Will Target’s New Tech Center Spur Innovation?
A RetailWire poll back in January found that only 45 percent of respondents believed many other retailers would open their own innovation labs over the next three years. Count Target among those that are not wasting any time. Last Friday, the chain announced the opening of its Technology Innovation Center located in San Francisco, close to talent and partner companies located in Silicon Valley.
"Retail is undergoing a major revolution, and technology is key," Beth Jacob, executive vice president and chief information officer for Target, was quoted in several reports. "You have to be able to operate at warp speed, and innovate very quickly."
David Newman, a former tech executive who worked for six years on Walmart’s online business, is running the Innovation Center for Target. Mr. Newman explained the location was valuable in helping Target work with partners such as eBay, Google, SapientNitro and other firms.
"Partnership is in our DNA and early-stage companies can sense that and are proving to be very willing to partner and co-develop," Mr. Newman told Reuters.
![[Image:Â Target Tech Office]](/public/images/discussions/16783/target-lab-still.jpg)
Target is looking to the center to help it improve its performance across channels. Among the items on its wish list are faster page loads and improved search on Target.com. The company is testing technology to support online ordering and in-store pickup. Looking further out, Target is also exploring augmented reality technology to help consumers find products they want around the store using a smartphone.
But it’s understood that not everything Target or its partners come up with the Innovation Center will work.
"Risk-taking is a part of the Target culture from a design standpoint," Ms. Jacob told The Wall Street Journal. "From a tech perspective, we are [also] willing to do that."
- [VIDEO] Our Heart’s @ San Francisco: Target Opens New Tech Center in Bay Area – YouTube
- Target goes hunting in Silicon Valley, following Wal-Mart – Reuters
- Target Opens Tech Innovation Center in SF – The Wall Street Journal (sub. required)
- Target dives into e-commerce with S.F. tech lab – San Jose Mercury News
- Why Don’t More Retailers Have Innovation Labs? – RetailWire
Discussion Questions
What should be the mission of a retail technology innovation lab? What are your expectations for Target’s Technology Innovation Center?
As the creator of an innovation lab that has developed retail technologies that have been put into stores, I think the mission is very simple: brainstorm anything, defend the use case for the best ideas, develop, test, and hopefully deploy successfully. What else can it be?
Target will likely come up with some interesting things given their very deep pockets and past history of trying some things that didn’t work out, shrugging it off and moving forward. Sapient is a creative agency, so having them on-board is “buying in” to a much deeper talent pool.
Target has traditionally lagged behind other retailers on the functionality of its website and implementing technological innovation, so it’s good to see their efforts to set up a technology innovation lab.
Target’s goals, as stated in the article, should be the goals of all retailers: faster page loads, better site search, seamless online/offline transitions, easier online checkout, and being able to quickly find items in stores. This is what consumers expect.
The only question to ask is, “What took them so long?”
A huge part of me is thrilled about any movement toward innovation. There’s just so little of it. Primarily because we have been taught, regulated and managed to NOT be innovative.
Then other thoughts click in…
Innovation cannot live in an atmosphere of fear. Any retail environment that is filled with bureaucracy, rigid policies, command and control, threat of layoffs, etc. can forget about it. So can any organization that has a “Failure is not an option” poster in the staff room.
Innovation is really the process of seeing new (and hopefully higher) possibilities. Everything that will ever be possible is already possible. Humans have always been able to fly. We have always had DNA. The world has always been wireless. We don’t have to ‘create’ innovation or possibilities…we have to learn to SEE them all around us.
In a living oxymoron we now assign “innovation” to a lab and keep it quarantined to IT. Someone will be in charge of innovation. It will be a box on the org chart. You can just feel the energy can’t you? The buzz reverberating across the country. In other words “the rest of you out in the stores carry on in the usual rigid way keeping your thoughts to yourself while the Enlightened Ones work on IT innovation—at which point you will be told how you have to change.”
The ‘possibility mindset’ is a way of thinking, seeing, breathing. There is only ONE question that will take an organization to the head of the pack: “What is possible?” Whether one is ordering lunch, stocking shelves, meeting a customer or updating IT, that’s the only question really worth asking.
Can’t count how many times over the years I’ve asked a CEO “Why are there locks on suggestion boxes?”
The mission of a retail technology innovation lab is the same as that of the corporation, namely superior customer service at lower cost. The value is in reaching the ever segmenting customer base as to their shopping preference.
