While retailers may have work to do to catch up with Amazon on the innovation front, there are common traits I see in successful retail innovators.
Retailers face great pressures on cost and revenue which can impact the ability to fund innovation. Ironically, pressure from innovation driven retailers like Amazon is creating much of the cost and revenue pressure.
Retailers are busy implementing ERP suites to support omni-channel processes - consuming resource that could otherwise be deployed for technology-led innovation. As an example, 40% of retailers recently reported a lack of IT capacity and skills is a key barrier to progressing with Internet of Things initiatives.
So how do they improve things? A pre-requisite is to change perception of IT and technology. This starts with the CEO.
Historically IT has been seen as a supporting function and a cost. That may be changing. Gartner observes: “Leading CEO's don't see technology investments as a burden to be controlled and managed. They view IT platforms as an asset to be developed for the future.”
The NRF suggests that there is a real need to invest in research and development. It also makes sense to take ideas from anywhere, even Amazon itself. But when emulating an Amazon idea it is important to do it better, faster or for a larger customer base.
When it comes to driving innovation however, the careful orchestration of people, process and technology is key to success:
- People. Elimination of boundaries is key. The most successful innovations I have seen appeared when technologists and business people were brought together. Common goals and co-location help, but also collaborating with technology vendors and system integrators can bring additional inspiration.
- Process. A clear methodology tends to aid innovation. Successful innovation programs I have seen were supported by a simple well-understood innovation processes. Failing fast is key – if something is not working, kill it and move on.
- Technology. Smart innovation builds on top of existing technology rather than be constrained by it. Existing technology underneath will change - so avoiding constraints requires an agnostic innovation layer that will scale to retail volumes in the event that the innovation takes off. Reliable vendor support ensures availability of skills and technical support into the future.
One final point is that digital disruptors solve a problem with the customer experience. As Stephen Covey once said: “Begin with the end in mind.”