My Barnard Castle Eye Test IPA is on its way

The email arrived last Wednesday from BrewDog: my Barnard Castle Eye Test IPA was on its way. Billed as short-sighted beer for tall stories, it’s dry-hopped 6% ABV for a juicy hit with pineapple, mango and hint of zesty lime. All profits will go to funding production of their free sanitiser for the NHS & Health Care Charities.

The Scottish brewery has an (in)famous reputation for its bravado on the naming of its beers, and its bold and brash marketing, and this is their latest provocative and cheeky marketing stunt.

Barnard Castle Eye Test limited edition IPA was named via a public vote, shortly after news that Dominic Cummings had broken the government’s lockdown rules in April, travelling 260 miles with his wife and child to his parent’s home in Durham. It transpired that Cummings had travelled 30 miles from Durham to visit nearby Barnard Castle, a local tourist attraction, to test his eyes, as his vision had become ‘a bit weird’.

Quick off the mark, BrewDog co-founder James Watt asked his 67,000 Twitter followers to vote for the name for a new, limited edition beer: Cummings & Goings, Stay at Home were suggested, but Barnard Castle Eye Test won the vote. The label features blurred out text at the bottom of the can. It adds to the branding…

Beer has come a long way since an Italian medic, Aldobrandino of Siena, published his treatise on health and diet in 1256. Here was a drink, Aldobrandino argued, that harms the head and the stomach, causes bad breath, ruins the teeth, and fills the gut with bad fumes. But his views would not prevail. In Britain, beer became increasingly popular.

But by the end of C20th, beer was in a bad way. Traditional cask ale was vanishing from the pubs in favour of thin, industrial bitters and fizzy, low-strength lagers. Technology allowed the big brewers to commoditise the product with economies of scale to churn out mass-produced volumes, supported by big advertising budgets to somehow convince people this bland, insipid parody of a product was what beer was supposed to be.

The vast majority of beer in Britain was chilled, filtered and pasteurised (to kill the yeast and extend the shelf life), injected with CO2 (to make it fizzy), served from a pressurised keg. Sales in supermarkets killed off the pub trade with their pricing.

At this time, James Watt had a beer epiphany with an American brewed Sierra Nevada Pale Ale, bought at Tesco, to wash down some fish and chips. With his friend Martin Dickie – and the brown Labrador, Bracken – they began experimenting with their own brews because they couldn’t find anything they really wanted to drink. At 55% alcohol-by-volume, their first brew, End of Historya blond Belgian ale infused with Scottish Highland nettles and fresh juniper berries – was stronger than most whiskies. It sold in a limited run of 11 bottles.

Their vision was to make people as passionate about craft beer as they were, revolutionise the British beer industry, and redefine British beer-drinking culture. They were part of the vanguard of a remarkable renaissance in British brewing that triggered the healthy micro-brewery sector we have today. Punk IPA was born.

Watt and Dickie pooled their savings, negotiated a £20,000 bank loan, and bought a pile of second-hand brewing equipment. Their first two batches of Punk IPA failed; the first because a phone, a thermometer and a set of car keys ended up in the mash, and the second because they had bought dirt-cheap garden hose for their brewhouse and the whole brew tasted like really strong plastic.

The third, however, worked. It was awesome. Now they just had to convince enough people they should feel the same way. It was tough going. They filled bottles by hand, sometimes through the night, criss-crossed Scotland in an ancient Fiat Punto and an even older Skoda pickup, flogging their beer on farmers’ markets.

Less than a year later, BrewDog had won its first major contract – to supply Tesco with twice the quantity of Punk IPA it was then capable of producing. Watt and Dickie had entered four of their beers in a competition run by the supermarket chain: the prize for the winner was a place on the shelves in every one of its UK stores.

Punk IPA became the UK’s fastest growing alternative beer brand and they launched ‘Equity for Punks’, aground-breaking crowdfunding campaign, and their business model was born. Theycontinued to push boundaries and perceptions of what beer can be by brewing the world’s strongest ever beer, Tactical Nuclear Penguin, at 32%; further Equity for Punks crowdfunding campaigns financed growth.

BrewDog captures the essence of passion-driven entrepreneurship, disruptive thinking in revitalising a declining market, an innovation mindset, vibrant product leadership and positioning, and unique customer intimacy strategies.

Let’s look at some key aspects of their strategy for your own startup.

1.     Be authentic, live your passion and values

What excites Watt and Dickie about brewing – above and beyond their fanatical obsession with beer itself – are its unending possibilities.From the very start they were inspired to brew American-style craft beers, sweet-tasting ales with high alcohol levels and large amounts of hops, which gave them a bold, fruity, even perfumed flavour.

