Innovation in Retail

How Retailers are changing the way they do business

Edward Chenard

Innovation Leader at Target

Built one of the first Big Data systems in Retail

Built Data Science teams

Built teams that have scaled to over $100MM in 2 years

Twitter: echenard

What is Innovation

“If I had asked people what they wanted,they would have said faster horses.”

- Henry Ford

• Innovation is about arriving at a place we have never been before by doing something we have never done before

• Innovation is about seeing the world through the eyes of your customer

• It is about creating value by challenging the culture and “how we do things”

The Heart of Innovation is RevolutionIt is about changing the world

“Understand this, you’re not competing with another company, you’re really competing for

time and attention.”

Innovation is a series of Evolutions

Data Centric

Silos

Specialist

Linking

Linear

Customer Centric

Collaborative

Big Picture Practitioners

Sharing

Frictionless

From To

Innovation is about arriving at a place we have never been before by doingsomething we have never done before

How to Approach Innovation

Innovation relies on trust and commitment. Reward the Brave

What do Executives want from Innovation?

New products & services for existing cus-tomers

New proudcts & services to expand new customers

New to world products

Cost reductions to existing products & services

Minor changes to existing products & services

0 20 40 60 80 100

Priorities

Priorities

www.competingvalues.com

What Stops Them from Having Innovation?

Lengthy Development Times

Lack of Coordination

Risk-Averse Culture

Limited Customer Insight

Poor Idea Selection

Inadequate Measurement Tools

Dearth of Ideas

Marketing or Communication Failure

0 5 10 15 20 25 30 35

32

28

26

25

21

21

18

18

Barriers to Innovation

Inhibitors to Innovation

Personal Block Problem Solving Blocks

Organizational Blocks

• Conformity • Following familiar

habits• Enthusiasm without

thinking• Lack of Imagination• Self discipline

• Focusing on tools not problems• Lack of discipline• Rigidity• Poorly thought out approaches• Poor language skills

• Forcing group think• Working in isolation• Not enough collaboration

• Policies over solutions

• Too much belief in experts

Innovation is hard, it is never going to get easy. Understand the pitfalls along the path of building great products

For innovation to work, you need to go from idea to scaled product in a way that allows you to reach your customers first with the best value

Relevance

Trust

Scaling

The Four Focus Areas of Innovation

Culture Changing

New Technologies

Partnerships

Learning

Innovation

Conversion

Industrial era management tactics don’t work with innovation

Innovation systems needs to not only be adaptive, but often complex systems that are open

Ideation

Production

Planning

• Crazy should be normal

• Focus on combining ideas to solves problems

• What is the future, know it and plan for it

• Think long term but plan for small steps

• Build to learn• Focus on stability

Being Unique has no value in itself, innovation much create

value for the customer

Goal: Always build with the goal of scaling, without scaling you are just funding someone’s hobby

Scaling

Think Different, Be Different

Getting Started

Defining what you are

doing

Creating a cultural

framework for the team

Information that helps you drive decision

The experience of the customer

Merging data and UX

Data AlgorithmsProcesses UXStrategy

Today, innovation is a blending of many different areas of the business to come up with new ways of engaging customers through repeatable systems

Innovation systems needs to not only be adaptive, but are often complex systems that are open. These are the models that survive, the more closed the model, the less use it will have by customers.

How to Build a Tem

Innovation is a team sport, working in isolation is deadly

“The best way to kill innovation is to let the boss speak first”

New MethodsMerging Many Methods to Gain an Advantage

Innovation doesn’t fit in a single methodology

One Method No Longer Works • Many companies only employ

one method or poorly combine two. New methods require combining many methods to drive out real innovation.

• Often Agile is used as a method for speed but often lacks big vision.

• Design thinking often brings great user experience but lacks speed.

• Product can bring great business strategy but can lack user experience.

