entities planning to launch
innovative products are required to analyse that business is nurtured by them or not. With
the help of it, existing operations could be managed and performed in systematic manner
(Tidd and Bessant, 2018).
 Creating a new innovation: It is the last stage where the organisations are required to
formulate a new business idea with high level of innovation which will be introduced in
the market. At this stage, the new and innovative product is launched in the market which
helps the organisations to attain growth.
Advantages and disadvantages of Three horizons theory:
 Advantages: It is beneficial for an organisation as it helps to innovate existing offerings
by exploiting them systematically. By using it managers become aware of the
requirements of future that are required for achieving growth.
 Disadvantages: While implementing it, it is essential for the organisations to be aware of
all the situations which may take place and affect the business negatively. It is not
possible to predict the future accurately therefore the level of risk and uncertainty as
compared to success is very high.
From both the above described theories BrewDog should adopt the theory of disruptive
innovation in which the entity can introduce an innovate beer in a new locations. With the help
of it the enterprise can enhance the market share and expand the business. Main advantage of it
to the company is that it will help it to capture a large part of the market and enhance number of
customers (Zeng, D. and et.al., 2017).
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Application of the Three Horizon theory of Innovation in the historical
development context
Company background
The BrewDog is multinational brewery and pub chain which was founded in 2007 by
James Watt and Martin Dickie. The founders of company not at current situation owns 46%
shares of company. The company is headquartered in Ellon, Scotland, UK and deals in brewing
industry. The company is a multinational which is operating and doing business in number of
market, domestic and global both. BrewDog started with brewed beer then entered into global
markets and increased its employees base and moved to higher scale of organisation (Ottosson,
2019). Once its profits raised, the entity entered into production by opening new production
brewery. It innovates too as it now serves brewed alcoholic and non-alcoholic drinks to the
customers acquiring wider range of market. It deals in marketplace by its rendering brewed
alcohol through its bars and pubs, but with increasing demand and business requirement it serves
food by two different menu that is burger and pizza. The company was a UK drinks company
knowns as Watchdog who put alligation on BrewDog for breaching of Code of Practice in
relation with labelling of one of its product (Erdogan, Rondi and De Massis, 2019). BrewDog
denied the alligation and said that Watchdog was impending the development of small and
medium sized businesses. The owners James Watt and Martin Dickie entered into a TV show in
2013 with a American television network and it stoped after three years. Then BrewDog decided
to launch their television network known as BrewDog network which was featuring selected
original content.
Historical Development
BrewDog is a beer company which serves brewed beer to customer through its pubs and
it renders mainly ales and lagers. BrewDog was established in 2007 and in 2009 the owners
opened their first bar in Aberdeen and eventually company operates around 78 bars around the
world locations. In 2015 company was awarded in regional selective assistance and in the same
year company announced its plans to increase its operations size and inducement in their
workforce by around 130 employees. Later, in moving years company was partly acquired by
TSC Consumer Partner and became owner of 22% shares of BrewDog. With increasing its
profits and productivity company planned to build a production brewery and tap rooms on a
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greenfield, in a Metroplex complex in Australia. As company is multinational, holds operation
in number of geographical locations, now in 2019 company opened its first bar in Ireland in the
upmarket area of Dubin. And now in 2020 organisation, opened its first alcohol free bar in
London. Also, due to the increasing fear of COVID19 or Coronavirus, shortage of hand
sanitizers is happening as the demand is high and supply is very low. So not BrewDog has
changes its Aberdeen production unit into a hand sanitizers manufacturer by looking at the
market and economic conditions (Szutowski, Szulczewska-Remi and Ratajczak, 2019).
The bars of BrewDog serves food too in UK, with either a burger menu or a pizza menu
and if the sizes of bares are good enough then they serve both menus. But the main product life-
cycle of company is brewed products alcoholic or non-alcoholic. The company adopts proactive
marketing technique for its businesses which enabled it to gain substantial international
coverage. The company BrewDog is ambidextrous organisation which is a idea that entity needs
to execute and implement its business models and along with looking over new capabilities and
developing new products and services. BrewDog is continuously moving towards innovation.
Three Horizon model of innovation is basically adopted by BrewDog in which it moves and
gives priority to innovating new products and services, even company has adopted it in its
operations in past. It started with developing and serving brewed beer through its pubs
(Kupeshova, Lazanyuk and Kareke, 2019). The company moves international and opened it bars
in worldwide locations. Furthermore, it enhanced its operations and staff and opened a
production house of brewery in Australia once it won a award. BrewDog, has always moved
towards innovation and expansion along with keeping its existing operations and business
models in working. Earlier it use to serve only alcohol based drinks (beers) but with changing
times it introduced non-alcoholic drinks too for capturing more market and increasing its
customer base by rendering products to wider range of consumer belonging to different segment.
