Managing Innovation: BrewDog Beer's Disruptive Theory Analysis Report

This report provides a comprehensive analysis of BrewDog, a multinational brewery and pub chain, focusing on its innovation management strategies. It begins with an introduction to innovation and the company, followed by a detailed examination of disruptive innovation theory, defining its principles and evaluating its advantages and limitations. The core of the report applies this theory to BrewDog's historical development, analyzing how the company has used innovation to gain a competitive edge in the beer industry. It examines the company's background, including its founding and product offerings, and then applies the theory to explain BrewDog's past successes. Finally, the report explores potential future development pathways for BrewDog, applying the disruptive innovation theory to suggest how the company might continue to innovate and maintain its market position. The report concludes with a summary of the findings, emphasizing the application of the theory to BrewDog's business practices.

Managing Innovation

Table of Contents
1. INTRODUCTION...................................................................................................................3
2. Innovative theory.....................................................................................................................3
Definition of disruptive theory...........................................................................................3
Evaluation of the theory.....................................................................................................4
3. Application of the theory.........................................................................................................6
Company background.........................................................................................................6
Application of the theory in historical development of products.......................................7
Application for the future development.............................................................................8
CONCLUSION............................................................................................................................9
REFERENCES..........................................................................................................................11

1. INTRODUCTION
Innovation management can be defined as a process of handling of all those activities
which are essential for introducing or developing something new (Nambisan and et.al., 2017).
This present study is based on Brew Dog which is a multinational brewery as well as pub
chain based in Scotland. This company was founded in the year of 2007 by 2 partners such as
Martin Dickie and James watt. It is famous for producing canned and bottled beers is different
varieties such as: India pale ale, stout etc. This study is going to show effectiveness of
disruptive theory of innovation which makes an organization able to create a value network
and perform business activities in a manner which can help them in taking competitive
advantages. It will analyse this theory in a critic manner in order to identify its advantages and
disadvantages on which basis company make changes in its strategies to accomplish its goals.
Further, it will discuss application of that theory in order to identify whether it can give
positive benefits to the company or by which company can take advantages, opportunities or
not. Disruptive theory does not only help company in taking current advantages but also it
makes company more able to make effective plan for the future and identify future advantages
and try to take it by implementing innovation theory. Internet is considered one of the main
effective element of innovation theory which is helping companies to the great extent and it is
being discussed in this study.
2. Innovative theory
Definition of disruptive theory
A disruptive innovation is a theory which makes an organization able to create a new
market and finally but gradually disrupts an exiting market and displace already established
market leading products. In other words it can be said that it refers a technology whose
application affects company to the great extent in a positive manner. Application of
technology described by this theory affect ways in which company perform its functions. In
this context it can be said that the way of performing functions is considered one of the main
key of the success of an organization. For example; There are several organizations in brewing
industry including BrewDog. Among all companies in the same industry do not make growth
as per their plan and some take effective growth (Cai, Lu and Gursoy, 2018). The main
difference which makes an organization able to take growth and making a strong position in

the market is ways of performing activities. Ways by which company perform varies and
effectiveness of this way helps them out in accomplishing goals. So, the main aim of
disruptive innovation theory is to change ways of BrewDog company of performing and make
them able to innovate its products and attract wider range of customers. Not all types of
innovation are considered as disruptive innovation as it includes only those industries and
companies who can make an effective use of technology and can alter their way of operating.
Some examples of disruptive innovation includes: E-commerce, ride sharing apps etc. On the
other hand, it is also stated that disruptive innovation theory is now in a danger only because
of its own effective success and growth which several companies has taken by applying this
theory. It can also be called technology mudslide hypothesis.
Figure 1: Managing Innovation
Sources : (Managing Innovation, 2018)
In addition, it can also be said that disruptive theory explains phenomenon by which
company innovation transforms by an organization an existing market by introducing
affordability, accessibility as well as convenience (Vesti and et.al., 2017). So, it can be said by
discussing disruptive innovation theory that it is a positive force. It can also be said that by
applying or making an effective use of this theory, companies can make their products and

