Accelerating Innovation for Retailers
By David Dorf-Oracle on Jun 19, 2013
In today's competitive marketplace, a big differentiator can be technology, where advancements in social and mobile have opened new possibilities for increasing employee efficiency and enhancing the customer experience. Therefore, its critical that retailers establish their own labs to track and adopt new ideas. There are several different approaches, and there's no single right way to establish a lab. Below I describe the most common three approaches I've seen from retailers.
1. Organic approach. Some retailers, like Tesco and Wet Seal, fan the flames of innovation within their four walls. Using internal employees, they design and implement novel ideas that improve the business. Tesco has continued to innovate with their website, loyalty program, and their mobile apps, much of which is developed internally. Wet Seal, one of the early pioneers of social retailing, learns through trial-and-error, finding out which ideas have legs. This approach requires strong leadership, vision, and a willingness to fail so its not for every company.
2. Kickstart with acquisitions. In April of 2011 Walmart acquired Kosmix, a social startup, and formed @WalmartLabs. This was followed by a string of additional acquisitions in the social and cloud spaces. HomeDepot followed a similar path by acquiring BlackLocus to form a lab then following with the acquisition of Red Beacon. This can be an effective approach if there's no existing culture of innovation, so buying the start-up mentality can form a basis for building a lab.
3. Partner collaboration. The danger retailers face is losing focus on their core competency -- retailing. Running a start-up within a large company can be costly, reliant on key individuals, and sometimes a distraction to the core business. An alternative approach is to partner with technology companies so as to share some of the burden. Lowes, for example, invites technology partners to present innovative ideas then chooses a few projects for collaboration. This can be an excellent way to stay on the leading edge of innovation without some of the mentioned downsides.
CEOs know that standing still is not an option, so look for more retailers to establish labs where technology innovation can be better cultivated.