Analysis: Retail innovators - Turning ideas into reality

Are you an ideas generator? If not, it might be time for a change. Retail has always embraced the new and different but the pace of evolution is stepping up.

Rapidly changing technology and a new economic environment are driving a revolution in the way shoppers think and act. If retailers are not engaging with smartphones, social media and the internet, while linking those developments back to the needs of their customers, they risk becoming dinosaurs.

“In a rapidly commoditising world, you really have to innovate to keep creating value,” says Ian Cheshire, chief executive of B&Q owner Kingfisher.

Mike Shearwood, chief executive of Aurora Fashions, which owns the Oasis and Warehouse brands, says: “Innovation is more important now than ever before because the world is moving on at an ever increasing pace, particularly with the growth of digital commerce.”

Yet many retailers are behind the curve. A quarter of leading retailers surveyed by recruitment firm Korn/Ferry Whitehead Mann in 2010 admitted that their executive teams were lacking the skills to “create the new and different”. Follow up research last year suggested things were no better. Nearly three-quarters of top retailers dedicated no formal budget to innovation and 80% had no dedicated team or leader focusing on new ideas.

That may be because retailers see their entire business as one big system for pumping new ideas onto the high street, but Korn/Ferry also found that only half the retailers it questioned were pro-actively recruiting for and developing innovation skills in their business.

The likes of Apple, Kingfisher, Amazon, Burberry, Asos and Aurora Fashions have all shaken up the retail market with new ideas in recent years. So how can other retailers follow suit?

The first step is to be clear about what you want to achieve, according to Dominic Swords, a professor of business economics at the Henley Business School, who has put together a seven-step plan for generating new ideas, using secrets from the likes of drinks company Diageo, mobile operator Orange and health company Bupa. As a first step, Swords suggests writing a one sentence brief and sending that out to four or five colleagues to get their views.

Encouraging feedback

Despite the 1980s passion for group brainstorming, more recent research suggests that individuals come up with a greater number of ideas on their own. Many retailers use the suggestion box or email route to encourage all employees to come forward, such as Sainsbury’s ‘Tell Justin’ system, which enables Sainsbury’s workers to email suggestions about all aspects of the business that are then seen by chief executive Justin King.

Some companies try to make the process fun. Entrepreneur Sir Eric Peacock, founder of kidswear brand Babygro, installed video camera booths in the office to encourage employees to comment on business ideas.

New technology, such as the Evernote smartphone app, can also help employees keep track of their ideas by recording web pages and photos that can be shared later. Checking out what local and international rivals and retailers in alternative markets are up to is also a good idea. Cheshire says Kingfisher looks to other related industries, such as mobile phone companies, to get a sense of new ideas in the wider business world, which is the sort of trick that can keep retailers ahead of the competition.

Once a list of relevant ideas has been compiled, Swords suggests inviting participants to share their ideas in a group meeting. Inviting along other staff with a different mix of experience, knowledge, personalities and roles in the business helps sift and develop the suggestions. Bringing in someone from outside the business, perhaps with a background relevant to the topic around which you are trying to generate ideas, might also help – if you want to cater to young mums, for example, invite one along. Working directly with suppliers to get an exclusive product or service can also make it harder for rivals to follow suit in the short term.

A diverse group of staff is crucial, Swords says. “A group is more likely than most individuals working on their own to spot links between different markets, technologies or consumer and business trends. As soon as you add an element of diversity you up performance in terms of generating workable ideas.”

He says experience of the market you work in and knowledge of other industries are vital in building a base for new ideas. Staff members with different life experiences and backgrounds may also be important.

Common sense suggests that if you are selling the majority of your goods to women, as most retailers do, it would be wise to ensure they are well represented in any group generating ideas. Another important factor is to include members of the top brass. “Involving senior employees means they are more likely to buy into the ideas and projects that come from it,” Swords says.

The next stage is to engage the group in developing the ideas. Everyone should be given a chance to put forward their best two or three suggestions and then each idea can be worked through to a stage where it could feasibly be handed over for development.

