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."
Discussion Questions
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?
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.
Nordstrom’s move points to the dilemma retailers face on where to focus to ensure future success. The role of technology has become wider and deeper in all facets of retail operations and the desire to innovate on technology becomes a very shiny object.
The trouble is that in general, the cost structure for retailers doesn’t allow for that luxury. Deep pocket/high volume retailers can experiment and even invest in standalone labs but that is a fraction of a fraction. Nordstrom’s announcement shows us that practical application of technology is the best way to unleash value for retailers and their customers: research for research’s sake is untenable. Retailing is about delivering goods and services that make people feel good about themselves and the decisions they make. Retailers’ core competency will always turn on the goods and services offered while technology partners will always deliver innovative and efficient ways of executing on those retail strategies.
Innovation labs, properly defined and operationalized, have a role in retail. We’re still in the first inning and discovering the rules of the game as we go.
I’m always amazed at how we pretty-up our myopia. “Pivoting” is code for “we still don’t get it.”
Truth is that most don’t know how to deal with the world of possibilities. “Innovation” means to “restore, make changes in something established.” Mostly to fix or solve a problem. “Invent” is somewhat stronger, meaning “to come upon, to devise, produce by original thought.” And then we have “create” meaning “to bring forth, to arise” as if summoning something out of the future into the now, something from nothing.
Not a thing wrong with any level described above, but only when we learn to participate in creation will we be satisfied and fulfilled. The corporate “lab” thing is an attempt to find new possibilities but unfortunately they are typically harbored in a context antithetical to the goal. Bureaucratic and political structures are toxic to possibilities.
Everything that will ever be possible is possible now, but cannot be found from the perspective of a dimensional world. This is why no one has ever had a creative thought during a board meeting. You have your best ideas, insights and discoveries when you’re not trying to have them. In a shower or on a run somehow things “come to you” quite apart from any effort. The interesting question is, where do they come from? Those who know the answer own tomorrow.
So what would I do if I was Nordstrom? I’d get a bunch of school dropouts, put them in a room and tell them to call forth something amazing. If I were really brave I’d add children to the group.
Retailers also have to be confident on the potential of what innovation labs are discovering.
These are two very different goals and two very different disciplines. As the CEO of a technology company I find it frustrating that retailers believe that they can do both—well.
For sure, retailers have the ability to access their customer’s input and feedback. And they can and should use this input to influence the technology they deploy to connect with their customers. The focus on mobile puts the Millennial retail associate front and center in many organizations. These are tech-savvy kids, some with coding experience who can, and do, bang out customer facing apps that are techy and cool.
Unfortunately, scalability and all that it implies isn’t in their wheel house. Companies like mine employ these tech-savvy individuals but also have the infrastructure to support large-scale deployments. We also have plenty of scar tissue around ideas that work and those that don’t.
At the end of the day I believe retailers should find companies that have the resources to not only carry out their vision, but also bring to the table real world experience that will give them a better chance of bringing their vision to fruition faster, cheaper and better.
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.
While I agree with Mike that mainstreaming innovation personnel into core processes will have positive effects if done right, I think Ian may have hit the nail head also. Do they really get it yet?
I just get a tiny cringe every time I read about innovation labs and tech phase in the same paragraph. Innovation labs are not just about tech. As a matter of fact, tech is simply one of many tools used for innovation and should never be the focus.
Everyone heard it at NRF and if you missed it, then sit in on some webinars that recap the show. The #1 take-away was…it’s time to fix the store!
A great way to do this is to take it to the lab. You start by putting on your customer experience hat and begin the experience design process. Then you use the lab to test out concepts before you roll them out. Its an ongoing process and yes, as you roll out, you might want to mainstream some of your innovation personnel to help make the transition but that hardly means that the lab is shutting down. It is simply rolling on.
For my 2 cents.
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.