On April 7th, Jim Koch, the founder of Boston Beer, a.k.a., Sam Adams®, wrote an Opt-Ed piece in the New York Times, “Is It Last Call for Craft Beer?” The story was about the state of the craft beer industry.
Koch laments the likely lose of choices for consumers as the craft beer industry matures and is coming increasingly up against the two major beer producers in the world, InBev and Miller/Coors. This article though begs the fundamental question of strategy for craft brewers. As much as I admired and respect what Koch has accomplished, he misses this point. Craft brewers need to rethink their strategy. Maybe here is why he misses this.
But let me digress first. I worked for GE when Jack Welsh was CEO. Welsh often let it be known what his thoughts and ideas were on how to run a company. A couple of years into his CEO job he released: Jack Welsh’s Six Rules.
There was one rule in particular that hit me with regard to the current changes in the craft beer industry: “Face reality as it is, not as it was or as you wish it were.”
Often business leaders fail to recognize the reality of the market, its dynamics, and never seriously consider how to adapt. Rather, they want to stay stuck in the way things were. Those times when everything just seemed to go their way and business fit the pattern they understood.
However, right from the beginning as CEO, Welsh recognized GE’s world was changing; they were going to have new competitors, market & customer changes to deal with, and a host of other forces GE needed to analyze, adapt to, and figure out how to build a strong business as a result of these forces. That’s what the work of developing a strategy is all about.
If your company faces a changing world, you have two choices: 1) Stay the course and hope the old days come back, or 2) Figure out a new business strategy based upon the world as it is.
Here are a couple other Welsh’s Rules worth considering:
#1: Control your destiny, or someone else will
#5: Change before you have to
These rules are applicable whether your company is the giant or a craft brewer, because strategy matters no matter your size or industry. The irony of Welsh’s Six Rules is they were developed under his notion that GE needed to think and act like a small company.