BrainTrust Query: What It Takes to Innovate

Discussion
Aug 14, 2012

Through a special arrangement, presented here for discussion is a summary of a current article from the Hanifin Loyalty blog.

Innovation is an objective that often floats aspirationally to the top of planning processes at the outset, but becomes suppressed, diluted and minimized as the practicalities of business take hold.

Attending the Badgeville Summit last week and considering what it will really take to create "innovative" customer loyalty solutions in the future, I’ve been giving thought to how we can really drive innovation in our business and what obstacles are most often in our way.

Four elements of project work are always present, and each of them has the potential to derail innovation. They include:

Adherence to a planning methodology: If you’re not planning with a proven methodology built for your industry or area of business, you can easily miss out on key points. Essential elements may be missed in launching a new product or campaign. That said, the methodology should be a starting point on which to create new ideas, not a prison that confines thinking and restricts options.

Reliance on best practices: Best practices may provide confidence and protect project sponsors from the criticism of their colleagues, but won’t necessarily result in anything ground-breaking or innovative. Use them as reference, but remember that there may be a new way forward.

The need for case studies: Almost every client asks, "Do you have any case studies for projects like ours?" What they really want to know, and sometimes ask directly, is "has anyone walked this path before?" When case studies do exist in parallel, they are great to borrow, but often we end up copying existing models because "we know they worked before." Innovation won’t flourish in this atmosphere.

Desire for quick wins versus longer term results: Fear and greed may drive Wall Street, but neither of these attributes result in consistently good outcomes for human beings. Fear is typically rooted in the organization, as few people wish to leave themselves exposed to criticism and second guessing if a project goes south. Greed shifts our focus from long term to short term. While a particular solution has the possibility of driving long term value for a business, there are short term goals to make, "quick wins" on the project plan to accomplish, and annual bonuses that no one wants to miss.

With multiple trips to Silicon Valley over the past few months, I’m convinced that the game-changers we read about think a bit differently. It’s good to retain the solid foundation that we’ve come to rely upon to drive business results, but we must constantly test the boundaries of our methods if we are to claim the title of "innovator."

Discussion Questions: What do you think are the main obstacles to innovation in retailing? What can be done to overcome the obstacles and foster innovation?

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25 Comments on "BrainTrust Query: What It Takes to Innovate"

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Paula Rosenblum
BrainTrust

I chose “Quick Wins” although it wasn’t perfect for the retail model. It’s very hard to create innovative products in a timely way when you’re sourcing products half a world away from the point of demand and average time to market is a year. We find both these data points in much of our research.

Zara is considered a retail innovator and does so by shaving time to volume down to 3 weeks. In fact, that’s what fast fashion is all about — rapid time to market for “stuff” that just isn’t going to last all that long.

I suppose we could highlight the entire JC Penney story as an example of the unforgiving nature of Wall Street, but while the street may not be patient, bad execution is still bad execution.

“Planning methodologies” would have been an easy answer, but I don’t think it’s core to the innovation dilemma.

Fabien Tiburce
Guest
Fabien Tiburce
5 years 5 days ago

I would add a few:

1. Build small teams. Small teams achieve better results, faster, every time.

2. Empower your teams. Give them the chance to prove, test and refine the concept. Use small scale, low-impact impacts. Fail but fail small.

3. Park bureaucracy. Walk into an average organization and there are a dozen departments with part ownership of any given project or initiative. Give the team responsible for it the last word on any pilot project. The point is to deliver value quickly, and refine as needed.

4. Be quick, be nimble, be agile. If you don’t innovate, someone else will.

Brian Numainville
BrainTrust

I believe that oftentimes one of the biggest obstacles to innovation is the desire to not deviate from the norm. The “We always did it that way and it worked fine so why change?” mentality. And while best practices may be the way that seems to work well for most people, it will never be revolutionary.

Ian Percy
BrainTrust

Well put Bill! Of these four points the one about the myth of “best practice” gets my loudest “Amen!” I wrote an article some time back titled “Looking for best practice isn’t the best practice.” It didn’t go over particularly well but now maybe I’ll republish it.

It is totally a mind-set issue. Having just researched the role of ‘intuition’ in business, I’ve come to the conclusion that the neuro-dynamic of both ‘innovation’ and ‘intuition’ are the same. Those who want both need only one piece of advice: GET OUT OF THE WAY!

Humans have both capabilities embedded in their DNA, their very soul. If we’d stop “thinking” so much, quiet ourselves a little, and open our minds to our highest possibilities…we’d see the world change almost instantly.

And speaking of possibilities….

There is a world of difference between “solving problems” which most of us are trained and rewarded for doing — and “seeing possibilities” which most of us are punished and berated for. Solving problems is simply fixing the past. Seeing our highest possibilities is creating a new future. That, by any other name, is innovation.