services more accessible as well as affordable with the main aim to make that products
available to a much large population. It has several competitors and main 2 competitors of
BrewDog company are: Brasserie De Tahiti, Diageo. In the context of Brasserie De Tahiti, it
can be said that it is also popular and known for its own local brewery as like BrewDog
company. It is an industrial company which is specializes in production as well as selling of
beverages. It has around 20 brands of soft drinks, juices, alcoholic beverages in order to meet
expectations of all types of customers. So, from this it can be said that it has a good brand and
image in the eyes of people which is increasing threat in this market.
In addition, in the context of Diageo, it can be said that it is a global popular company
who sell its products in around 180 countries around the world. It has vast varieties of
products like soft drinks, alcoholic breweries and others. So, all over it can be said that there is
high intensity of competition in this market.
Figure 2: Managing innovation in brewery
Sources: (Business Model Innovation. 2019)

There are mainly 2 principles of this theory which are:
 There are multiple dimension of performance.
 Technology is improving day by day and it develops faster than requirements of
people. With the help of this advanced technology, companies can improve their
products and services and replace with their existing products.
So, from the discussed theory and its principles, it can be said that it can help out
organization in improving their processes by making them innovative.
Evaluation of the theory
Disruptive theory of innovation does not only have advantages as it has some
limitations or disadvantages which can sometimes create problems for those companies who
completely rely upon this theory. Some advantages of disruptive theory which put pressure on
some sectors of companies to make an effective use and application of this theory include:
Already Established market: When an organization disruptive something then,
established market is present for what company wants to sell its products. So, it becomes
easier for companies to analyse current situations of the market as what is being going on and
in trend as well as is being offered. Company can also identify the market size, selling price,
distributions channels etc.
Customers familiarity: With disruptive products and disruptive theory, organizations
try to create a new market but eventually disrupting in an exiting market which is beneficial
for companies in order to solve problems of customer (Coccia, 2017). Customers in an

existing market have effective solutions as well as they are familiar with products which
company want to offer them which make acceptance of products initially.
Opportunities for huge buyout: It can be said that this type of disruptive market has
less competition and due to concentrated competition in this type of markets, company can
easily understand effectiveness as well as potential for their disruption. But there is a
requirement to pay large premium for attracting people, selling products as well as preventing
themselves against competition if exist.
Chances of Limited competition: Initially companies who disrupt, start to operate a
market which are underserved mainly based on performance and price. There are several other
companies who do not considered these types of market as well as market segment
competitive, effective and attractive so, they ignore to operate in. It can also be said that their
current technologies do not compete in these types of market, so they prefer to keep
themselves away from these types of market and operate in it. So, it can be said that
entrenched interest often move upmarket. So, those companies who disruptive and apply this
theory has more chances to make a strong position in the market and attract customers to the
great extent (Perez, Paulino and Cambra, 2016).
On the flip side, it has some limitations which are discussed as below:
Competitive products exists: It is stated that there are less companies who operate in
these types of market which is beneficial as it decreases competition. But in the context of
products, it can be said that they are existed already as there is only few differences in
products of companies who disrupt. For example: If an auto mobile company produce
electronic cars, there are already gasoline powdered cars that exists already which means that
solution of that auto mobile company who disrupt is not unique. So, it can be said that this
theory of innovation and operating in this type of market can be beneficial only for some years
or initially. Gradually it can ruin the huge profits and company cannot make themselves
profitable for the long run. It is the main disadvantage for disruptive companies which they
need to consider (Patel, 2017). There is an only option and way by which they can take huge
profit is continuous differentiation or quality management and providing products at lower
prices than competitors. It may be beneficial for the company or may be not.
Entrenched companies prevent from succeeding: It can be said that competitive
companies do not prefer and want that their rivals make growth and increase their sales. So, if