Staples, Nordstrom and Walmart also have introduced innovation labs. For Staples, the innovation lab “provides a space that allows our teams to think creatively and rapidly bring to market enhancements to our mobile commerce, online and in-store digital offerings,” according to Prat Vemana, Director, Velocity Lab & Mobile.
Other retailers, such as Sport Chek in Canada, are using their stores to test new technologies on the front lines.
And universities, such as Wake Forest, are jumping on the retail innovation bandwagon by setting up innovation centers to foster ideas from the next generation of retail executives.
I think a lot of good could come out of these incubators for innovation.
I’m glad that Target wasn’t too proud to emulate Walmart through its creation of a standalone technology innovation center. Tesco’s recently-announced plan to launch a digital campus in London is yet another example of the decentralization movement that is hitting retail as retailers attempt to future-proof their digital strategies. Ensuring that the Technology Innovation Center maintains experimental autonomy in early-stages will be a critical success factor. Otherwise, why not just house it within Target HQ and dare it to succeed?
Target continues to enjoy a seemingly bullet-proof cool factor in discount retailing even as it plays a mean game of catch-up in the digital and social shopping arenas. This is a make-or-break opportunity for Target to close the gap.
The mission of the retail technology lab is to find new ways to put its parent ahead of the retail pack. Partnerships and perceived DNAs are great assets but too much experimentation for experimentation sake could covert it into just another cost center.
Target’s innovation center will be successful so long as there are enough innovative business people involved and the center helps produce early-on sales results.
Retail Innovation Labs provide the environment to create the best shopper experience with developing technologies—speed to market is critical. Target will bring the people, partners, and resources together in an environment that fosters creativity and solution optimization.
Innovation labs can be powerful tool for e-commerce; obviously we’ve seen them at Staples, Nordstrom and Walmart, etc.
The challenge is that they have to be looked at as longer-term investments that foster out-of-the-box thinking that doesn’t necessarily translate into an immediate ROI. Otherwise, they are just e-commerce development shops.
To me, WalmartLabs is the best example of a lab that was successfully able to acquire and organically hire great talent (that would otherwise not have been attracted to the Walmart culture), and develop some truly interesting and ultimately useful competitive advantages for Walmart.
I do trust that Target has a similar long-term view for their lab. The interesting challenge is that by locating in San Francisco, they give themselves access to top digital talent, but will have to complete with Google, Facebook, and Walmart labs for that talent. If they can successfully recruit, the Lab will be a great asset.
Information Technology (IT) partnerships are only as good as their escape clauses. Groups of individuals trend and move alike and in IT, where change is the foundation, being off in the wrong direction and forced by contract to stay there will get a company killed quick.
I also saw no innovation to monitor actual market trends against the IT results of this very necessary start-up venture. Many of these types of start-up companies only provide “WOW, DID YOU SEE THAT?” reports with no inclusion of cost information or ROI analysis. Perhaps partnering the companies’ sales and marketing departments with IT to create a window to the WEB might work just as well, at least for a start.
The mission of an innovation center is to create a safe environment to experiment without fear of failure. In retail, innovation is often difficult in the store because of the need for stability and “keeping the lights on.” Having an innovation center where retailers can look at technology investments to say “why not?” rather than “why?” as the first response, that is the value of the center.
A major area of focus for such technology innovation labs should be customer experience. There is so much more that technology could do to enhance the customer experience both online and in store.
Understand the shopper’s pain points and address them in an innovative way, before anyone else gets there.
Under the customer experience umbrella, the following things should be included. In-store mobility and associate productivity tools, new customer insights, taming the online competitor, optimization, and others.
Target has chosen shrewd, experienced and able partners. Because the shopping experience is changing so dramatically, they should take cues from anywhere and talk to smart people everywhere. Can’t wait to see what they come up with.
The challenge of off-campus R&D is its difficulty in re-entry at HQ. TGT seems to be anti-silo, yet all reporting seems to be all about the CIO. Therefore this effort seems to be a tech silo and not an enterprise-wide initiative.
Insight into CIO-CMO partnering? Or as we like to say, “retail ain’t for sissies.”
When you reach a critical mass in terms of resources that can be deployed for growth, innovation is the only route through which you can sustain growth. The mission of innovation labs is generating and implementing innovations!
What’s great to see is that retailers like Target are actually focusing on it and this gives us confidence that Target will keep evolving and growing.