Max Goldberg
BrainTrust

Fear and greed. Each retailer has a way of doing business. Those “ways” become ruts and are hard to overcome. There is a fear of change. Management fears it, employees fear it and suppliers fear it.

If the retailer is a public company, Wall Street will not wait for long-term results, focusing instead on the short term.

A case in point is JC Penney, where new management instituted bold changes, only to be upbraided by Wall Street and pundits for not producing immediate, short-term results.

Overcoming these obstacles takes bold management with long-term vision and a thick skin. It also takes great communication skills. The company will need to effectively articulate its vision and goals to customers, vendors, employees and shareholders.

Mark Heckman
BrainTrust

In retailing, I find most retailers regard “innovation” as something third party enterprises should offer and no longer view innovation as an affordable internal function. Bill Hanifin has nicely drawn a road map conducive for internal innovation but, as he states, risk aversion, and the insatiable appetites of shareholders and owners for quick ROI, often make the needed investments for innovation impossible to sustain.

There are no silver bullets to circumvent this “quick return” mentality other than work to build a cogent financial model in which C-level decision makers can clearly see the longer term benefits and then make a determination if the investment is warranted and on strategy.

In addition, both internal and third party innovators in retailing need to be mindful that great technology and ideas are useless without a thoughtful business model. Their plan should be complete with identifying savings and/or revenue that should result from the investment, knowing that a speedy return enhances the likelihood of adaptation!

justin tyme
Guest
5 years 5 days ago

I feel that case studies are only useful to illustrate NOT what to do or at least to recognize what to do best before you blunder. A fifty year case study of Great A&P would be a valuable primer to every supermarket merchant that wants to survive in today’s cutthroat marketplace.

Stores like Delhaize America’s Bottom Dollar Food have discovered the best qualities of the 1950s and 1960s era A&Ps which prospered by offering quality private label brands at the lowest prices, a small footprint, great advertising, convenient locations and store appearance. It worked 60 years ago, and it has proven to work again today. If only A&P would have reread their own playbook from that era, they would be the leading food discounter today.

Gene Hoffman
Guest
Gene Hoffman
5 years 5 days ago

The innovative idea always carries with it a sense of violation. It’s like “What we do here is sacred.” Innovation can violate established comfort zones.

The persistent innovator (are you listening, Thomas Edison?) is a person who does not know what other people have thought. He is indefatigable and knows that everything eventually develops a crack. He knows that’s what lets new light in. So he plows forward, looking for possible fissures and mental flaws that permit the opening of new horizons. Original thinking should always be encouraged and rewarded, not feared by the retailing world.

W. Frank Dell II
BrainTrust

Listen to the customer and create as best you can what they want. Best practices will only get you to where everyone else is. Look outside the industry is a great source for new ideas. Risk of failure is the most common restriction to innovation. The better retailers will test/try many concepts. They learn from their failures without it becoming a career ender.

Matt Schmitt
BrainTrust

Embrace a “crawl, walk, run” mentality when trying new approaches. Taking the time to plan out all the long-term implications and operationalizing everything is a sure fire way to get stuck in analysis paralysis.

Taking many small steps forward creates agility. Quick wins (and quick losses) allow for course correction along the way.

David Slavick
Guest
David Slavick
5 years 5 days ago
Innovation is defined in my daily business practices as breaking the mold and taking a solution to market that has a true differentiation and a compelling probability of success. If not successful as defined by pre-established metrics, then as shared here, willing to fail and set up the methodology for thorough hindsight to learn and refine, to then improve on it. One key factor not addressed by Bill is people. For an innovation to be borne out of the intellectual capital of the enterprise and potentially with outside counsel, you need to know who best to include in the brainstorm, innovation planning process to enable true breakthrough ideas and plans to result. A bad combination of personalities will inhibit innovation. Bring together leaders, creative minds and those who have the potential to contribute, but have never been asked and could if given the chance, and innovation at many levels will result. I challenge the case study/risk avoidance feedback shared here. Those who have a passion for success and seek to lead their enterprise to a competitive advantage rely on their instincts and understanding of their consumer/customer to achieve greatness. Sure there are those who manage to the most common practices… Read more »
Adrian Weidmann
BrainTrust

Innovation always threatens the status quo and the status quo is always the safest path forward in an enterprise. In the political landscape of an enterprise, innovation is a great word to eject into strategic conversations, but it is only the brave who are willing to actually try and do anything innovative. Innovation often results in failure and in an enterprise environment, failure is rarely tolerated. Your career, even job is threatened with taking a bold position that may not align with the corporate culture or prevailing power winds. It is safer on a personal level to stay the course. Unfortunately this multiplied across the entire enterprise will result in a downward spiral that is detrimental to the success of the enterprise in this rapidly changing digital revolution. Nothing is moving and changing faster than your customer!