They experimented, and what’s good with beer is you can try stuff and get an outcome really quickly. You can put in twice the malt, four times the hops, whatever, and two weeks later you know the result. Whisky, you have to wait years.

The zeitgeist is also key. BrewDog took its cultural values from the punk ethos – looking at how punk rock existed as an alternative to pop culture. BrewDog wanted to exist as a radical alternative – to reassess the value of beer, how it should be drunk, and ultimately start a movement away from the ‘4%, industrial tepid lager’ which dominated at the time.

For all the annoyance at their marketing antics, BrewDog have built a successful business on the loud and repeated pronouncement of their own authenticity: that all they truly care about is beer.

Takeaway: Stand for something Founded on a mission to revolutionise the beer industry and redefine its beer-drinking culture, BrewDog started a movement. The lesson from this noble vision is that by aligning with a purpose and standing for more than profit, BrewDog created a community of loyal customers and investors.

2.     Create your own market space

The punk positioning strategy is classic Blue Ocean thinking – if the rest of the market has moved to the right, turn away and head left. With the market dominated by mass-produced similar tasting beers, BrewDog travelled in the opposite direction and created their own market space. They let everyone else fight for market share in the crowded mass market, and created individual craft beers, with a focus on beer drinkers who desired authentic and artisan quality beers at an affordable price.

They adopted the same approach to marketing, not competing with mass- advertising selling a similar message, they stood outside of the crowd and made their brand distinct and memorable. Some of their communication strategies maybe unconventional, but they leverage and amplify their brand values.

Punk makes sense for a startup, challenge the status quo, conventional thinking and accepted paradigms, be non-conformists, get your point of view across. They communicated their philosophy and attracted like-minded people to a craft beer cultural revolution. It was about staying true to their philosophy.

Takeaway: never compromise on price In a market characterised by big brewers shipping volume beers that sacrificed flavour to compete on price, Watt and Dickie did the opposite and set about creating a market and educating customers willing to pay a premium for their highly differentiated product. Lowering your price is often a race to the bottom and hard to reverse, so BrewDog steadfastly refused to get involved with this strategy.

3.     Make product innovation your purpose

BrewDog has a straightforward, single product-based strategy – they supply the best beer – but their business model is based on purpose, passion and beer. They are not about a crowded supermarket shelf where the product is stacked high and sold cheap, but about creating their own shelf space, through product innovation, a positioning on brand and product that is distinct, discernible and distinguishable from competition. It’s hard to compete against purpose, passion and innovation.

BrewDog has set the product innovation bar high, and shown what can be achieved. The reality is that innovation is like the old story about a teenage boy’s claims about his first kiss: everyone talks about it all the time; everyone boasts about how well he is doing it; everyone thinks everyone else is doing it; almost no one really is; and the few who are, are fumbling their way through it incompetently. But BrewDog makes it happen, time and time again.

Takeaway: Make scalable innovation your competitive advantage Product innovation and scaling this at high velocity enables BrewDog to out-manoeuvre the market. Time and time again they gain first mover advantage by being agile, bold and responsive – the Barnard Castle Eye Test is just their latest play.

4.     Choose your attitude, choose your tone of voice

BrewDog describes itself as a post-punk, apocalyptic, motherfucker of a craft brewery. Their crazy, provocative marketing stunts have got their voice heard – as seen by the Barnard Castle Eye Test venture. Two others stand out for me:

·     Ahead of the 2012 Olympics, BrewDog released a special edition beer, Never Mind the Anabolics, containing steroids and other substances allegedly popular – though banned – among athletes. When we were putting steroids and other banned substances in beer, the initial reaction from the media was shock, disdain and disgust, but then we were able to talk to them about the chemicals that are in beer – that started a whole discussion, said Watt.

·     My name is Vladimir, was a beer released to mark the 2014 Winter Olympics and protest against President Putin’s archaic laws around homosexuality.

Takeaway: Develop a brand personality that people connect with BrewDog is an alternative type of business and from the beginning its founders focussed on creating an irreverent and quirky brand personality. By doing so they have built a passionate and sustainable connection with their audience whose loyalty has driven its hockey stick growth.

5.     Build a brand: make your marketing memorable

BrewDog’s provocative marketing has been a pivotal to the business model. They are serial offenders, and haven’t always got it right – Pink IPA, satirically labelled beer for girls, to highlight the gender pay gap, drew significant criticism.

