Quantifying an abstract concept, innovation, for a top brewing company

AB InBev is the world’s largest brewing company with more than 500 brands of beer, including Budweiser, Beck’s, and Stella Artois. Historically, the company has relied heavily on acquisition for growth, but AB InBev tasked MIT Sloan's Enterprise Management Lab (EM-Lab) with assessing a new strategy: internal innovation.“Measuring innovation is quite a fickle endeavor. All organizations argue that it is one of the most important elements in their strategy, but nobody seems to agree on what innovation actually is and how it should be measured,” says Esteban Martinez, global director of Research & Technology Transformation at AB InBev. It is particularly difficult to identify the best key performance indicators (KPIs) for comparing a company with its peers and with world-class innovating companies, he adds.

EM-Lab put four MBA ’22 students to work identifying the right KPIs and innovation frameworks that would allow AB InBev to externally benchmark other companies. The team—Lydia Kaprelian, John Merkovsky, Zach Sherman, and Jeff Hsiao—brought together expertise in fields as diverse as product management, data science, and chemical engineering. The students interviewed key stakeholders and analyzed available data from peer companies. They then developed an “innovation dashboard” that enabled AB InBev to see both financial metrics (such as earnings growth) and innovation metrics (such as new patent filings) from benchmark companies.

“Action Learning labs are really fun because you get to work on real-life problems. That also means the problems will have real-life, messy, solutions,” Kaprelian says. “I came in thinking that we were going to solve a problem. What we landed on was defining a problem.”

The team identified five key drivers of innovation: people, incentives, metrics, processes, and culture. The students also delivered a framework to support ongoing research and drafted an interview guide with key questions the company can use to assess innovation strategies in the future.

MIT Sloan senior lecturer Sharmila C. Chatterjee, academic head of the Enterprise Management Track, and  instructor for the EM-Lab class, says the work was exceptionally well-received by AB InBev. "This project was also a terrific learning experience for the students on the team since they learned how to quantify an abstract concept: innovation. This is particularly important because measurement and quantification has become increasingly critical in managerial decision-making,” she says.

Students also benefited from the experience of defining and tackling the challenge together. “We really lucked out in having a great team,” Kaprelian says. While the team members all came from different backgrounds and had slightly different ideas about how to approach the problem, she says they communicated well and learned a lot from each other.

The project proved very valuable for the host company as well. “The work done by the team was crucial in helping us identify the right KPIs to address our dream of becoming the most innovative company in our sector,” Esteban says.