Tuesday Oct 01, 2013

Five Ways to Seed Innovation

So you're a retailer and you want to plant the seeds of innovation at your company.  Where do you get started?  Here are 5 suggestions:

1. Find sources of inspiration

You and your team need to be exposed to many ideas from lots of different industries. Its unlikely a perfect solution to a problem will drop in your lap -- more likely you'll see how someone in a similar industry solved a similar problem, and you'll be inspired to do the rest.  I follow general technology sites like Mashable, TechCrunch, Ars Technica, The Verge, ReadWrite, and MIT Tech Review and look for applicability to retail.

You can also get a good understanding where technology is going by reviewing ARTS blueprints, analyst briefings, and industry publications like Retail TouchPoints, RIS News, Chainstore Age, Retail Wire, and Internet Retailer to name a few.  These organizations do a good job of staying current with the happenings of both retailers and vendors in the industry.

Its also important to cultivate ideas within your own organization.  At Oracle Retail, we have a yearly science fair in which employees form teams and are given time to build out ideas and experiment.  I've also been invited to retailers' "vendor innovation weeks" where various vendors are invited to pitch ideas.

2. Set aside resources to experiment

Many retailers have decided to acquire a start-up to form an internal lab where engineers are free to experiment with new ideas.  Others create a rotation of engineers through lab assignments to spread wealth.  Whether there are dedicated or ad-hoc resources, the important thing is always be testing new ideas.

3. Establish partnerships

Vendors, especially start-ups, want to partner with retailers to test ideas.  Its important to cultivate partnerships with regular meetings and occasional proof-of-concepts. You can get access to multiple start-ups by staying in touch with venture companies, or attending conferences.

4. Streamline processes

Its easy enough to plant the seed, but existing processes are sure to strangle any seedling.  Some amount of capacity needs to be set aside to cultivate ideas when they spring up.  Forcing someone to create a huge marketing pitch and wait six months for hardware will not advance the cause.  Make it easy to start, pivot, and if necessary, fail fast.

5. "Non-stupid vs. brilliant"

I was once discussing innovation with Jerry Rightmer in a bar in San Francisco when he said something that has stuck with me.  Paraphrasing, he said it wasn't necessary to have a brilliant idea, only a non-stupid one.  If the idea has any merit, then follow the thread and see where it leads.  From one idea, many others may sprout with a little investment.  Failed projects are full of valuable learnings and will likely lead to better ideas in the future.

Thursday Sep 19, 2013

Aligning Strategy to the Future

People like to ask me what retail will look like in five or ten years.  I can paint a futuristic picture involving lots of tech toys, but the reality is that I, like most people, am horrible at making accurate predictions that far into the future.  There are just too many variables, and the biggest one is the consumer.  Its really hard to predict the success of an idea AND get the timing right.  I recall testing tablets at a retailer ten years ago, but they've only recently taken off.  People are saying tablets will replace registers, and maybe they will, but I never could have predicted that ten years ago.

So perhaps instead of asking what will be different ten years from now, maybe we should ask what won't change?  That's one approach Jeff Bezos takes when deciding where to focus energies.  You can bet consumers will still want low prices, vast assortments, and fast delivery so those are constants in the Amazon strategy.  So what are some other things that won't change?

The internet isn't going away, that's for sure.  If anything, bandwidth will increase and open up even more features.  How can your business benefit from a 10x improvement in bandwidth?  Would all the products on your website be animated, perhaps with 3-D perspective?  Would you offer live video help online and from store kiosks?

Mobile will still be important as well, but it might take some additional new forms like wearable devices.  Its always going to be important to serve customers wherever and whenever they want to shop.  We need to stay flexible and support various form-factors for communicating with consumers on the move.  That might include watches, holograms, and displays projected on the nearest piece of glass (Total Recall 2012).

You can bet the marketing department will still be around, and they might just wield even more power. Assuming we're able to increase the amount of data we collect about our customers, how will we use that data to improve the shopping experience?  Can we provide real-time, personalized pricing?  What new types of security can we employ to protect that data?  How do we better include the customer's voice in our business processes?

My best advice for retailers: First and foremost focus on how technology can improve the things that aren't going to change.  Adopt technologies that help keep prices low, improve the customer experience, and make better merchandising decisions, for example.  These will vary depending on your business model, but the point is to not waste energy aiming for something that may never take hold.  Even the best ideas have fits and starts, so don't even try to align your strategy to predictions of the future.  But always track innovation and be ready to adopt when the timing is right.  Awareness and agility are key.