Shock and fanfare have been the core of the marketing strategy for their thirteen years (91 dog years) existence, with the aim to shorten the distance between the people who make the beer and the people who drink it. 

BrewDog has used its marketing to provide a direct connection between the brewery and their audience, injecting humour and education content to reflect the brand personality. Their marketing is notorious for the alignment of product branding with their ethos, often being opportunistic with controversy whilst focused on product innovation – a winning combination.

Takeaway: Leverage the power of content BrewDog is a great example of leveraging content for inbound marketing. Introducing a whole new product category, their marketing fuels the sales cycle – from suspect to a prospect, to a customer, to a repeat customer, to an advocate and to an evangelist – Equity for Punks means customers own equity, an amazing alignment.

Business for Punks: Break All The Rules – the BrewDog Way by James Watt captures the remarkable tale of their turbocharged, heady growth, it’s a must read for all startup founders. They are a remarkably energised business. My Barnard Castle Eye Test IPA is on its way. Short-sighted beer for tall stories. I can’t wait!

Apple, bobbing along in its own Blue Ocean Strategy space

I’ve always had an interest in business strategy and business models, I like thinking about why some strategies work and why others don’t. When I see a company starting to do something that is innovative, I take notice and investigate, and try to leverage insights into my own client work.

What sparked my interest is a concept developed several years ago by W. Chan Kim and Renée Mauborgne called Blue Ocean Strategy, a metaphor for companies creating uncontested market space. Here’s a link to their web site http://www.blueoceanstrategy.com

Imagine a company as a fishing trawler at sea. Setting out from port, there are many trawlers that are in competition with each other. They are sailing in a ‘Red Ocean’, contending against each other for a greater share of the ocean space and fishing catch. They’re all fighting after the same fish.

As more trawlers enter the Red Ocean, the harder it gets for them to be commercially viable, since the ocean does not get any bigger and the potential catch is shared out more. Customer demand remains the same but the number of suppliers continues to increase, thus encouraging fierce competitive practices to ensure that they get as much of the market out at sea, and also when they get back to port. Inevitably this means a price war – and blood everywhere, hence ‘Red’ Ocean.

Now let’s think of two scenarios: a new trawler that has never sailed in any ocean decides to venture out on its own into unchartered territory instead of entering the Red Ocean, or a trawler decides to sail out of the Red Ocean that it is currently in, and into unchartered territory, which we’ll call the ‘Blue Ocean’, as there is lots of space and clear, blue ocean around.

For each of the above scenarios, the end result is the same. The trawler has entered a Blue Ocean and in so doing made the other trawlers irrelevant as they’ve removed competition, and created itself a new market to thrive in. If you get it right, the pay off for developing your own market is much more rewarding than trying to beat down others to get to the top in established markets.

Competing in existing market space, with existing customers, only makes the water bloody, resulting in a horrible Red Ocean where there are more fisherman – but less fish each. By creating a Blue Ocean, there aren’t only more fish, but you’re the only trawler around. You’ve reconstructed the market boundaries.

A good example of a Blue Ocean Strategy is Apple’s iTunes. In 2003 Apple moved into the digital music space as a provider and distributor of content – and signalled the end of the previous innovation, the CD. Apple created iTunes as an online service where people could download legal, high quality songs for a very reasonable price.

Apple observed the flood of illegal music file programs such as Napster and LimeWire had created a network of Internet savvy music lovers freely, yet illegally, sharing music. By 2003 more than two billion illegal music files were traded every month and the recording industry fought to stop the cannibalisation of physical CDs.

With the technology available to digitally download music free instead of paying for a CD, the trend toward digital music was clear. This trend was underscored by the fast growing demand for MP3 players that played mobile digital music, such as Apple’s iPod.

Apple decisively capitalised on this trend with a clear trajectory, by launching the iTunes online music store. Until that point, no one had been able to establish such a user-friendly system for online music content curation and distribution.

Apple’s strategy was also unique in that the success of iTunes fed into Apple’s other hot product, the iPod. People would go to iTunes and download music onto their iPods. Apple provided the content, the means of acquisition and distribution, and the device. A great Blue Ocean!

Another reason for Apple’s success is that it is more a design-driven company rather than a technology-driven company, putting customers at the centre of its product innovation. In doing so, Apple created the need for its products and then exploited its newly created market share quickly, making it very difficult for competitors to grab a piece of the pie.

iTunes offered legal, easy-to-use and flexible à la carte song downloads. iTunes allowed buyers to freely browse and listen to thirty-second samples, and download an individual song or an entire album. By allowing people to buy individual songs and pricing them far more reasonably, iTunes broke a key customer annoyance: the need to purchase an entire CD when they wanted only one or two songs on it.

iTunes also leapt past free downloading services, providing sound quality as well as intuitive navigating, searching, and browsing functions. Apple’s iTunes unlocked a Blue Ocean in digital music. It was personalised, it was accessible, it was affordable – it was value innovation. iTunes was, and is not, a product either. It sprang to live as an eco-system, a collection of carefully orchestrated hardware, software services and content channels with unbeatable pricing.

