It Worked Great, Until It Didn’t The Surprising, But Perhaps Foreseeable, Shutdown Of Drinkworks

RITA MCGRATH

IT WORKED GREAT, UNTIL IT DIDN’T: THE SURPRISING, BUT PERHAPS FORESEEABLE, SHUTDOWN OF DRINKWORKS

When companies make a product that has more to do with their own needs than with solving a real customer problem, the results are seldom pretty.

One of the latest casualties?

Drinkworks, the product of a joint venture between ABInBev and Keurig.

Both of the parent companies have been grappling with strategic growth issues. People aren’t drinking as much beer as they used to (or at least as much of the kind that Anheuser Busch sells) and Keurig has long lusted after finding markets beyond coffee for automatic home preparation.

RITA MCGRATH

THE HISTORY About The Company Drinkworks was founded in 2017, funded by AB InBev’s venture fund, ZX, as part of a joint venture between the highly successful coffee pod maker Keurig Dr. Pepper and Anheuser Busch. The technology behind the at-home drink maker was underway at both companies, reportedly, for over ten years. While I don’t have any insider information, it sure looks as though when the two companies hit the “go” button, the recipe for landing in my “flops” file was in place. Lots of up-front funding, a big team, assumptions taken as fact, leaders totally bought in to the concept without the potential to change direction…and so it goes.

The product launched in St. Louis in November of 2018. The offering was a machine that one would buy for $299, plus a set of pods which contained all the ingredients necessary to create a great cocktail.

Rita McGrath

IT SURE SOUNDS GOOD

Visiting the Drinkworks web site (as of January 30, 2022), you might think you were witnessing a revolutionary startup out to change the world. It’s pretty impressive. Nathaniel Davis, President and CEO, proclaims that the company’s mission is nothing less than reinventing the entire drinking experience. As they say, “From purchase, to creation, to enjoyment – striving to make it all more remarkable through innovation.” The company values are amazing, too – “We deliver remarkable” “we make the user the hero” “we act as owners” “we collaborate for success” “we act thoughtfully in everything we do”.

Because what we really all need is a push-button way of creating a craft cocktail at home, at a price per cocktail of about $5 each.

We should maybe test that assumption?

Rita McGrath

TECHNOLOGY FIRST, REAL TESTING WITH CUSTOMERS LATER… Their Process At the time of the St. Louis launch, spokespeople for the company described with great pride the enormous investment the joint venture had made. As their CEO at the time said, “We’ve got scientists, chemists, process engineers, and so on to figure out how to do that. There’s lots of research and development, lots of technology.” As of 2019, the company continued its fairly aggressive development, announcing a partnership with Brown-Forman corporation leading to the ability to make even more branded types of cocktails. The company went nationwide in 2020, hoping to capitalize on a resurgence of interest in all things at-home during the pandemic. If you look at the video on their website, you’ll see big offices, manufacturing plants and a whole lot of other stuff that must have been really expensive.

BACK TO THE WISDOM OF “THE RIGHT IT” “The Right It”

Now we come back to a fundamental issue that Alberto Savoia has so wisely talked about in his terrific book “The Right It.” An example from the book to me eerily represents what could have been the issue with Drinkworks. And it reflects what happens when enthusiastic people live in what Alberto calls “thoughtland,” that magical place where our beliefs and assumptions are not questioned, all ideas are good ones and there is no such thing as the potential for missing the mark.

Could an ecosystem approach have been better?

As Ron Adner and I discussed in our Friday Fireside Chat, every business today has an ecosystem dimension to it. What Drinkworks was trying to do was become a go-to at-home bartender in much the same way Keurig’s popular coffee machines are used by 27% of all Americans. One could conceive of such a machine that would be a platform through which multiple producers could sell their products. One could even conceive of the popular razor-and-blades model. In that model, companies make one part of the solution inexpensive or even free, and make their money on the renewables that are used with it. Gillette of course did this with razors, and Hewlett Packard does this with printer ink.

DE-RISKING INNOVATIONS AND CREATING CUSTOMER INSIGHT Discovery Driven Planning The techniques I’ve described here – creating real customer insight and de-risking projects through discovery driven planning – can now be learned in a series of short on-line courses I’ve developed. They are perfect for people facing important decisions about whether innovations make sense and how to develop them. You can find out more here.

https://thoughtsparks.substack.com/