Monday, April 24, 2017

Imposing Innovation or Exposing it

Sorry I've been a bit lax about keeping up the blog posts.  Between an open innovation webinar, a planned trip to Dubai to speak on innovation and a very successful innovation conference, (not to mention some customer work) I've been a bit busy lately.  But it was something I saw at our conference, and something I read today about Target that prompted this blog post.  Because I'm becoming convinced that you can't impose innovation from the top, it only gets exposed through internal cultural beliefs.

Lowe's at the Conference

We were fortunate to have a team from Lowe's (home improvement not grocery) speak at our conference.  This was the second year that a team from Lowe's provided us with insights on the opportunities and challenges of doing innovation in a large, distributed retail environment.  I liked the fact that the Lowe's team talked a lot about customer experience, starting their innovation activities with the customer's needs and jobs in mind, and framing everything based on experience.  In the discussion and Q&A afterwards, it became clear that a lot of Lowe's focus on innovation is cultural, embedded in the culture.  In fact one of our employees who worked at Lowe's while in college mentioned the discussion and how true it was for him - that Lowe's culture hadn't changed in 20 years and that it empowered people and encouraged them to make change and to innovate.

Retail at the crossroads

There's a lot to think about in the retail space, as news stories remind us that we have far more retail space than we need, and even ground-breaking shopping destinations like the leading malls are going underwater as people turn to online shopping.  Destination malls are suffering, and even retail strip centers are experiencing a drop-off in foot traffic.  Look at any strip center near a residential area and you'll see what was once a collection of shops, retail, clothing, food and hardware is now a collection of services businesses (dry cleaning and doc in a box) and restaurants.  Gone are the corner drug store, the corner hardware store, the small clothing boutique.  Whether we are talking about large malls or smaller shopping centers, retail is changing rapidly, thanks to Amazon, Wal-Mart and others.

What happens to Target?

Target, which was once one of the most interesting and unique large department stores, seems caught in a cross-fire.  It was able, years ago, to compete with Wal-Mart because it had better design and more interesting store brands.  It didn't necessarily compete on price but on value and style.  Those days are over.  Further, Target and other big box stores are feeling the squeeze as people are really busy and don't want to drive all over town, when they can order good like dish washing soap and have it delivered.  If you can't compete on quality and design, and certainly can't compete on price (versus Amazon and Wal-Mart) and people don't want the hassle of driving to your stores, what's left?

Target just announced today that its senior innovation leader is leaving so that Target can focus on "core business".  Mark today (April 24, 2017) on your calendar.  This could be the beginning of the end for Target.  It must either 1) improve its product lines and product value (innovation, but they are moving away from that) or 2) get closer to customers (who have already made it clear that they are happy online and don't want to visit stores) or 3) cut costs.  How do you cut costs and compete with Amazon and Wal-Mart?  Target is making a big mistake - it should be moving up market, creating new versions of stores and innovating its in-house brands, bringing value and style back.  Instead we're likely to get a Wal-Mart copy cat and/or a Amazon copy cat online from Target. 

Target is removing its innovation capability and focus at the moment it needs it most.  In many companies, innovation is what CEOs reach for when everything else has failed.  In Target's case, either the existing innovation wasn't working, or the CEO didn't see value in the outcomes, but in either case the CEO is working against industry and societal norms.  You can win as a brick and mortar store, but you've got to innovate in order to do so.

Lowe's and Target

Strange that two companies that actually compete in some segments see the world so differently.  Both are "big box" stores that typically stand apart, aren't in a mall but may be in a strip center.  Both are destination locations.  Both have significant and comparable competitors (Wal-Mart/Kohl's/etc) and Home Depot.  Both are taking radically different approaches.  Target lost its way years ago when it shifted its focus away from differentiated products, and the removal of the innovation officer only confirms this.  Lowe's is doubling down on innovation, with a focus on customer experience.  I think Lowe's is tapping into a core cultural phenomenon, while Target was finishing trying to impose innovation from the top.  While I'm not a Wall Street analyst, I have to believe that the investment by Lowe's in innovation will provide value, while Target will founder.
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posted by Jeffrey Phillips at 2:18 PM 0 comments

Tuesday, April 04, 2017

Innovation Evolution

I was asked recently to speak about innovation in a webinar and at a live conference.  These requests left me in a somewhat reflective mood.  When I'm asked to speak I want to provide the audience with valuable, useful insight, and that often requires ensuring a shared foundation before taking the audience where I think innovation is likely headed.  In my thinking for these two programs, I've developed a five step evolution for innovation in most organizations.