Thursday Jun 20, 2013

The Innovation Pivot

One of the things our Retail Applied Research team tries to do is "fail fast."  That doesn't mean we're trying to fail, but we want to arrive at a failure or success assessment quickly so we minimize investments in failures.  But just because a project isn't deemed a success doesn't necessarily mean its a failure.  In many cases we can pivot, reusing some of the knowledge and technology but applied in a different context.  In some circles, entrepreneurs are encouraged to run with an idea until it fails, then pivot in a different direction.  There are many famous examples of pivots, like the emergence of Fab.com from a social app targeting gay men or the pivot of Tote into Pinterest.  Sometimes the original idea just didn't fit, and other times the market changed and required re-assessment.

The Austin-based start-up Digby has pivoted twice. Digby first created a mobile marketplace on the Blackberry where consumers could order products from multiple retailers in a single application.  I once used it to order flowers for my wife.  This was in the early days of smartphones when mobile commerce was in its infancy.  Then when the iPhone was released, retailers wanted their own dedicated app so Digby moved away from the marketplace app and focused on mobilizing e-commerce sites, providing mobile apps to retailers supporting iPhone, Android, Blackberry, and Windows Phone. While that was a successful business, the market was shrinking because e-commerce vendors, like Oracle ATG, started offering mobile extensions so that third-party software was no longer needed.

Wanting to leverage all their experience with mobile technology, Digby next pivoted to Localpoint, a product that enables retailers to easily create geo-fences and provide direct marketing to consumers via their mobile devices.  CIO.com recently gave them an honorable mention in their 7 Hot Mobile Startups to Watch in 2013.  They seem to be making great inroads with retailers using this latest approach.

Conventional wisdom says you don't know what you don't know, so its best to dive in but be prepared to pivot.  (Idea-driven vs Outcome-driven is an interesting debate and something retail labs should consider.) Agile retailers need to test (a step Ron Johnson skipped over) lots of concepts before finding the ones that work, and then not stay married to those concepts forever. And don't think this advice is limited to small companies -- large companies can pivot too.

Wednesday Jun 19, 2013

Accelerating Innovation for Retailers

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.


Monday Mar 18, 2013

Techapalooza

I previously discussed the importance of establishing an innovation lab so that companies can keep up with emerging technology trends. But innovation doesn't just happen in the lab -- it works best when its part of the culture.  Companies need to foster the free flow of information and ideas across the entire organization.  There are many tools that help in this regard, including online forums, instant messaging, social networks, etc.

Take this example from Lowe's.  An enterprising employee in the paint department of a store decided to demonstrate how a Teflon paint tray works by pouring in the paint, letting it dry, then peeling the paint out of the tray.  She left the tray and paint mold on display, and soon she was sold out of Teflon trays.  She described the incident on the company's internal forum and other stores began duplicating the display.  Sales went from 2 units per week per store to 6 representing over a million dollars in additional revenue.

But you can't just expect communication to happen without a little push. To get the juices flowing, Do It Best has an annual education event they call Techapalooza (kicking off today) that has the following mission:

Provide education that will inspire the innovative use of technology to improve our supply chain efficiencies and to help our members grow - all while having fun.

They invite a variety of presenters to this regional conference that speak on varied topics such as Big Data, RFID, Google Apps, cloud deployments -- all for the benefit of their employees. This week-long conference is packed with engaging sessions and networking opportunities that get employees thinking about new ways to go about business.

Companies need to provide opportunities to learn, share, and collaborate through a combination of software and events.  Internal conferences, science fairs, lunch-and-learn, online courses, social networks, etc. are great ways to engage employees and improve the way we work.  It only takes a few good ideas to make a difference.

Thursday Jan 10, 2013

Innovation Labs

Once of the trends I noticed in 2012 was retailers creating standalone innovation labs.  The ones that seem to get the most notice are Walmart Lab and Nordstrom Lab, most likely because they have great marketing to compliment their inventions.  Two new labs that just started are the Staples Velocity Lab and the Home Depot Lab.  In most cases these labs stem from acquiring a start-up, and not wanting to crush the start-up spirit, the retailer keeps the company separate.