Application of the Three Horizon theory of Innovation Theory in the future
development context
Future Development
BrewDog is a very persistent company which believes in innovation and expansion, the
organisation is always evaluating and analysing the market and other areas by which it can
innovate and move further toward growth and success. BrewDog, is operating internationally
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serving to wider range of customers and to their requirements. The organisation was started in
2007 by two individuals and with passing time it has developed to various regions and in
different sectors. The organisation initially use to develop brewed beer and alcoholic drinks but
with passing time it evolved and moved its operations to production of non-alcoholic drinks
which are brewed too. Therefore, it is seen that it implements and uses Three Horizon theory of
innovation for expanding and moving into new sectors of business. The time Horizon theory of
innovation is used by company in present times too (Alexander and Joe, 2019). As the world is
suffering form the huge problem of heath named as Coronavirus or COVID19. The world and
numerous economies are suffering form it and trying to control its effects and spread in more
number of population. BrewDog who deals in liquor industry and develop brewed beers, now
with the changing situations and looking at the economy brought innovation in its system and
increased a product life-cycle (Naqshbandi, Tabche and Choudhary, 2019). BrewDog made its
Aberdeen production unit of beer into a production of a hand sanitizer. As COVID19 is a virus
which spreads through close contact and touching, it is very dangerous and harmful causing
thousands of deaths on daily basis. The hand sanitizers market raised and gone up, as COVID19
is a sudden outbreak the demand of sanitizers boosted which created a imbalance in marketplace
demand and supply are affected. The demand is high and supply is almost zero as production has
stopped and market stock of sanitizers are over. BrewDog innovated a hand sanitizers by using
its brewed beer formula and started the production of hand sanitizers (Winch, 2019). The
company made use of Three Horizon theory of innovation and made its beer production unit into
a hand sanitizers production factory. This is part of CSR activity by which BrewDog is
supporting the economy and people of UK. The company increased a production units which can
be further evaluated and evolved by the experts in order to change it into more productive units.
Therefore, it is seen that innovation can make their organisation more effective and by using
several theories it can be changed into more productive operation and idea.
CONCLUSION
The report is based on BrewDog and concludes that innovation is one tool which can be
used by organisations in enhancing their business practices and improving capabilities and ability
of company. The report covers the knowledge of innovation, which states that it is a process of
developing new goods, services or systems for business and rendering best to the customers. The
innovation theories are developed and given by many researchers and marketers which helps
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company to become more productive and evolve its processes. The innovation theory which are
described in this report are Three Horizon theory and Digital Disruption theory. Both these are
effective innovation theories which can be used by the given company. The three horizon theory
states that company should make use of its existing business models and along with it innovate in
order to move to increase its productivity. The digital disruption theory suggest that the it is a
change that affects the business when new digital technologies and business models affects the
value proposition of existing goods and services. It basically refers to the rapid increasing
digitalisation and use of new technologies in daily use. The report also, covers the
implementation of these innovation strategies in organisational context and its impact on the
business and services of company.
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REFERENCES
Books and Journals
Acemoglu, D. and et.al., 2014. Managing innovation in a crowd (No. w19852). National Bureau
of Economic Research.
Alexander, B. and Joe, T. eds., 2019. Managing innovation: understanding and motivating
crowds (Vol. 32). World Scientific.
Biemans, W., 2018. Managing innovation within networks (Vol. 7). Routledge.
Chen, J. and et.al., 2016. A knowledge-based theory of the firm: managing innovation in
biotechnology. Chinese Management Studies.
Erdogan, I., Rondi, E. and De Massis, A., 2019. Managing the tradition and innovation paradox
in family firms: A family imprinting perspective. Entrepreneurship Theory and
Practice, p.1042258719839712.
Kupeshova, S.T ., Lazanyuk, I. V. and Kareke, G. T., 2019. Risk Management in the Innovation
Project. Central Asian Journal of Social Sciences and Humanities. 1(1). pp.9-12.
Mao, Y., 2017. Managing innovation: The role of collateral. Kelley School of Business Research
Paper .(17-25).
Naqshbandi, M. M., Tabche, I. and Choudhary, N., 2019. Managing open
innovation. Management Decision.
Ottosson, S., 2019. Developing and Managing Innovation in a Fast Changing and Complex
World. Springer Books.
Prokop, V. and Stejskal, J., 2017. Different approaches to managing innovation activities: An
analysis of strong, moderate, and modest innovators. Inžinerine Ekonomika/Engineering
Economics .volume 28.issue: 1.
Szutowski, D., Szulczewska-Remi, A. and Ratajczak, P., 2019. Managing innovation processes
in industrial sector. Qualitative study. Economic research-Ekonomska istraživanja.
32(1). pp.282-300.
Tidd, J. and Bessant, J. R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.
Winch, G., 2019. Managing complex connective processes: Innovation broking. In Building
tomorrow: Innovation in construction and engineering (pp. 81-100). Routledge.
Zeng, D. and et.al., 2017. Managing innovation paradox in the sustainable innovation
ecosystem: A case study of ambidextrous capability in a focal firm. Sustainability.
9(11). p.2091.
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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