BrainTrust Query: How Can Retailers Accelerate Innovation Through Labs?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Insight-Driven Retailing Blog.
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 it's a failure.
In many cases we can pivot, reusing some of the knowledge and technology but applied in a different context. 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.
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.
These days, more and more retailers are establishing labs where technology innovation can be better cultivated, perhaps only to be pivoted. Below are three common 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. Tesco has continued to innovate with their website, loyalty program and mobile apps, much of which are 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. Home Depot took 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. Lowe's, 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.