Having a separate lab has a few important advantages.  First, since its not part of the larger IT organization it doesn't get sucked into fire fighting, which can be a huge distraction.  Also, its not bogged down by enterprise-class software development processes that tend to slow things down.  An important part of innovation is constant tweaking that can't be documented up-front.  Having labs focused on retail-specific solutions keeps a retailer's edge.

At Oracle Retail we established the Retail Applied Research (RAR) team a couple years ago under the leadership of John Yopp.  They research emerging technology, collaborate with other labs, and convert ideas into prototypes in a nimble fashion.  Their efforts help us better assess the value of ideas and de-risk some of the technology.  This year we'll be demonstrating two of their projects in our booth at NRF.  We'll be demonstrating an Isis payment using NFC with our Mobile POS running on a Verifone sled. Additionally, we'll be showing how voice-response can speed transactions on our Mobile POS.

To foster the innovative spirit, we also have an annual Science Fair in our R&D organization.  Small teams with innovative ideas are given the week of NRF to build prototypes which are then judged based on originality, execution, and presentation.  Last year we had some pretty cool ideas using iPhones and Twitter that led to patent applications.

Technology doesn't stand still, so I'm hoping that more retailers create separate labs to incubate ideas in 2013.  Nobody can afford to stand still.

Tuesday Oct 02, 2012

Innovation for Retailers

One of my main objectives for this blog is to point out emerging technologies and how they might apply to the retail industry.  But ideas are just the beginning; retailers either have to rely on vendors or have their own lab to explore these ideas and see which ones work.  (A healthy dose of both is probably the best solution.)  The Nordstrom Innovation Lab is a fine example of dedicating resources to cultivate ideas and test prototypes.

The video below, from 2011, is a case study in which the team builds an iPad app that helps customers purchase sunglasses in the store.  Customers take pictures of themselves wearing different sunglasses, then can do side-by-side comparisons.


There are a few interesting take-aways from their process.  First, they are working in the store alongside employees and customers.  There's no concept of documenting all the requirements then building the product.  Instead, they work closely with those that will be using the app in order to fully understand what's needed.  When they find an issue, they change the software onsite and try again.  This iterative prototyping ensures their product hits the mark.  Feels like Extreme Programming if you recall that movement.

Second, they have time-boxed the project to one week.  Either it works or it doesn't, and either way they've only expended a week's worth of resources.  Innovation always entails failure, and those that succeed are often good at detecting failure quickly then adjusting.  Fail fast and fail often.

Third, its not always about technology.  I was impressed they used paper designs to walk through user stories and help understand the needs of the customer.  Pen and paper is the innovator's most powerful tool.

Our Retail Applied Research (RAR) team uses some of these concepts in our development process.  (Calling it a process is probably overkill.)  We try to give life to concepts quickly so the rest of organization can help us decide if we're heading the right direction.  It takes many failures before finding a successful product.

Wednesday Jul 20, 2011

Don't Forget to Check the Rearview Mirror

Over at AppsLab, Jake is reminiscing about retailers gone by the wayside and it got me thinking a bit.  Arguably Tower Records was killed by Apple, Blockbuster was killed by Netflix, Borders was killed by Amazon, and Circuit City was killed by Best Buy.  (I guess its never that simple, but at least we can say there was a clear winner and loser in each of these battles.)

But here's another way to look at it: Tower Records was killed by MP3s.  Blockbuster was killed by streaming video.  Borders was killed by e-readers. (Okay, Circuit City doesn't really fit this motif.  They went down due to a whole host of issues, none of which were really technology based.)  These companies saw the writing on the wall and tried to save themselves, but they just didn't move fast enough.  Blockbuster knew it needed to offer DVDs by mail, kiosks, and streaming but it was too slow to market.  Toward the end its offerings were at least as good as Netflix, but the customers had already left.  Borders offered the Kobo (anagram for "book") e-reader via a partnership, but it was long after the Kindle and Nook had established themselves.

So I think there are a few lessons to take away from the Borders liquidation.

  • No business model is sacred.  What works today is no guarantee for the future.
  • Timing is everything.  Established businesses are best at being fast-followers (with emphasis on fast).
  • What sounds impossible today may not be in a couple years, so don't dismiss it offhand.

Retailers need to be looking in their rear-view mirrors not only at their competitors, but also at alternative technologies that might sneak up on them.  (Yes Gamestop you're on top today, but platforms like Steam and Microsoft Live are sneaking up on you!)  I'm sorry to see Borders close its doors, but I'm excited by the e-reader technology and the pace at which other innovations are coming to market.

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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