With tongue firmly planted in cheek I'll relate these evolutionary steps to famous Hollywood productions.  Perhaps you'll recognize your organization in one of these phases.  I'd love to hear about other innovation evolutionary phases that you've been through.


Lone Ranger

The "Lone Ranger" stage is one that many companies must pass through - in fact most startups and entrepreneurial firms are founded by Lone Rangers. These are people, like Steve Jobs, who have amazingly clear insight into what customers want or need and create products that meet the needs that established companies miss.  Lone Rangers work especially well in startups or entrepreneurial organizations, and strangely enough are often found in larger corporations.

The challenge for a Lone Range in a larger corporation is that they are often swimming against the tide.  Acting as a Lone Range in a large organization is exceptionally difficult, because unless or until the culture and prevailing processes bend to your will (or you bend to their will) it is difficult to get anything done.  Occasionally a Lone Ranger will succeed in a large organization, or an executive will appoint and sponsor a Lone Ranger when the executive desperately needs a new, innovative product or service.  But Lone Rangers, by their very nature, are lonely, often isolated and unappreciated.

Twelve Angry Men (or women, or both)

The next iteration of innovation in larger corporations is the stage I like to call Twelve Angry Men (taken from the excellent play and movie of the same name).  If you aren't familiar with the movie, it's about a jury brought together to decide the fate of a criminal.  The vast majority of the people on the jury don't want to be there, were coerced into serving and want to resolve the case as quickly as possible.  Only the daring of one juror causes the jury to stop and carefully consider the evidence, eventually leading to acquittal.  In the same way that the jury is brought together, innovation teams are often brought together, but with little preparation, few shared values or common goals and the desire to do the work as quickly as possible.  While collaborative innovation is currently all the rage, collaborative innovation based on teams that don't want to be there, who don't share common values and don't have experience, who simply want to do the work as quickly as possible and go home, doesn't lead to better outcomes.

The Martian

The next iteration or evolution of innovation in a corporation is similar to the book and movie The Martian.  For those not familiar with the Martian, astronauts from several different countries set down on Mars and establish a base.  After gathering scientific information, many of them leave quickly when a storm blows over their base, eventually stranding one of their own accidentally.  The "Martian" as he is called manages to thrive in hostile conditions and is eventually rescued.

The Martian represents the next phase of innovation evolution because placing a base on Mars and sending astronauts all that way represents a significant investment.  It has to be a conscious strategic investment to send people all that way, and in the same manner innovation becomes a conscious, strategic focus.  However, when trouble erupts (like a bad financial quarter or the failure of one new product or idea) the management team pulls the plug, not recognizing that through all of the work innovation has actually taken root.  While many of the innovators go back to their day jobs, some resilient souls remain behind and actually produce good ideas.  These are finally recognized and everyone acts and believes as if this was the strategy all along.

Ocean's Eleven

A parallel track to the Martian can emerge when executives are interested in the outcomes of innovation but not the investment or the publicity.  Ocean's Eleven is a movie about a gang of confidence men and thieves who plot to rob a casino. They do so by publicly fumbling around while at the same time smuggling a thief into the vault and then rushing in as firemen to save the day.

There are plenty of innovation activities that resemble Ocean's Eleven, where much of the work is kept under wraps, using sleight of hand to find resources and funds, and often even the outcome is difficult to celebrate because it was done under cover. 

Independence Day

What we innovators hope for is that innovation will be embraced in the same way that the people of Earth respond to alien invasion in Independence Day.  In the movie, aliens come and attack the Earth, and the people of Earth seem to have little chance to fight off the invasion.  Through insight, pluck, daring and sharing information, they manage to fight off the aliens.  This happens as everyone gets on the same page - they have no choice but to all share the same beliefs and values, to do what has to be done.

While desperation isn't the best driver for innovation success, getting the majority if not the entirety of your organization on board, focused on a common innovation goal is what is going to make your organization more successful and help it win in the innovation wars.

Conclusion

As innovation demand increase, the Lone Ranger model is too isolated, too hit or miss to produce innovation at the pace and size you need.  Twelve Angry Men take too long to coalesce and in some cases may not coalesce at all.  The Martian is a moon shot, and while you need these you need a range of innovation investments and types, and the courage to stick with it in the face of a storm.  The Ocean's Eleven approach is a stop gap, but you can't build on it or expect people to be comfortable doing the work under wraps.  It's only when you have a common purpose and recognize innovation as a tool for survival and eventually thriving that you can successfully innovate.

Which stage of the evolution are you in?  What would it take to get to the next and hopefully more valuable stage? What will it take to get everyone in your company bought in at the level of the characters in Independence Day?
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posted by Jeffrey Phillips at 6:46 AM 0 comments