UX

Agile

Product Management

Solutionist Approach

Design Fast

Strategic Design

New Model

Doing Product Management the Right Way

Learn from manufacturing product management

One Method No Longer Works • Agile product management

just isn’t enough to get the job done

• Product managers need to be the small business owners of their own products

• Long view with quick movements is the new normal

Product Management

Agile gives you speed

Agile works best in the development space

Agile, a method with its place • Agile helps to keep your

development team moving quickly

• Agile is not a method for strategy or business management

• Agile alone is not innovation

Agile

UX, Where Design and User Experience Bring a Human Touch to Innovation

Numbers alone don’t create innovation

User Experience is the special sauce • User Design (UX) is not design, it is

the action that informs design

• It must be cross functional or else it just becomes “something those design guys do”

• Design think helps the team balance the solutionist approach that often is rampant with technology innovation teams

• People are ruled by emotions, not logic, build with that in mind

Design Thinking (UX)

When people think of innovation teams, they often think of people like these

Most innovation team members look like these

Studies have shown that people over 50 produce more high value products than the under 34 crowd.

Over 45 have better financial understanding

Over 35 have the experience needed to work on multiple work streams at once

Key Players Your Team Needs

Idea Creation Implementation

ChoicesChangeCulture

ActionableScalableRepeatable

ConnectorKeeps the team engaged with other teams

Customer ChampionKeeps the team focused on the customer’s needs

CreatorThe magic maker, creates ideas

RevolutionaryBelieves in change, driven to change the world

TroubleshooterThe problem solver, gets the team through challenges

Enlist Deep and Diverse Domain Experts

Not all Doman Experts work the same:

Brokers: A person or group that connects different clusters together.

Closure: Building trust within a team cluster, the closer you are the stronger the trust.

Betweeners: Critical linking member between other teams that can help the innovation team

How to Sustain it All

Just because it works for Google, doesn’t mean it will work for you

• Algorithms should not replace

strategic judgment.

• Data can give a false sense of

direction and security.

• Big data and data science are

not the same.

Technical Pitfalls Companies Often Fall Into

Building Your Roadmap

Can we win?

Is it worth doing?

Is it real?

Today’s assumptions don’t work for tomorrow’s solutions

One Roadmap is Not enough

Ideas and Strategy RoadmapFocus on ideas and how those ideas will then help the

customer and business. No limits on ideas, use strategy planning to help narrow down which ideas to

follow

Detailed RoadmapResearch, production and scaling roadmap. A roadmap to build these ideas to make them a

working product that can be used by customers

Collaboration RoadmapWho outside of your team do you need to work with. No idea grows in a single team, have a roadmap for

collaboration across the org or ecosystem

Innovation RoadmapHave a roadmap to delivery and scaling

FY 14 Q4Nov- Jan

FY 15 Q1Feb - Apr

FY 15 Q2May - Jul

FY 15 Q3Aug - Oct

FY 15 Q4Nov - Jan

Algorithm and Metric Monitoring

Research

Delivery

Operations

Social Interaction

Batch Recommender

Real-time Recc

Search Data

Revenue Attribution

Pipeline for Rev Display

Store Display

POC

Store Display

POCReal-time recc

based on search terms

Recommendations utilizing social data

Desktop/Mobile/Tablet specific

recommendations

Real-time Inference

Customer Experience Framing

Innovation and Customer Emotional

Engagement

Source: XPLANE and Business Model Generation by Alexander Osterwalder

What do they

THINK & FEEL & FEAR?what really counts

major preoccupations worries & aspirations

What do they

SEE?environment

friendscolleagues

what work offers

What do they

SAY & DO?attitude in public

appearancebehavior towards others

What do they

HEAR?boss

colleaguesinfluencers

friends

PAINfears | frustrations | obstacles

GAINwants/needs | measures of success | obstacles

How can you reinvent the customer’s experience?

Connect the dots across multiple touch points

Think of the memories you want to evoke, then design for those memories

NOT what messages to communicate or what media should carry them

Remember, innovation is about the customer, not the technology

Thank You