Why retailers need to embrace a culture of innovation

Why retailers need to embrace a culture of innovation

Retail has never been easy, but it used to be a whole lot simpler. While consumers have always been demanding--and it’s hard to remember a time when competition wasn’t intense and constantly evolving—once the age of digital disruption began to emerge some 20 years ago, almost everything has changed, upending the fundamental basis for competition.

Moreover, what counted as solid and sufficient innovation at many companies was often, to paraphrase Henry Ford, more “faster horse” than a truly new and innovative way of delivering meaningful customer value. A relatively small portfolio of new initiatives combined with a comparatively slow and steady approach was often adequate to keep pace. Today, that is wholly inadequate.

The modern retail era now demands that we take a more radical approach to our innovation efforts. This means truly embracing a culture of innovation and keeping a few things front and center in our transformation efforts.

Choose remarkable. Even very good is simply not good enough anymore—a concept that is central to the primary argument of my best-selling book Remarkable Retail: How to Win & Keep Customers in the Age of Disruption. To be merely very good doesn’t make the sale or engender loyalty. In an era where consumers have nearly infinite choices and 24/7 access to products from just about anywhere in the world, to be anything less than remarkable is often to be ignored. And to be regularly ignored is the first step on the journey to irrelevance or, far worse, extinction.

Let go of the past. Digital disruption has unleashed myriad and profound seismic shifts which dramatically expand choice, how we gather information, how products are ordered, fulfilled, and paid for, and on and on. Entirely new business models have been made possible by leveraging technology that scarcely existed a decade ago. What brought us success in the past is not very likely to be what we need to thrive in the future.

Move at the speed of disruption. Yes, shift happens, but it’s also happening faster and faster all the time. Increasingly, the pace of change looks more exponential than linear, making it far easier for retailers to fall behind and much harder for those engaged in timid transformation to catch up. The retailers failing to keep up with the speed of disruption are either gone or struggling mightily.

Fail better. As Seth Godin reminds us; “If failure is not an option, then neither is success.” Embracing a culture of experimentation requires us to try more things and take more risk. And it’s not about avoiding failure, it’s about failing better. That means seeing experiments, pilots and proofs of concept as being about learning, not keeping score. It’s about knowing when to cut your losses, when to step on the gas, and when to glean the nuggets of value and repurpose them into something with greater promise.

Safe is risky. At the heart of building a culture of experimentation is accepting that the only way to bridge the innovation gap that likely exists at your company is to accept that the riskiest thing to do is to defend the status quo and take little or no risk at all. Fortune favors the bold.

Learning to surf

We live in a “VUCA” World. VUCA is an acronym that characterizes the reality of the circumstances in which we must navigate. VUCA stands for Volatile, Uncertain, Complex and Ambiguous. And we can probably all agree that the pandemic made the truth of this even more apparent. It’s never been more important to gain clarity of vision, intensify our customer focus, and do the hard, uncomfortable work to figure out where consumers are headed. This includes assessing where and how technology can disrupt the playfield and taking the plunge into the unknown.

It's also critical to realize that it’s increasingly harder to know what the future looks like. And that calls for building agility into our business model. To paraphrase Jon Kabat-Zinn: “The waves are going to keep coming. We’re going to have to learn how to surf.”

For many organizations, embracing and building a culture of experimentation is not easy. It often involves a new mindset, a much higher tolerance for risk, bringing in new talent, and completely new processes, disciplines, and metrics.

Yet the track record of the past 20 years is quite clear. The organizations that took a more radical approach to innovation—by aiming higher in the value they deliver to customers, by moving faster, by eschewing the status quo, and so on—are, on average, the ones that have seen enormous success. The ones that moved more slowly and iterated to a place that merely represents a slightly better version of mediocre are gone or are in increasingly deep trouble.

Eric Shinseki boils it all down nicely: “If you don’t like change, you are going to like irrelevance even less.”

Does your business live and breathe innovation? If you want to learn more about how to empower your organization with an innovation ecosystem that continually evolves and improves, visit the Honeywell website here.

Steve Dennis

Steve helps organizations understand and respond to retail disruption by creating customer-centric, memorable and profitable growth strategies.