Strategic Thinking in Changing Markets
Jim Koch, the founder of Boston Beer, wrote an opinion piece in the New York Times on April 7th. His article discussed beer industry consolidation forming the two worldwide players MillerCoors and InBev, as well as the implications for craft brewers and consumers. Koch ultimately fears: “Beer lovers won’t have the broad range of choices they have today.”
Koch’s article recognizes the craft beer industry is changing and perhaps the glory days of craft beer are over. Perhaps antitrust law enforcement and Department of Justice aren’t protecting craft brewers enough, but the real threat to the craft beer industry is if brewers fail to accept the changing landscape and then not act to build a strategy that adapts accordingly.
The value of developing a strategy is that it accounts for the changing dynamics. It should force a brewer to rethink what it is doing. The strategy process intent is to discover insights that enable a company to go in new profitable directions because of change. An effective strategy should do two things: First, determine exactly what you are going to deliver to customers- both the product and customer experience; and Secondly, become the focal point to align your brewery operation, its staff, your marketing and your capital to focus on delivering the product & experience you found important to your customers.
The challenge for most companies is how to do it? While the process can be complex and never linear, one of the most critical aspects is in discovering fresh perspectives to build a new strategy around.
To discover insights, start by considering three principles which allow you to see new and interesting aspects of your customer’s world:
Right Mind-Set: Get yourself in the right mindset by not wasting one moment thinking about the way the industry was. It’s not that way anymore, and it is never going back that way. Focus on creating a new revolution.
No Beer: Put down the beer, the answer not in the glass. While your love of beer led you to creating a brewery and a business, the answer to figuring-out a new strategy is not in your product. As tempting as it is to believe you will invent the next great brew, the probability of achieving it is as likely as the SEC breaking up MillerCoors and In-Bev.
Make a Difference: Your insight into people is central to developing a successful strategy. This notion should echo in your brain… “How can we make a difference in our customers’ lives.”
For example, look at Yeti® coolers, the high performance ice chest that cost ten times more than an Igloo® or Coleman® cooler. In just over 10 years, Yeti grew to over a half billion dollar market leader and reinvented the cooler category. Yes, it is a superior product- its coolers are "virtually indestructible," and ice last practically forever. This reinvention though came from having a clear understanding of user lifestyle, in this case, the day-in-the-life of avid fishermen standing on anything to give them more height in a small fishing skiff to better spot fish. With space being scarce on a skiff, a cooler strong enough to pull double duty freed up tight space, as well as avoided the cost of a dedicated casting platform.
The insight for developing Yeti coolers came from its founders, Ryan and Roy Seiders. They live the life of fisherman/ outdoorsman who put serious demands on their equipment. The brothers also knew a day in the life of every avid fisherman meant a long day on the water resulting in warm drinks and maybe spoiled food or caught fish. So their coolers were built to keep ice for days, making for a far more enjoyable day on the water.
Maybe you already have insight like the Seider brothers. If so, then act on it. Otherwise here is how you can develop unique customer insights for your brewery.
Step 1: create a team of your people who actually have been around your customers or other beer drinkers. Do not involve any customers as often they will mislead you and say things they think you want to hear.
Step 2: Ask each person to describe what they SEE and HEAR when around customers enjoying, buying, or talking about yours or a competitor’s brew. Create exact descriptors of what everyone sees or hears. Make NO interpretations as to what anything means. Keep describing; keep writing until you can’t remember anything else.
This will be hard for people so try this. Have everyone think of their brain as a video camera. You want them to hit playback, without any editing. People should only describe “EXACTLY” what they have personally heard or seen. Ignore anything that sounds like: “someone else said this’ or “told me that”, or “I think this is what’s going on”. Don’t let people interpret what they think they saw or heard. Force them to use “playback only”.
NOTE: You should not be judging what anything means. Your job is to capture what went on and group common behavior of people. If you only see one type, keep pushing the team for anything else they saw or heard. You may have to jumpstart what their brains recorded, such as, “Did anything look or sound unusual?” Or did you see any differences between people?
Step 3: What should emerge are different patterns of what people are doing and saying, revealing very different customer types when drinking beer and living their life. Don’t be surprised if you have three, four, or five different customers’ types. If you have dozens of different customers types, go back to step 2 and look for what is in common and reduce the number of groups to 3 to 5. You cannot effectively deploy a strategy if you have dozens of customer types.
Next, name the different customer types. Example: Beer snob- the person who painstakingly tastes a beer. Or maybe Party Person- the one who seems to go from beer to beer with little deference for what they are drinking.
For each customer type, work to group and summarize the descriptors. The goal is to get the team to identify how customers experience your brew in different ways. (Later when implementing a strategy, these customer types allow you to effectively focus your resources.)
Step 4: Finally, identify unique insights with what you learned. Looking separately at each group, ask these questions:
What really matters to these people?
Why does it matter?
How well do we currently deliver what matters most to them?
What can we do to make their life better?
Why would they be better if we did this?
There is no formula or software that will spit out what you need to do. It takes intuition and gut feel based upon your insight from this type of exercise. It is likely to take multiple working sessions to go through steps and before the new insight is discovered. At the point of frustration, keep going back to Step 5.
One final closing thought. It is common to think about good customers and bad ones. For this exercise, do not eliminate “bad customers”, a.k.a. industrial beer drinkers. Some of your best opportunities may come from them. In mature industries, your competition feels the same way about these people and ignores them too. They are fertile ground to discover your next strategy. It only takes the finding how to make a difference in their lives, matched with focused resources.
© Eric Balinski, 2017
Note: This article appears in Craft Brand and Marketing Magazine: http://www.pageturnpro.com/BOC-design-Inc/79263-CBAM-MayJune-17/index.html#8