5 big questions on innovation

I really don't know whether we are changing the game or the game is changing us. Success in business, today, is all about the optimal intersection of the physical and digitals worlds, and the interaction between humans and intelligent machines.

If you really think about the retail industry, so many innovations have compelled companies to start to think different, to act different, and to plan for potentially different outcomes. Within workforce management, for example, the industry is going through tremendous shifts due to the expansion in internet selling coupled with rapidly changing demographics and regulations. Thus, brick and mortar stores are under a different type of pressure. And it is said that necessity is the mother of all inventions, so many organizations find the dynamics of the environment and the accelerated speed by which innovation is happening a threat and an opportunity leading to new strategies and innovations.

I’m of the opinion that societies change slowly, and despite so many years in e-commerce rapid growth, e-commerce is still a fraction of the total retail and service industries. So, it is going to continue to be a combination of digital and physical for the retail industry. Many organizations are utilizing data - predictive modeling, advanced algorithms - to better forecast work in the stores. And once work is forecasted and measured, then it becomes easier to schedule people to be at the right places and times - either when the truck is coming to the store to deliver products, or when customers are coming to the stores to receive a service.

You need optimizing software to help deliver efficiency. But no one platform is going to be the only and the ultimate solution. I think what's so clear, at least in my mind, is that the future is a blend of the digital and physical capabilities.

Based on my academic and my industry knowledge, I can tell you that customers want to shop anytime and anywhere. Leading retailers, including Bed-Bath, want to serve customers wherever, whenever, and however they wish to be served.  Leading retailers want to be there for customers when they want to shop, the way they want to shop, and the way they want to complete the transaction, whether it is “ship it to my home” or “let me pick it from the store”, or a combination of both.

What's exciting about the current technology is how friendly it is to everyone involved. For example, 10 years ago you had to go to the store to see your schedule as an employee. And the manager of the store ultimately decided who worked when. There was little freedom or flexibility. Today, technology allows you to see your schedule on your phone, and even to opt for available shifts. Employees can swap shifts with their coworkers if they need to, without disrupting operations. This is a significant win-win change.

The technology is not only allowing organizations to respond better to customer needs, but also to employee's needs and situations. It's becoming more participatory versus top-down. And it is proven in research and in practice that happy employees create an environment of happiness for the customers. Efficient workforce management is beneficial to customers, and to the business. That's why companies invest in them.

In terms of benefiting from customer insights, today, you can measure and map customers’ movement in the stores from the entry point to the exit point through sensors. Based on data, you would know exactly, or on average, know how long the customers will be shopping in your store. Eventually, you would know when they're going to get to the register. Ultimately, you will be able to know the number of employees that need to be at the front end to help the customers exit the building and pay for the merchandise. So, it is not just long-term predictive modeling, but on-time, live, as you go, so that there will be totally no long lines up front for customers who choose to interact with an employee, and managers would be able to respond faster to customers’ needs. 

I’m very familiar with two industries: the retail industry and the academic industry. Luckily, both industries have adopted and encouraged innovation, perhaps because of the competitive nature of the retail industry, and the critical thinking nature of academia.

Fear of failure and siloes are often common challenges.  Financial obstacles and opportunities are both drivers and blockers of embracing innovation. You might go after an innovation because it's financially rewarding, but then you may not embrace it fully because it's financially burdening on the short term.

Some are short-sighted; they might think about the quarterly results, and not necessarily look at the long term. The other fascinating aspect is the speed of innovations. Some companies are hesitant to embrace innovation because today's innovative solutions may become obsolete quickly, which add burdens on the organization; especially from a change management perspective.  However, perhaps the biggest impediment lies is the culture of the organization; organizational culture is the make or break for innovation. 

The retail industry was among the first industries to benefit from (disruptive) innovation. Take Walmart for example, it started with Sam Walton’s innovative ideas about the nature of the retail store - the role of transportation and logistics, and the mindset of trying new things. Walmart optimized innovation by supporting its people to become owners of the business and by techniques such as profit sharing and career planning. You see, employees are called associates, and associates call Walmart stores “my store”. A culture that's built on the idea that the employee is the owner of the business unit, not the keeper of the business unit, is positioned to benefit from the unlimited creativity of people.

Another example from Walmart: They have a practice called VPI, or Value Producing Items, where employees compete and have fun adopting and promoting specific items. Employees get recognized on results. All this infuse tremendous amounts of energy, engagement, pride, and innovation into organizational culture.

The Internet of things, robots, artificial intelligence, brick and mortar store closure, regulations, and the entry of new organizations to the marketplace. For example, the entry of Lidl from Europe to USA.

Lidl already has 10,000 stores in Europe, and they’re coming to the United States like Aldi did, and Aldi already has 1,600 stores in the US, and by some reports, in the 2018, they may have another 400 stores, reaching 2,000 stores. That's almost half the size of Walmart! Granted, the stores are smaller, but they are everyday low-price, because of their competitive pricing and their business model Walmart has to respond, and they are. Walmart recently announced drops in the price, and  Target - a couple of days ago - announced a significant investment in price. So that entry of new organizations, and new regulations will significantly impact the retail industry.

From my perspective, one of the innovative strategies that I find very compelling is the idea of underground delivery of freight, supported by drones and self-driven cars and robots. The idea of moving freight underground by a magnetic field that's created by electrified coils, when complemented by drones and self-driven cars seems fascinating and disruptive. Research is happening, especially in the UK, around the concept of underground fright delivery. Why not, water and electricity are delivered to homes underground; why not packages! Imagine that!