Why Carlsberg is building ‘lighthouses’ to thrive in the digital age

INNOVATION is a necessity in today’s digital-first world. Carlsberg understands that.

The company has gone from strength to strength over the past few years, creating innovative products and solutions for a variety of markets, to differentiate itself from competitors and to delight customers.

While some businesses look at innovation and feel it gives them a competitive edge, Carlsberg’s team seems to see innovation differently — putting their faith in continuous innovation, believing that is the best way to create new opportunities for growth.

In a recent presentation, the team laid out the evolution of the company’s digital transformation program and offered several interesting insights.

Among them, the most interesting was Carlsberg’s use of ‘lighthouses’ as a center for co-creating and piloting with end-users across multiple markets.

From the outside, the company’s exciting Carlsberg Analytics Platform seems to be the most interesting project in recent times, especially because of the work they’ve done with machine learning.

However, at its core, lighthouses seem to be the secret to the company’s phenomenal success with digitization.

Lighthouses have helped the company move from scattered experimentation with dispersed, locally-driven initiatives and prototypes to building a program that helps the business scale digital products and services.

To drive innovation, the company has built several lighthouses, which it believes introduces new ways of working.

At its core, each lighthouse is a digital product team comprising of five to 10 core members with design-thinking skills, from a variety of divisions, and an obsession with Carlsberg’s customers.

Typically, the company’s innovative lighthouses follow a continuous loop of ‘make, test, and learn’, ensuring a deliberate focus on the customer at every stage. In fact, “co-creating with markets and customers” is one of the cornerstones of innovation for the international brewing company.

An interesting point that the presentation made was that Carlsberg’s innovation teams are designed to thrive with “minimum viable bureaucracy (MVB)”.

Project managers familiar with the Agile Framework don’t need an explanation, but for the rest of us, MVB is simply an assurance to an innovation team that there will be just enough processes to ensure that the team stays on track but no more than that.

The idea is to ensure that members don’t have to deal with cumbersome processes when trying to build something new — which is especially important in the digital era where customer’s demands, expectations, and the market, all change very quickly.

What can businesses learn about innovation from Carlsberg?

The obvious lesson that Carlsberg brings to the table is that businesses need to continuously innovate in order to survive in this day and age. That’s non-negotiable.

Further, in order for innovation to be effective, businesses need to understand that innovation must be customer-centric. That’s the focus of the international brewing giant’s lighthouses and re-inforced at each of its ‘make, test, and learn’, phases.

Finally, organizations, especially the larger ones where processes are considered sacrosanct, MVB is important to ensure that the company doesn’t get in the way of its own innovation engine.

Aside from these, an important thing that the company’s recent presentation points out in terms of innovation is the need to validate value early and to use an evidence-based approach to investment decisions when prioritizing innovation projects.

Given the resource limitations that most companies have, paying close attention to validating value early allows the organization to capture value early and build confidence, not just within the team but also among stakeholders.

Further, using a balanced approach to analyzing the investment decision in taking an innovation to the market —  which involves forecasting its business value and potential customer value, demonstrating market demand, and spending time on user and market research — is critical to long-term success.

The reality is that innovation isn’t easy. Carlsberg’s method might not be revolutionary but it’s a well thought out system which is what helps it deliver results.

Organizations struggling to innovate need to get to the drawing board to chalk out a framework that works for them, something that’s easy to articulate and ensures customers, employees, and stakeholders are able to collaborate effectively. Of course, it’s easier said than done, but ignoring or failing to innovate is no longer an option.

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