What went wrong at Brewdog?

Illustration by johnbiggs.art

People who read The Power Of Us would be forgiven for a dose of schadenfreude at the summer debacles at BrewDog, the Aberdeen-based craft brewers who’ve seen meteoric growth over the past decade. I visited their HQ in Ellon, interviewed their self-styled ‘Captain of The Ship’, James Watt, and was so impressed that I featured BrewDog as a case study in the book.

The Power Of Us Agency also has skin in the game when it comes to BrewDog: two of us are ‘equity punks’ having invested in their unique community-funded scheme (alongside 200,000 other supporters).

So, it was especially disappointing to see what happened over the summer (quotes in italics are from the case study I wrote). On June 9th, James heard the phrase no CEO wants to hear: An Open Letter to the CEO from ex-employees. The letter, from the newly-formed ex-employee group, Punks With Purpose, pulled no punches, accusing the company — and Watt personally — of building a culture of fear, misogyny, putting growth above personal safety and wellbeing.

What happened next made an already bad situation much, much, worse. The letter was all over the media and Watt, reportedly, immediately asked people in BrewDog to write to him telling them how much they liked the culture. Since, unsurprisingly, this news was leaked within minutes by Punks With Purpose, Watt is reported to have initially denied that the instruction had come from himself, but instead from the comms team (way to throw your people under a bus, James…). Eventually Watt had to fall on his sword, and admit that Punks With Purpose had raised important concerns and that they would attempt to change the culture.

(Watt: “Trust is key — we trust our teams and our community, and they trust us to support them, their future and our business’s future”).

Then came the news that the app built for the 200,000 equity punks, had a flaw which meant their personal data had been exposed for 18 months. I have still to receive any confirmation from BrewDog that this data leak exposed my own data, nor has the company publicly spoken about it, claiming that no-one’s data was at risk, so legally, they were under no obligation to disclose it.

(Watt on radical transparency: “Our numbers don’t lie, and ensuring everybody has access to them means everyone has the opportunity to affect them….Transparency is a huge part of our approach to comms.”)

Then came the saddest screw-up of all, symbolising the tackiness that lay under the public appearance of a carbon-negative, B-Corp organisation. A promotion, echoing Willy Wonka’s golden ticket, hid 50 ‘solid gold’ cans of beer. As the winners soon discovered, the cans were made, largely, of brass. Though gold-plated, they were worth nowhere near BrewDog’s claimed £15,000 valuation. When one of the winners attempted to contact customer support, his email account was reportedly blocked by the company.

The Equity for Punks scheme offers perks, and access to recipes and VIP events. But it’s not like a conventional IPO — it’s more like the Hotel California, you can buy shares, but you can’t check out by selling them. This is just as well for James Watt because — judging by the irate posts on the Equity for Punks forum — had investors been allowed to sell their shares, it might have triggered financial collapse for the business. Either that, or he’d be fired by shareholders.

Of course the lure for investors, apart from the laudable aim of supporting an organisation that was saying all the right things, was that they’d get a healthy return when the company did eventually go public. Pre-Covid, this was due to be in 2020. Now, post-brass cans, that day has disappeared into the distance, and BrewDog is facing the loss of its treasured B-Corp status.

In fairness, Watt made some very public ‘mea culpa’s, brought in a mentor, ex-Asda boss Allen Leighton as non-executive Chair, and hired consultancy firm Wiser to address the ‘toxic culture’ allegations.

So, what went wrong at BrewDog? Let’s start by saying the reason why I showcased their culture was that there were — or appeared to be — so many good things the organisation was doing to support its people: paying bar staff living, not minimum, wage; offering tons of learning & development opportunities; private health care schemes, ‘pawternity’ time off to employees who have just acquired a dog; building a vibrant and (then) hugely supportive community; open days and brewing collaborations with small craft-brewers….and much more. That hasn’t disappeared overnight.

‘However seductive it may feel to forceful CEOs, cultural change is co-created, not mandated’

But it seems that the near-fatal mistake that co-founders James Watt and Martin Dickie made was in assuming they knew what the culture of the organisation was — simply because they’d decreed it. They’re not alone in this misperception: your culture is not the words you put on the motivational posters, it’s what’s in the head and hearts of your people on the production line, or those making deliveries or cleaning the loos. And if you indeed do have a culture of fear, where no-one is willing to tell the CEO how things actually are, then the gulf between perception and reality, keeps growing.

That’s why at The Power of Us Agency we have a non-negotiable with any client: before working on any cultural development initiative, we insist that every employee completes our Cultural Audit. That way, we start with the culture as it is, not as it is imagined by the leader. Only when you know where you’re starting from can you plot where you need to go. And, however seductive it may feel to forceful CEOs, cultural change is co-created, not mandated. As Lou Gerstner, former boss of IBM said:

“In the end, management doesn’t change culture. Management invites the workforce itself to change the culture.“

That’s advice that James Watt would do well to heed. Bottom-up, not top-down. This doesn’t allow for quick-fix transformations — that’s why at Power Of Us we prefer to talk about ‘cultural development’ — because any cultural transformation that can be done in weeks, can just as easily be undone in weeks, too.

We sincerely hope that BrewDog gets to the bottom of what went wrong with their culture, however painful that process is. We need organisations that have authentic and humble leadership, and leaders who work hard to nurture a positive culture. BrewDog’s charter declared “ WE NEED TO EAT CHAOS FOR BREAKFAST” Well, be careful what you wish for….

The Power Of Us Cultural Audit is now available for organisations to use. To mark the launch of the agency, we have an introductory rate of 40% discount until December 31st, 2021. More details at: us@powerofusagency.com

Lead for Culture at The Power Of Us Agency