Bill Bittner
Guest
Bill Bittner
5 years 5 days ago
I think a clear objective is the key to driving innovation. This objective often comes from the “vision” of an inspiring leader. The innovation comes from the “followers” who understand the objective, are well trained and equipped with the tools they need, and have the financial foundation to succeed. The big challenge in retail is defining the objective. Especially in today’s world, where shoppers are becoming fragmented between “brick and mortar walk-ins” and “smart phone shoppers,” products are becoming more and more specialized in color, flavor, size, etc., and venues range from mall boutiques to standalone locations it is difficult to set the retail objective. Retail staffing is difficult when you compare salaries and working environments to those in other fields. The chief advantage in retail had been the ability for people with little formal education to climb the corporate ladder, but even the retail corporate suite is fast becoming filled with MBAs. Organic growth of corporate staff through internal training and use of proprietary tools has given way to hiring based on resume and the use of packaged solutions. While establishing a pop-up store for an established retailer has become a no-brainer, introducing a new retailer into a saturated… Read more »
Mike Osorio
Guest
Mike Osorio
5 years 5 days ago

“Innovation” as a concept for most retail organizations is a non-starter. The typical low-risk, low-margin, quarterly results oriented retailer can’t even begin to think innovatively or allow innovation to exist. To thrive, innovators need to be fearless, have executive sponsors, and time and money to fail repeatedly before an innovation results in a positive gain. Fortunately a few retailers have the environment to foster innovation — but sadly, very few.

Ken Lonyai
BrainTrust

These are very good examples of the major hurdles that can derail/stymy innovation. The one we encounter the most is the request for a case study or in other words “I’m too afraid to make a decision. Prove to me that someone else has done it for me.”

The biggest obstacle however, in retailing or anywhere else, is lack of real commitment. Doing something new and untried (innovating) inherently means there’s a risk of failure, no matter how well researched (otherwise, it’s not an innovation). So many businesses talk the talk and use the right language, but then let fear of failure hold them back or compromise project objectives. Real innovation comes from understanding the market, working hard to deliver a worthwhile response to a known or unknown need, and then the willingness to succeed or fail.

Kim Barrington
Guest
Kim Barrington
5 years 5 days ago
For the retail industry, I think it’s actually a case of if it ain’t broke don’t fix it. If a retailer, let’s say Bed, Bath & Beyond is continuing to make money hand over fist, then their model still works. Until disaster hits, they won’t change it much, but they are adding by acquisition, and growing so they’ve figured out a strategy to grow in this environment beyond their core structure, BBB. In the case of J.C. Penney, let’s be frank — they needed something. Johnson did work miracles with Apple, but he underestimated the J.C. Penney market … it’s not Apple. He had 3 choices if you ask me, copy Target, copy Kohl’s or copy Walmart. He chose Walmart. Walmart has even gone back to their promotional ways because when you price things one price, but it’s a higher price (though perhaps lower than their every day when not on sale), the value still isn’t there. The consumer is so price savvy today, they know the difference and they price shop. He underestimated his market. Let’s see what his tweaks will do. Still the need for innovation was and is there in Penney’s case. I think people — which… Read more »
gordon arnold
Guest
These past six years of economic depression have clearly helped dismiss what were believed to be safe business building practices. Unfortunately, the tried and proven methods of winning and gaining in business had never been tested against an evaporating economy. When time allows for reflection, the remaining retailers are wondering how this company ever survived and why that one went away. We are, however, in disaster survival mode and time for speculation is an unaffordable luxury. There are no proven methodologies for a world market tail spinning in economic turmoil that I am aware of. The constant changes in the markets suppliers and sellers makes looking for a rule of best practices an impossible job. Any of the case studies I have seen come into question when the age, ranges and samples are closely scrutinized. Unlike the depression of the 1930s, fuel costs have a stranglehold on transportation which in turn has effected supply and demand issues which now hampers the likelihood of quick wins. What one can conclude from this is simply that the rules that applied 10 years ago are not good tools for the present day movers and shakers. Companies that wish to succeed need to manage… Read more »
Lee Peterson
BrainTrust

Question of the century! From our experience, it’s always two things: expectations and cost, but mostly expectations.

Case Study: We applied an innovative design and process once to a movie theater. It didn’t catch on immediately and was dismantled. The failure did not occur in the innovative design but in the setting of expectations ahead of time. The process in movie theaters has been the same for over 100 years, what are the chances of it working right away? Slim to none. But we didn’t think about that until later, thus its demise.