Walt Disney set up a three room system – one in which to come up with the most fantastical ideas possible, a second to re-examine them from a practical standpoint and a third to criticise the new ideas thoroughly.

Swords suggests members of the group put themselves in the role of the target audience to liven up the discussion. Any mediator should keep an eye out for those who stay quiet – if they are studiously making notes they may be about to suggest a major breakthrough.

After a full discussion, each participant should nominate their favourite ideas, and the resulting list can then be ranked in terms of their potential benefit, costs and length of time they might take to realise. The best ones can then be allocated to the teams or individuals who could take them to the next stage. They can be tested with the target audience and a deadline set for review.

Finally, the innovators Swords spoke to suggested that businesses keep an open mind. Ideas that don’t seem right now may just need a tweak or a new perspective to fly.

“Don’t lose any ideas. Keep a log and review it every quarter,” he says. “There needs to be a process where ideas are banked, looked after and carried forward.”

Reality check

Retailers agree that coming up with ideas is not necessarily tough – it is putting them into action that takes most effort. “In the UK we have an ideas culture. The grinding part of innovation is taking an idea and making it work,” John Browett, the former Dixons boss who is now senior vice-president of retail for Apple, told Korn/Ferry.

The majority of business leaders Korn/Ferry spoke to admitted their business was better at producing ideas than getting them into the field.

Kingfisher’s response to that problem was to improve communication between its top 250 managers with an internal social networking system and develop a Dragons’ Den-style process to trial challenging new ideas.

It has also tried quirky tricks to shake up the business like forming a ‘youth board’ of 16 to 18 year olds, who were charged with coming up with constructive ideas for change.

Cheshire says: “We found the ideas were out there but they were maybe not reaching the right people or not getting communicated. Funnelling ideas and testing things is a huge job.”

One of the first ideas to be tested in Kingfisher’s Dragons’ Den process was Streetclub, an online community network that builds on the trend of connecting and engaging customers. Consumers can type in their postcode on the site and connect with neighbours in their area and offer to help with DIY jobs or ask to borrow tools.

B&Q also tried out a hire system under which customers could pay to use a van for a couple of hours to get goods home.

On board

But such ideas will never develop unless they are given a chance by senior management. The process of generating ideas needs to be taken seriously by the chief executive downwards and be seen as a core part of everyday business. Some retailers ensure their board keeps newness in mind by appointing a director with innovation as their remit. Kingfisher appointed Andy Wiggins as innovation director, but others add innovation to an existing director’s slate. At Waitrose, for example, Rupert Thomas, director of marketing and brand development, also has responsibility for ensuring that innovation is constantly on the board’s agenda.

Having the right team in place is also key. Real innovators can be hard to find so Korn/Ferry recommends a programme to identify and develop those with the right skill set within the business. Those with experience and technical knowledge of multichannel operating are in particular high demand and structures should be in place to reward and retain them.

“Innovation efforts need to be tracked and made a clear element of measuring business performance,” Korn/Ferry’s report said.

Senior management’s main role is not to create ideas but to foster a culture where it is seen as good to challenge the status quo and try things.

“If management is always asking ‘what’s new?’ they set a tone that goes from there,” Cheshire says.

Shearwood says Aurora Fashion’s recent burst of new ideas, from 90-minute delivery to accepting mobile PayPal payments in store, has been generated by encouraging everyone in the business to embrace change and evolution.

“Nothing is formalised but we are very clear about our objectives and goals. We create an atmosphere where every member of staff can speak up about any crazy idea they may have and we’ll listen to it,” Shearwood says.

He believes that the process of change is now so fast that retailers can’t operate under the old rules where new ideas might spend six months or a year in development.

“People used to do cost analysis and stats on pay-back before anything launched but we have got to change that as some new ideas may only be around for five months,” Shearwood says.

Accepting there will be some failures and mistakes is all part of moving forward. Waitrose head of brand development and innovation Sam Dickson says: “In order to successfully innovate, we have to take risks, as you can only drive true innovation by pushing the boundaries. ”

Failure is necessary – the only alternative to embracing change and risk is falling behind your customers. That’s something no retailer can afford in these tough times.