an entrenched company see that companies who disrupt and making growth then they do take
all possible actions to stop companies to take growth and protect their position in the market.
The main strength of Entrenched companies is they have more power and resources by which
they can do anything for protecting companies from succeeding. Companies in this situation
feel threatened and feel that it may decrease their sales, so they do take all possible actions
such as making an effective use of regulations and franchise laws to prevent companies who
disrupt market from selling direct. So, it can be said that it is other main disadvantage an
limitation of this theory. There are several ways of entrenched and other companies of
preventing from succeeding such as: lowering prices for the same product and start a price
war. It can make difficult for disruptive companies to form exclusive agreements with supply
chain and distribution channels. So, overall it can be said that applying or making use of
disruptive innovation theory is not an easy task.
Risky: In the context of innovation and disruptive, it can be said that success is not
guaranteed. There are several types of barriers and problems occur in the path of the success
of companies such as cash flow, investment in marketing, making aware to people about
products. Making an effective use of techniques, getting effective staff and selection of the
best technique are some other types of problems which may consume time as well as cost of
the company (Marano, Tallman and Teegen, 2020).
So, from the above, it can be said that disruptive theory of innovation can have both
positive and negative impacts on the performance of an organization and overall productivity.
3. Application of the theory
Company background
BrewDog is a multinational pub chain and brewery which is based in Ellon, Scotland.
The main aim of this company is to increase sales and taking competitive advantages by
offering canned and bottled beers in variety of styles. In the context of bottled beers, it can be
said that it is being majorly distributed to British Supermarkets as well as exported worldwide.
It is also stated that this company produces approximate 2.2 million bottles and over 400,000
cans per month. This company was founded by James Watt and Martin Dickie in the year of
2007. It also offered open sourced for its beer recipe to public in order to make them a form of
free bear. In the year of 2011, it was considered as one of the prime movers. So, it can be said
that this company make a growth rapidly and effectively.

On the other hand, It is also stated that it faced several challenges and legal issues as
UK drink industry Watchdog the Portman group claimed this company to be in breach of their
code of practice. BrewDog also cleared all claims and breaches of the code of practices and
after all investigation, it was allowed or permitted to continue its business operations as well
as marketing their brands. It was also told to not make any changes in packaging. After that,
BrewDog produced some other stronger beers which increased its sales.
Application of the theory in historical development of products
In the context of innovation, it can be said that it undoubtedly plays a vital role.
BrewDog offers and produces different varieties of canned and bottled beer and different
varieties as well as different packaging is the main key of its success. By applying disruptive
innovation theory it can develop as well as create market share, revenue and profit and can
take competitive advantages. Disruptive is one of the important and effective theory because
with its help, company can identify when, where and what type innovation it required to be
implemented. Before applying this theory, it is important for the company to understand the
types of disruption by which it can make itself more beneficial and can accomplish all its goals
such as: low-end disruption and new-market disruption (Cortez and Johnston, 2017). In the
low-end disruption, businesses who want to disrupt come in at the bottom of the market and
adopts ways of serving customers which can help it out in satisfying them and are good
enough. On the other hand, in new market disruption, companies try to compete against non-
consumption in lower margin sector. In this type, companies also offer products in a way that
are good enough to attract customers. So, it can be said that the main difference is in low-end
type, companies focuses on over-served customers and in new-market type, businesses focuses
on underserved customers.
In the context of BrewDog, it can be said that it is a disruptive thinker because its
strategy and customers offerings helps it out in selling unique branded beer products (Brew
Dog's Disruptive Innovation Strategy, 2015). Some unique and disruptive products include:
Tactical Nuclear Penguin: It is considered the strongest beer which was not produced before
and only produced by BrewDog for competing with German Brewer Schorschbrau.
The End of History: It was also known as the world's strongest beer. It is also stated that only
12 bottles of beer released of this type inside stoats.

