Through a special arrangement, presented here for discussion is an excerpt of a current article from Insight-Driven Retailing Blog.
One of the trends I noticed in 2012 was retailers creating standalone innovation labs. The ones that seem to get the most notice are Walmart Lab and Nordstrom Lab, most likely because they have great marketing to complement their inventions. Two new labs that just started are the Staples Velocity Lab and the Home Depot Lab. In most cases these labs stem from acquiring a start-up and, not wanting to crush the start-up spirit, the retailer keeps the company separate.
Having a separate lab has a few important advantages. First, since it's not part of the larger IT organization it doesn't get sucked into fire fighting, which can be a huge distraction. Also, it's not bogged down by enterprise-class software development processes that tend to slow things down. An important part of innovation is constant tweaking that can't be documented up-front. Having labs focused on retail-specific solutions keeps a retailer's edge.
At Oracle Retail we established the Retail Applied Research (RAR) team a couple years ago under the leadership of John Yopp. They research emerging technology, collaborate with other labs, and convert ideas into prototypes in a nimble fashion. Their efforts help us better assess the value of ideas and de-risk some of the technology.
To foster the innovative spirit, we also have an annual Science Fair in our R&D organization. Small teams with innovative ideas are given the week of NRF to build prototypes, which are then judged based on originality, execution and presentation. Last year we had some pretty cool ideas using iPhones and Twitter that led to patent applications.
Technology doesn't stand still, so I'm hoping that more retailers create separate labs to incubate ideas in 2013. Nobody can afford to stand still.
What's the likelihood that many other retailers will open innovation labs over the next three years?