So, from that and many other “innovation” projects we’ve worked on, it’s expectations that are at issue more than anything else. That and cost, which are related, of course.

Ralph Jacobson
BrainTrust

With more than 250,000 new items introduced globally each year, and more than 70% failing in their first year, I believe one major obstacle is the lack of effective collaboration between the retailer and the CPG and the interpretation of consumer data to determine exactly the products and services desired in the marketplace.

There are plenty of great tools to discover the proper response to the marketplace, and these tools will help overcome the decades old challenge that we now call “Big Data.”

Bill Emerson
Guest
Bill Emerson
5 years 5 days ago

Experience says that the biggest obstacle to innovation in retailing is the top-down control structure that most retailers embrace. True innovation thrives in an environment that:

Encourages experimentation (Google requires associates to spend a portion of their time working on something they, not their boss, thinks has promise).

Is collaborative across organizational boundaries (Apple has representatives from each organization involved in every stage of new product development, from initial design through initial shipping).

Keeps relentlessly aware of innovation outside the four walls of their own company and industry and adapts/adopts new ideas.

These are just a few of the requirements for an innovative culture. How many retailers do you know that personify these qualities?

james christensen
Guest
james christensen
5 years 5 days ago

When ever I think of innovation I think of Henry Ford’s line “If I asked the public what they wanted, they would have asked for a faster horse.” When you apply this, the main obstacle to innovation is defining the real goal, very clearly. Is it effective transportation or a better horse? It may seem obvious to us now but fast forward to today and most of us are trying to innovate “the horse” because that is what we know. Why do we have the horse (so to speak) in the first place?

If you want innovation at every level then the clear goals needs to be set at each level.

So clear, high level goal setting and then brainstorming on those goals would help overcome obstacles to innovation. Remember, innovation requires thinking outside the box but you need to define the box first.

Martin Mehalchin
BrainTrust
Two key obstacles that are as true in retailing as they are in other industries include: 1. Just like consumers in focus groups; executives in typical brainstorming sessions have difficulty visualizing concepts that are different than what they already know. This is why most innovation exercises lead to incremental improvements rather than true innovations. 2. Because truly innovative ideas (disruptive innovation in Christensen’s parlance) often address new or underserved markets, the initial market opportunity can seem too small to be worth bothering with. This is why innovative, new categories are usually driven forward by new entrants rather than established retailers (Lululemon and the yoga apparel market is a good example). Getting past these obstacles requires a shift in culture and management systems for most organizations. To avoid the first obstacle, spend more time out in the world with real customers and in real shopping environments and less time in conference rooms. Think about consumers unmet needs and what opportunities they present; rather than focusing on what will give your business an incremental lift next quarter. Once you’ve developed what you think are innovative ideas you need a process in place to rapidly prototype and test your concepts. Measurement of these… Read more »
Bill Hanifin
BrainTrust

A few comments after reading today’s stream of contributions from our great panel:

1. Gaining executive support for an initiative can be the catalyst to cut through the bureaucracy, overcome politics, and have a legitimate shot at arriving at an innovation solution.

2. Inviting the right people to achieve results through brainstorming and early planning might often include some front line personnel that don’t share titles with the C-suite. Practical insight can avoid execution problems down the road.

3. I appreciate my colleagues here for being open-minded and not punishing me for putting the four elements of planning on the block for discussion. They are strategy and consulting table stakes, but do leave us open to group-thinking.

Last thought for the day: Courage is what’s really required to innovate. If we lose our fear of fellow man and put our best ideas on the table, good things can result.

Barbara Gunter
Guest
Barbara Gunter
5 years 5 days ago

Store level management and associates have an extraordinary amount of work to do to execute their planograms, merchandising and marketing guides, get the sale up and then get it down again on a weekly basis all of which is required for them to keep their jobs they have very little time for innovation. They are even told what to display on their registers. I have seen the only time they can be creative is when items are discontinued or become last chance. I understand the need for consistency among the stores, but it suppresses creativity. I have found that internal contests helps to rebuild creativity and their desire to beat out others. But that has to be sanctioned and recognized by their managers.

Barry Kirk
Guest
Barry Kirk
5 years 4 days ago

I would add two practices that I’ve found particularly helpful in keeping a focus on innovation in my work in the consumer loyalty field:

1. Get your head out of your own company — way too many businesses seem to have a tendency to be very insular and inward looking. That is a recipe for repeating not only your past successes, but failures as well. You should be aggressively scanning the industry for signs of shifts that spark new ideas or opportunities for your brand.

2. Get your head out of your own industry — it’s not enough to just keep an eye on your competition. The real opportunity for innovation is identifying and translating new ideas from other spaces and applying them creatively to your own.

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