The Business Insider published an article on February 11th entitled “What Budweiser Can Teach You About Innovation“. This was based on blog post from the Harvard Business Review entitled “Four Innovation Lessons from Anheuser-Busch“. Based upon a talk given by the global director of innovation at Anheuser-Busch Inbev, the two wrote about lessons that A-B can teach us about innovation. While the four bullet points were perfectly fine (explain strategic objectives in simple terms, have defined types of innovation strategies, have a clear but robust innovation process and draw insight from non-obvious places), the suggestion that A-B is innovative in its product development is absolute bullshit.
A movie that was recently released called Beer Wars that exposed the battles fought in the beer industry (written, produced and directed by Anat Baron, former head of Mike’s Hard Lemonade), showing that A-B is both heavy-handed and rips off ideas from some of the true greats in beer (Dogfish Head, and Yuengling, for instance). In one scene, Sam, the owner of Dogfish Head, shows a bizarre and unsubstantiated cease and desist order from A-B for Dogfish’s use of “Punkin'” in the name of one of its brews. Since when did strong-arm litigation = innovation?
The following quote from the HBR article illustrates the ridiculousness of the contrast between the big brewers and those who are truly passionate about the craft:
Its strategic objectives are to increase SOB (share of beer) and SOT (share of throat). It can achieve these objectives by getting consumers to switch to its products, consume its products in new locations, or attract new consumers.
Wait, what? They have metrics like “share of throat”, a term that entertains my inner 12-year-old? They don’t simply look at ways to deliver better beer to the customer? No, they don’t. They make boring, bland beers and acquire brands that have strength in the market and a loyal following (see how they destroyed the Rolling Rock brand, a particular insult as a former resident of Latrobe, PA). That’s not innovation, that’s a recipe for market domination that is focused on shareholder value. As a business, it’s a fantastic strategy, but it should not be confused with innovation.
I’m a homebrewer and enjoy a lot of different types of beer. I’m a fan of microbrews and strange and innovative beers. I frequent local microbreweries (East End Brewing Company is a great example of innovation in beer-making) and enjoy great beer-focused Pittsburgh establishments such as Sharp Edge, Bocktown Beer & Grill and Fat Head’s. I’ve had some pretty amazing, innovative beers from brewers who are willing to take risks. A-B isn’t remotely on this list. It’s insulting to beer drinkers to suggest that A-B is innovative. It’s not innovative — it bullies its suppliers, spends amazing amounts of money keeping a regulatory system in place that does not benefit the customer and actually reduces innovation, and pursues a strategy whereby it steals innovative ideas from the market and pushes out the competition.
HBR, you’re better than this. You’re better than to swallow the propaganda of the largest brewing company in the world. Keep talking innovation, but find the right players. In beer parlance, A-B is all foam, no beer.
I guess maybe their “innovation” is in marketing, and world-wide sales growth? I’m assuming this is a big challenge in the US market where these guys already produce over half of the beer consumed here.
These are the pressures that a publicly traded multinational beasts like AB-InBev has to respond to. They could be selling lugnuts, and their measure would be SOLB…share of lug bolts. Independent breweries don’t suffer from these constraints, and don’t have to worry about shareholder return. Sure, we need to stay in business or any BEER innovations are fleeting at best, but the beer is the driver, and our devoted beer fans are the way we get there… coming along for the ride, no matter how weird it gets. (Apologies to Hunter S. Thompson for butchering that quote.)
So yes. In the eyes of the HBR, they are probably innovating the hell out of the business world. I assume this, because their business world is of little or no interest to me.
Is the beer I’m brewing exciting to me, and to the people who like GOOD BEER? If so, I’ll consider myself a BEER innovator, and leave the market share calculations to those people at AB-InBev who already hold their +50% slice of the pie. That’s just not a kind of pie that interests me.
Cheers – Scott
Thanks Scott, I appreciate your perspective.
I would be fine with the HBR perspective if they were talking about innovating the business process (like Walmart revolutionized supply chain management), but their conversation revolved around actual product innovation, which is laughable. Bud Light Golden Wheat or Bud Light Lime aren’t innovations — they’re marginal changes to existing ideas.
Thanks again for sharing your thoughts!
I just read the second article you linked – you’re right. The term “beverage platform” makes me wretch a little. Apparently their gag reflexes have been overstimulated by something other than actual beer.
Maybe that was the “share of throat” they were enthusiastically discussing.
(Bows head in shame for embarrassingly immature joke.)
Thanks for the link and the well developed and well written piece. ‘Beer’ and craft beer are living on two different planets. I am just extremely glad I live on the one with craft beer and true innovation.