Retail success is about creating a compelling customer experience and today it takes innovation to be compelling. Sophelle is a management and technology consultancy focused on retail. Over our 20+ years we’ve helped hundreds of leading retailers on thousands of projects. We’ve gone back and looked at the retailers which have demonstrated the most successful and most consistent success with innovation. Here’s what we’ve found.
#1: Prepare – Their organizations, partners, and customers
Highly innovative retailers prepare for innovation. They prepare their organizations. Associates throughout the enterprise are ready for change. They prepare their partners. Stores work with landlords and mall operators to prepare them for increases in parking needs. They prepare their supply chain. Raw material providers are ready for peaks in demand and flexible in case things don’t go as well as hoped. They prepare their vendors. Website hosting companies are prepared for changes in online activity so servers are ready for scale. Highly innovative retailers prepare their customers. This is particularly important as retailers try to address the “change is demanded” needs of millennials with the more change adverse baby boomers.
#2: Invest – In the people, tools, and process that support innovation
Innovation isn’t free. Every highly innovative retailer understands this. Highly innovative retailers invest in all aspects of the business. They invest in processes, defined, but flexible in order to support to innovation. Store pilot programs are a good example. They invest in tools that support innovation. A/B and multivariate testing aren’t just used by highly innovative retailers, they’re relied upon to make better, objective decisions. They invest in people. Some associates are dedicated to innovation. Most associates understand that innovation is part of their job. And almost all associates are active participants in innovation.
#3: Partner – Don’t do it alone
Highly innovative retailers don’t do it alone. They realize the benefits of shared financial burden, educational effort, risks, and rewards. They partner with suppliers to innovate on things like product development. They partner with vendors to innovate on new solutions. They partner with non-competitive retailers to leverage cross-brand synergies, explore new markets, and expand product assortment. They partner with customers on social media. They partner with other companies to increase their knowledgebase on what’s worked, and what hasn’t. They partner to increase their exposure to innovation – to be brought into innovation opportunities that they might not have considered otherwise. And they increase their ability to learn from innovation – to gain a partner’s perspective on what value can be taken from an innovation.
#4: Test – They’re great at it or partner with those who are
Highly innovative retailers are great at testing or, at a minimum, partner with those who are. They understand how to test, both accurately and fairly. A/B and multivariate testing are a bedrock for highly innovative retailers. The people who lead testing are QA or Analysis professionals who understand that testing is a science. They aren’t testing to prove a case. They’re out to win by understanding the cause and effect of their innovation. They listen just as well if the facts indicate something isn’t working as when things are.
#5: Pivot – Don’t get locked in to a solution or even a goal
Highly innovative retailers don’t get locked in to a specific solution or even a specific goal. They recognize that the ability to pivot is key to success. Very few innovation projects went exactly as planned, even the successful ones. Innovation has many road blocks. Highly innovative retailers figure out ways to work around them and find new opportunities along the way.
#6: Fail fast and cheap – Factor in the cost of failure
Highly innovative retailers fully embrace the mantra, “Failure is an option”. They treat innovation as experiments. They factor in the cost of failure. And the costs of failure are often spread among a wider set of innovation projects. They do what they can to minimize the time and cost for initial results. They often first aim for MVPs (Minimum Viable Products). And they have clear, specific decision frameworks for proceeding with a project, pivoting, or killing it.
#7: Learn – Innovation is a marathon, not a sprint
Highly innovative retailers understand that innovation is a marathon, not sprint. Innovation for them is a continual process and learning is an integral part. They consider learning a core competency. They hire more on intellect – ability to learn – and less on specific experience. They have learning ingrained in the culture and facilitated by enterprise systems. They consider knowledge an institutional asset. Knowledge repositories are another common tool. They capture lessons learned from failure. Root cause analysis is used extensively to learn the underlying reasons for failure.
I’ll have more details in coming posts. Please check back. In the meantime, I’d like to hear how you are innovating and I invite you to share your comments with me. Reach out at email@example.com.
Contributed by Doug Weich