diginomica article by Paul Wallbank

Brewing cultural change at AB InBev

By Paul Wallbank March 16, 2017


Summary: ABI is on a journey of infusing innovation into every part of the organization. That requires a significant degree of cultural change. Here’s how they’re doing it.

Trying to shift a large corporation’s culture or attitude to innovation isn’t a simple matter. The lessons of the world’s largest beer company shows how change has to start at the top.

At the Sydney Ad:Tech conference this week Tina Wung, the Global Director of AB InBev’s Innovation Community, laid out some of the initiatives the world’s biggest beer company undertook as the organisation dealt with a sprawling global business empire, changing consumer tastes and the rise of small brewers around the world.

The company began its innovation program with the Beer Garage innovation laboratory in Silicon Valley’s Palo Alto, well away from its established St Louis operations.

"Essentially in 2011 we decided we were going to double down on innovation. The primary purpose of this office was to do test pilots so that when we found something that was really great we could work with our business teams to scale it up.

Following that we instituted functional innovation teams within the businesses, this allows for a lot of scale and allows for more innovation capabilities, being able to test more and being able to scale faster and also to bring in people with that innovation mindset and you start to transform the culture from an employee standpoint from the ground up."

Having successfully established the Bay Area facility, the company’s next innovation lab was opened in the US Midwest, much closer to the roots at their Anheuser-Busch operations.

"Next we opened up Budlabs in Illinois, in partnership with one of the top Engineering universities to do advanced data analytics, predictive modelling, statistical regressions, artificial intelligence and machine learning to help solve higher level corporate problems.

Then we started our own global ventures fund, ZX Ventures, our corporate venture fund of ABI which we are inviting startups in specific areas to invest in and finally we opened up an analytics centre in Bangalore.

In the course of just six years we really integrated this idea of innovation not only in the hardware but in the people, in the strategic partnerships that we chose and our branding."

Having the backing of the company’s senior management was essential to the initial successes and expansion with that support giving the wider workforce confidence as well.

"Everyone in the company had to put a stake in the ground, leadership had to put a stake in the ground and say ‘innovation is important to us and we’re going to invest behind it.

It really has made it possible for our employees to believe in this as well."

The change also required bringing on board the company’s external partners such as suppliers, distributors and retailers.

"A big part of changing our culture involved educating our partners. If you’re the only one that innovates and your network doesn’t then it’s not going to be successful and it’s not going to be widely adopted. One of the first challenges I and my colleagues had was doing basic education with distributors, retailers to show them how consumer behaviour is changing and how technology is affecting them. This mindset is not saturated across all industry sectors equally."

With other large consumer goods and retail companies having second thoughts about innovation programs, Wung offered her thoughts on what’s essential for a successful scheme with the buy in of senior management being high on the list.

"Coca-cola shut down their founders program, their accelerator. Nordstrom reassigned some of their innovation people and Target shifted their focus on the retail store of the future. The culture really has to embrace innovation from the bottom up in an infrastructure perspective and really have clear focus on what’s going to be accomplished and have the resources in place to enable that."

Having a clear definition of what ‘innovation’ is to the business and what the program can add to the company is essential, Wung believes.

"Define what innovation means, for those of you at an early stage this is a good time to get clear as far as what do you mean by ‘innovation’, I think innovation is a term that has been diluted because it is so sexy and everyone has it in their title but does it mean that you guys want to disrupt the way you guys want to do business? your infrastructure? is it step change? is it incremental change? in what areas of the businesses do you want to focus on?

There can be different definitions of innovations for each of your functions. Just really get clear on what the definitions are. Just really get clear on what it means to you and what the vision is.

If the different functions have different desires of what to do with their data, if it’s not used right and unified at the top then the different functions are going to be working against each other.

So really getting top dow buy in and alignment on what your innovation needs are, what the vision and what it means is going to make it easier for the people who are going to go out and execute."

For ABInBev, encouraging new thinking in marketing campaigns is one way of getting a more innovative mindset into the business along with the idea of encouraging failures with the lean startup mindset of understanding why an idea failed.

"70% of the campaign should be bread and butter, the tried and true tactics you know drive distribution, perceptions and brand health, twenty percent are incremental changes on top of that which you can test and ten percent are just wild ideas that you want to try and that’s institutionalised.

If that’s one of your targets, think of the things your teams would go ahead and try. Obviously you have to be smart about the failure rate, you have to go off hypotheses and strategic testing on different partners and platforms but if your target is actual failure then you’re going to jump that much higher and test the boundaries of what your teams can do."

Ultimately though, it’s the benchmarks staff are accountable to that determine the success or otherwise of innovation programs and it’s easy mis-apply the broader organisation’s KPIs to speculative projects that may not, at least in their early days, meet the financial or operational criteria demanded by management.

"Finally, set realistic KPIs. When we were doing these small in-market innovation tests that lasted a month or three, we were applying our business KPIs upon them, we expected them to meet revenue targets, change perceptions even market share. That was really unrealistic and it creates no-go decisions for the innovation roadmap."

My take

Wung gives a good insight into an aspect of how one of the world’s largest businesses is reacting to a changing world. It would be interesting to hear however how much of the innovation focus has permeated across the company’s sprawling operations across the globe.

Another measure of the company’s innovation agenda’s adoption will be how the merger with SAB Miller affects the management culture as the organisation’s leadership tries to meld disparate business practices and cultures ranging from Mexico and the US midwest to Germany and Australia.

The key lessons though, of having senior management buy-in and being careful about winding R&D and innovation performance measures into the broader company’s KPIs, are important points and ones that have to be considered by executives and boards of far smaller companies than Wung.

Driving a cultural change in any organisation isn’t easy even in smaller businesses so Wung’s points are worth considering for any manager or board member.


Read this article at http://diginomica.com/2017/03/16/brewing-cultural-change-ab-inbev/