Innovation is a challenge for large incumbent companies. Their long-term success depends on exploring new innovations that stretch the organization beyond its core businesses. But these new opportunities must draw on the company’s existing strengths and leadership position.

Harvard Business School senior lecturer Derek van Bever and former lecturer Stephen P. Kaufman studied global brewing company Molson Coors, as it prepared to enter the cannabis beverages business in 2019.

“The unknowns were unknowns — they were unknowable,” Kaufman tells Cold Call host Brian Kenny. “You need to have a theory, rather than to look for data. And this is much tougher than what we often see — major companies getting into a market that a startup has already proven exists. This is a place where no market exists.”

Molson Coors initially planned to slowly test a few products in a small market to see if there might be a viable business. But ultimately the company decided to take a more aggressive and expensive strategy, with the aim of seizing first-mover advantage. Kaufman and van Bever explain how Molson Coors formulated that strategy.

Key episode topics include: strategy, global strategy, budgets and budgeting, business ethics, disruptive innovation, joint ventures, food and beverage sector, beer, cannabis, market opportunity, first-mover advantage, incumbent, product development, new markets, managing risk, scope creep, Canada.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

· Listen to the original HBR Cold Call episode: Should Global Beer Company Molson Coors Enter the Cannabis Beverages Business? (2021)

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