Nordstrom reassigns Innovation Lab workers

Nordstrom’s Innovation Lab ain’t what it used to be. According to a GeekWire report, Nordstrom has moved employees out of its tech startup to positions inside the company, including its Customer Experience Center (CEC), which was founded in 2013.
"To utilize the CEC to its full potential and widen the impact of innovation, we are moving parts of the original Innovation Lab into tech/biz teams while continuing to run a core Innovation Lab focused of solving specific customer opportunities, in addition to continuing to foster the innovation practice where needed," an unidentified Nordstrom spokesperson told GeekWire.
In addition to Nordstrom, a number of companies, including Home Depot, Staples and Walmart, have opened their own innovation centers in recent years.
An article by David Dorf of Oracle Retail on RetailWire in 2013 cited a number of advantages for retailers that operate independent tech labs. Among these were lab personnel being able to stay free of the entanglements associated with working within a corporate IT department as well as being slowed down by "enterprise-class software development processes."
- Nordstrom shrinks Innovation Lab, reassigns employees in shakeup of tech initiatives – GeekWire
- Why don’t more retailers have innovation labs? – RetailWire
Is Nordstrom making a mistake moving people from its Innovation Lab to tech/biz teams within the company? Are innovation labs the latest tech phase to be praised and then abandoned at retail?
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13 Comments on "Nordstrom reassigns Innovation Lab workers"
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In general, an internal innovation lab is a great idea. It allows a retailer to be independent and test and explore anything and everything they want without undue influence or obligation from a third-party vendor. They can manage the scale, place and duration of trials, control the data gathered and make quick decisions as to go forward or abandon technologies and techniques they trial.
There is a bit of a cachet about having an internal lab that some retailers might try to leverage for PR, but in all likelihood, most of these labs are created for the right reasons.
I doubt Nordstrom is going to share much about its reasons to kill off this entity.
Retailers also have to be confident on the potential of what innovation labs are discovering.
Rather than assume that Nordstrom is abandoning innovation, consider the possibility that this retailer’s innovation has been successful and that it’s mainstreaming it.
Putting smart/capable/get-things-done people from its innovation labs into the core operating units of the business will lead to a spread of ideas, an increase in entrepreneurialism, and other positive effects.
To make this change most effective, I hope that the Nordstrom management team will:
The map is not the terrain. You might take this as dropping out of school, but how about it’s a sign they have graduated?
Years ago when they started this, they brought in folks who cared about design thinking, lean start-up culture, etc. This jumpstarted their knowhow around the culture and thinking. Now it’s part of their culture. The guy who was the founding force behind the lab, JB Brown, is running mobile app development. Nice move. That’s innovating innovation. Start your lab now, so you can end it sooner.
There is more, but you would need to start and close a lab to learn it.
On the surface, innovation labs promise to provide unique and valued insights and “discoveries” that are unbridled by IT and political agendas. The reality is that they are expensive to fund and remain innovative and viable with the rapid change and evolution of technology. Instead of focusing on what the shopper values, these labs often become technology tests. Does the technology do what is advertised and promised? The lab should be an operational store with real customers, shopping for real products and services. Only in this environment can you determine what is valued by your shoppers.
Retailers need to be “hedgehogs” as defined by Isaiah Berlin’s essay entitled “The Hedgehog and the Fox.” Be great at one thing. Jim Collins defined his ‘Hedgehog Concept’ in his best seller ‘Good to Great’ as the intersection of:
Be great at understanding your shopper and travel in her shoes! These are not things you will discover in an innovation lab.
Sorry, but my experience with innovation labs is they hire digital hipsters (not tech experts) who are out of touch with line of business operations and spend more time playing with gadgets like 3D printing than being on the floor or in the business understanding how operations actually work. And I will reserve my comments about the (lack of) diversity makeup of these innovations for another time and place.
Nordstrom has long been a leader in terms of delivering a superior customer experience and without context, it’s hard to say they are making a mistake. There have been some leadership changes, in some cases due to missteps and in others due to the company’s leadership commitment, so without more context it’s wrong to say they are making a mistake.
Without knowing more about what has come out of its lab, it’s possible to question how successful it was, however. Companies don’t always—and retailers do not usually—break things that are working. As Nordstrom moves towards being more promotional, it’s possible that there is more pressure on its margins and that this could be purely due to economics (i.e, cost-reductions).
Not a mistake moving people back inside the company. The hope would be that having them outside, they could attract different talent and not be constrained by everyday business, but this “lab” strategy feels like the dotcom tracking stock craze in retail around 2000—a fad.
It didn’t sound like the Lab was closed; rather, some people we mainstreamed (possibly to help foster an innovative culture throughout the company) with a small core remaining. Labs need to run lean, and maybe they just started getting fat. It’s good to shake things up.