Innovation: Change the way you think about your retail business

24 May 2012

Summary: Our Innovation workshop made the case that retailers have to be innovative to succeed and showed examples of some of the latest developments in the industry. It challenged delegates to think differently about their business, introduced an innovation framework and encouraged an innovative approach to transforming business performance.

Innovation is important. Competing solely on price, range, location and even brand is no longer good enough and the retail innovation revolution has already begun. Customer expectations have never been higher and they increase every day as consumer technology advances at an astonishing rate. They no longer tolerate average.

Retailers have to innovate to simply stand still in a fiercely competitive landscape, you have to transform the way you think about your business in order to be successful in the future. There is no other way.

What have we got to think differently about? Here are a few examples.

Massive changes in behaviour between generations X and Y mean things will never stop changing. There is no going back. What do we do?

Businesses place too much emphasis on negative thinking; Risk Committees, Audit Committees, ‘what might go wrong’? How about ‘what might go right’?

The Board – how about some young people, customers or staff instead of the normal model ?

Leaders need to think like a customer, how many decisions are made because that’s how IT systems and supply chains work ? Change them. New businesses will (or not have them at all!)

Customers’ relationship with the shop – consumers wants a different, more personal experience than online. If not, why bother? You have to differentiate now more than ever.

The ever increasing use of mobile in our lives, what do you do beyond a mobile site and an app?

So how do you help people in your organisation innovate?

A Harvard Business Review article on innovation – called “The Innovator’s DNA” – prompted our session at the Ecommerce Futures Conference 2012.

You can find the article here – http://hbr.org/2009/12/the-innovators-dna/ar/1. They established that innovative CEOs are not simply naturals who happen to innovate. They don’t have a genetic predisposition. Consistently innovative companies tend to have a replicable approach to innovation built in to their way of operating. They conclude that you have to act differently in order to think differently. By understanding, reinforcing and modeling the innovator’s DNA, companies can find and harness the creative spark in everyone.

So the role of senior executives in a business is not to identify the creative few within their business. Their responsibility is to lead the innovation and share an approach to thinking innovatively.

HBR identified five “discovery skills” that distinguish the most innovative executives:

  • Associating (in the centre of the diagram) is being able to connect seemingly unrelated ideas;
  • Questioning, ask questions that challenge conventional wisdom;
  • Observing, study people and tie innovation to meeting needs;
  • Experimenting by trying things out or by doing new things;
  • Networking, not to get your next promotion or deal, but to understand other people’s perspectives and points of view.

The 5 skills of innovation

By using these ‘discovery skills’, as we now do at Summit, we believe that companies can become more innovative throughout the organization. And we have already established that there is no option but to innovate. So we briefly outlined this model during the workshop and set some challenges that could only be solved through innovative thinking. We split the room into groups and encouraged them to use the model to crack the seemingly insurmountable problems.

 

The Workshops

Delegates were divided into small groups and each played the role of the same national multi-channel retailer facing “impossible” missions, starting tomorrow;

  1. None of your existing customers will buy from you again
  2. You have no marketing or advertising budget for a year
  3. You have no new stock for 3 months
  4. You have no website for 3 months

The challenge was how they would maintain sales and profit levels for a year. Using the innovation framework introduced earlier in the session generated some great ideas. Within just a few minutes teams had moved from being startled rabbits in the headlights of apparently impossible issues, to ideas factories. Thinking became more innovative as more of the group grasped the approach and contributed.

Observations

The 4 missions generated a huge amount of debate, discussion and ideas amongst the delegates. Clear communication with customers, attracting and retaining customers and tackling new markets came across strongly in all the groups.

Most groups focussed on driving the sales line rather than on profit. Growth rather than cost reduction was definitely the tactic employed by the majority of delegates. Given the hard times retailers are facing it is perhaps surprising there were not more cost saving ideas generated. Maybe a group of CFOs, rather than CTOs and Head of Ecommerce would have generated a contrasting list of priorities!

What can you learn from the way our groups behaved?

  1. Apply some pressure. It was clear that imposing restrictions and constraints was the catalyst for some creative thinking. Constraints provide an imperative for the process of innovation.
  2. Look for diversity. Bringing together people from different backgrounds will lead to greater experimentation and questioning.
  3. Make time to observe. Our groups suffered because they didn’t really have the opportunity to observe how those affected by the constraints were behaving.
  4. Facilitate. When the discovery skills are new to a group, it helps to have someone who can bring the group back to the five core skills.
  5. Practice. We have found that the more we use this technique the more innovative we get. We have found that Association takes the most practice. So give it a go, but keep practicing.

Next Steps

Why not take this exercise back to your business and see what innovative ideas you can generate? Try posing one or two of the missions faced by the groups in your own Boardroom and to different teams. We’d strongly recommend reading the HBR article and then think about how, as an organisation, you can encourage people to ask questions, observe customer behaviour, experiment with new ideas and network to share experiences. Encourage your business leaders to draw associations and innovate to transform your business. We would love to know how you get on.

 

 

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