As a creator of a Blue Ocean, Apple didn’t use the competition as their benchmark. Instead of focusing on beating the competition, they focussed on making the competition irrelevant by creating a leap in the value proposition for customers across several dimensions as highlighted above, thereby opening up new and uncontested market space.

Apple then applied Blue Ocean thinking to the iPad – instead of further segmenting the PC industry, they asked can we create a third category that is neither PC nor smartphone? Instead of offering high-valued laptops or lower-valued netbooks, can we make a new product that provides breakthroughs in value for PC users? Today the iPad defines the market, it is not so much a competitor in an established market, it sails in its own clear and pristine Blue Ocean.

The iPad and iPad 2 show that Apple is trying to displace the way we use our computing devices, and extend the usage of tablets to a larger, wider audience. They have sold 204 million units to the end of February 2013.

Rather than competing head on with a laptop or tablet pc market leader, the iPad defined a new market and even the boundaries of the space, showing its applications and usability. Instead of seeking to mitigate its weaknesses (specifications and price), it isn’t afraid to harp on its strengths (design and user satisfaction).

Just like Windows made OS the PC mainstream, now Apple wants to move people away from that mainstream. It wants more people on iOS devices, more people to use iTunes, more people to purchase apps from App Store, more people to use iPads to read books, more people to use iPods to listen to music and iPhones to make calls.

By moving the consumers into the Blue Ocean market defined by Apple, it doesn’t need to fight with Microsoft head on. Maybe it hopes that one day enterprises will use iOS instead of Windows, and use Apps instead of software?

Apple has shown that a Blue Ocean Strategy makes sense:

Focus on the market and user How does the user interact with your product or service? Find out what hasn’t been met and how things can be improved. There is definitely a way to improve on things, since nothing is perfect. Dyson made vacuum cleaners a tech-gadget with its futuristic design and disposing with flimsy one-use filters.

Don’t fight the market, move the market boundaries. Create the necessary foundations to define the boundaries of the new marketplace. Apple did this by creating iTunes and the Apps Store, making it affordable to people to buy songs and easy to access from all iDevices. It created a new ecosystem where new customers can thrive, and retention rates are high.

Build on your strengths and hide your flaws Apple focused on user-experience where it could make a difference rather than showing off its technical specification. In the iPad 2, it didn’t tell people how much RAM it had but told them it was lighter and thinner – things that were more important for portability in tablets.

This is where the Blue Ocean begins to turn a little murky – blood in the water from skirmishes between laptop companies, Android and Windows-based tablet makers. However, iPad has so far demonstrated that it can navigate around these battles because it is not a product, it is part of a broad collection of products and services that no single competitor seems to be able to match. Even in these seemingly competitive scuffles, the iPad is slowly but surely replacing the traditional modes of computing and moving users into Apple’s clear Blue Ocean space.

The competitive sea is getting more crowded for iPhone. Apple still has an edge, in that it built that sea. However, the sheer convenience of using all its products together also creates very real switching costs – the 250 million users of Apple’s iCloud are going to think twice (or three or four times) before buying a smartphone, tablet, or computer from anybody else.

Apple made the iPod with a great circular touch-sensitive dial to make the user interface more satisfying to use rather than to press on buttons and dials. The iPhone was the first great touch screen phone and cracked open a market. The screen rotation on the iPad and the tap, scroll, pinch and swipe – the multi-touch function, continue to set it part as genuine value innovations.

Apple’s strategy is really about finding Blue Oceans, markets that come into existence as Apple defines them. The company has repeatedly given customers something that felt entirely new, that solved their problems in a way no existing product did.

Of course, Apple’s market position is currently under threat with commentators saying it has lost its creative mojo. I wouldn’t be so sure that Apple has lost its way, but what I am pretty sure about is that Apple’s future success will be built on continuing its Blue Ocean strategic thinking.

The language of strategy is more informative about Apple’s predicament than most of the chatter one hears about whether the company is still cool or Tim Cook really has what it takes. And as it fights back, take a look at this:

https://itunes.apple.com/au/app/blue-ocean-strategy-visualizer/id645511279?mt=8