In addition, it is also stated that BrewDog is now making an effective plan to release a
new brand of Vodka as well as launch its attracting disruptive Whisky. In the context of
Whisky, it is stated that it comes under spirit category and that is why it is most ripe for
disruption. The main aim of this disruption and releasing innovation product by disruptive
theory is to make Scotland fall back in the love with its national spirit and attract them towards
buying this product to the great extent. In this context, BrewDog make people aware about its
characteristics and tastes and states that it has the flavour of honey, candy and sticky toffee.
Customers can get this product on its official Website as well as in its own pubs (Rasool and
et.al., 2018). So, it can be said that with the help of this theory and applying this, BrewDog
beer company has made its successful and also trying to be more innovative in the present.
There are some another factor which need to be considered or followed for taking competitive
advantages and making itself successful for the long run such as: focus on customers as well
as investors, identification of own capabilities and disabilities, adopt advanced technology etc.
Application for the future development
Disruptive theory of innovation explains that companies need to stop producing such
items that are too much sophisticated and those which are highly costly. In order to control
over costa and to generate more revenues there is need to make changes in existing practices
so that company can offer highly satisfactory goods and services to consumers and can make
them happy towards the organization. Brew Dog needs to pay attention on sustaining
innovation, this kind of changes will help the organization in accomplishing its future goal
successfully (Beltagui, Rosli and Candi, 2020).
Brew Dog can implement biotechnological techniques that are helpful in selecting
appropriate barley, yeast etc. In the future there would be use of genetic engineering system to
make it more effective and to serve consumers well as per their requirements. Use of these
technologies would be beneficial in order to work for disease resistance in human body. Use
of biotechnological techniques would be better in managing resistance contamination. In the
future Brew Dog can also use micro propagation system which is the new experimental
technique that helps in controlling over growth of bacteria’s, etc. This is not a sophisticated
innovation and also help in controlling over cost as well. By this way Brew Dog can easily
meet specific needs of potential buyers in near future. technological innovations in near future
will assist the business sin growing well aid in gaining competitive advantage. As it improves

delivery process and also help in enhancing manufacturing or production process of products.
Technological innovation may create necessity to make changes in working process of
the firm but implementation of this process would be better to gain success in market.
Disruptive innovation can be defined as development tool which has ability to improve market
opportunities by introducing new functionalities. This will help the firm in offering new values
to consumers and customers will take more interest in the products and services of Brew dog
company (Clark, 2018). Entity may also go with radical innovation in near future. This would
be better in altering the entire market ad g creating strong image of business unit. Use of this
innovation will be better in saving production time, minimizing wastage, effective utilization
of resources and to maximize efficiency of the firm to great extent. Use of new technologies
gives positive results to the business as it makes the financial position of Brew Dog more
viable and strong. In the future companies must make innovation in their working purpose and
process as they have to work little more for social purpose as well. Use of correct material
during the production of products must be done so that enterprise can fulfil its corporate
responsibilities. This sustainable development would be beneficial for the organization in
gaining desired outcome and sustaining in market for longer duration. So, it can be said that
disruptive theory is not beneficial for taking advantages in the present and currently but with
its help company can make itself beneficial for the long run or in the future as well.
CONCLUSION
From the above study, it has been summarized that disruptive theory played a vital role
as it helped companies in making a growth and creating a new market but gradually disrupt in
an existing market. It has also shown some advantages as well as limitations. With the help of
disruptive theory of innovation, company can take competitive advantages, make strong
position in the market, do not require promoting products and focus more on solving
customers queries as they are already well-known from it. Further, this study has discussed
some disadvantages which create several problems or barriers in the path of the success of
organizations. Analysis of both advantages and disadvantages also played an important role as
it helped companies in making changes in strategies and accomplishing the main aim. Further,
this study has shown ways of applying this theory in an organization for increasing sales. It
does not only help companies in making growth currently as it also makes them able to take