Newfangled #35: What a pint of Guinness can tell us about driving growth
Thinking around the box from Guinness to the iPod, Lego Star Wars and 90 year old guidebooks
This week, I’ve been thinking about innovations that extend brands in genius but perhaps unexpected directions.
And it all revolves around a pint of Guinness (or two)
The highest-altitude pint of Guinness in the world is served up in an Irish bar in Cusco, Peru. Technically, Namche Bazaar in Nepal has the highest-altitude Irish bar in the world but when I was there last November, they hadn’t been able to get supplies of Guinness for months, so let’s stick with Peru.
You can find Irish bars all around the world, and they have driven huge international sales for Guinness, not least because of a halo effect. Once people have been used to drinking a pint of the black stuff in the Irish bar, then they also drink it in other local bars and nightclubs - direct and indirect growth.
If we took a time machine back to the 1990s and were sitting in a board room debating strategy, then perhaps the obvious move would have been to invest directly in a franchise of Irish bars around the world. But not in Guinness’ HQ.
They supported the global growth of the Irish bar but without owning a stake in any of them.
They instead provided advice - a consultancy service that had invested in designs for a traditional Irish pub and had found suppliers of dark wood, brass fittings and the other authentic paraphernalia that made the ambience. The Irish pub package also included training, Irish music and of course advice on pouring the perfect pint.
Did they get paid for their advice or consultancy? No.
Did they take a cut of sales from vendors of Ye Olde Worlde Irish pub interiors? No.
Did they invest millions in setting up this consultancy product? Yes.
The only contractual arrangement was the multi-year supply arrangement for drinks. Same as they would grant to a non-supported Irish bar or another venue.
Is it marketing or innovation? I think it is both. And it’s a great example of innovating and thinking around the box. It’s putting together new components to extend the brand.
I spend a lot of my day job deconstructing innovation programmes to decode why they only have pockets of success rather than scaleable success. What do I think the takeaways are from this age-old Guinness legend?1
Key reframe: Guinness was in the fun business, not the drinks business.
The Product: A repeatable, tried and tested package that would deliver Guinness sales growth.
Obstacles avoided:
You can imagine a conversation with Finance or Procurement where there was a desire to monetise the service directly. Resisting this was crucial for success because it allowed all the players collaborating on the vision to profit from it. All boats have to rise.
Copycats were welcomed. The goal was growth of the category, not control over a franchise.
Type of innovation: It’s a strategy-type innovation, not a product-type innovation. Better Guinness would be a product-type innovation.
I’m sure there are more, do add a comment and let me know what this sparks for you.
What other examples can we think of?
The iPod and iTunes store. In isolation, the iPod would have been another MP3 player that was a blip in the market. Sure, it looked cool but it wouldn’t have been a splash without iTunes which enabled easy, legitimate buying of music to listen to. And it wouldn’t have been a splash if Apple had limited it to the Mac. Instead, within a year, you could also use the ecosystem on a Windows PC.
And perhaps, the world of Lego gives us other insights, going from bricks to Star Wars Lego Movies and Games.
A nostalgic throwback is also the Shell Guides - these were pre-Lonely Planet Guides to the British countryside, to help new motorists explore in their newly acquired cars, coinciding with the rise in vehicle ownership starting in the 1930s. What is notable is the artists involved, like poet John Betjeman and artists like Paul Nash.
Looking forward, perhaps new models need to evolve around EV charging roaming or net zero investments to accelerate progress. The challenge is that these models might be non-obvious at first and challenge the expectations of your CFO and shareholders at the start.
But next time you’re in an Irish bar, unless you’re in an authentic spit and sawdust place in Ireland, raise a glass to the marketing men that made it all possible.
The Round-Up
What we’ve been reading?
I’ve been re-reading Loonshots by Safi Bahcall - some great concepts explaining why big companies find innovation hard and what they can do to change that. And there was a bit of a discussion about it on LinkedIn here if you want to join in.
Until next time!
Great example of business model reinvention and a growth hacking mindset. I have a personal example (not as significant or as impactful as this but it follows the same thinking). When I was at Microsoft I had a role to find, engage and activate video games studios to put their mobile gaming applications on the Windows 8 App Store. The challenge here was that the App Store was new with no pre-installed base to monetise. The Windows Phone was also relatively new to market and competing against the two big incumbents of Google and Apple. The final challenge was that many of the breakout mobile gaming apps were not coming from the big "AAA" gaming studios (where Xbox had a publishing arrangement) but from smaller independent game studios. So the value proposition was challenging as a new app store, a new entry phone OS (that was more targeted at Enterprise than consumers) and game studios that had no real engagement with Microsoft up to this point. So, working with the Xbox team, we created a programme called Greenshoots and delivered this in partnership with Creative England. We brought EU funding to these small game studios and used that, wrapped with the Go To Market support of Xbox/Microsoft and engaged them around how to fuel their business growth and accelerate their mobile game app's they were developing with an initial launch on Windows 8. A key part of this was not to exclude the game titles from the competitors app stores (as that was counter to the intent of fuelling business growth) but have the game launch first on Windows 8 and/or launch with additional content and features. The programme was hugely rewarding to work on and saw many game studios go through it over the years and bring some strong performing games titles to both WIndows 8 store as well as the XBox Store. Net, net. The UK revenues for mobile games was the second strongest to the US in the World and the UK had the most vibrant ecosystem of net new small games studios joining the platform. We weren't selling the product (the app store) we were creating a support programme to help the studios themselves grow and be successful.