‘Retail leaders need new skills to make better decisions about tech’

History tells us that technology hype cycles bring many promises and all too often fail to deliver.

Generative AI could be a recent case in point, but glancing over its shoulder reveals a range of earlier technological twists and turns that still have retail leaders entangled in pursuit of value.

One entanglement that I see today is less about the technology than the people that surround it.

Large retail brands have seized upon Agile and other working principles and practices born out of software development, such as Scrum team collaboration structures and Scaled Agile Frameworks, to extrapolate maximum effectiveness from their digital transformation pursuits.

Having gazed enviously from the window of corporate headquarters at the flexibility and speed to results of their ankle-biting ‘digital native’ competitors, many have gone all in on tribes, squads and two-pizza teams looking for a slice of the action.

The power of rapid ideation and iteration, self-direction, and decentralisation has been validated by the rapid growth of many start-ups, who are now of a size more suited to tapping on incumbents’ shoulders than biting ankles.

Surely these poster children know the ingredients for this organisational construct’s secret sauce?

“What worked well for 150 people is unlikely to be as successful for 1,500 or more. This is now the case for many of the digital innovators from the early 2000s”

Actually, what I’ve seen is that almost all those heralded as leaders of the agile revolution are no longer following their original playbooks. The pendulum has swung as the day-to-day practical requirements of much larger cross-functional, highly matrixed organisations are brought to bear.

What worked well for 150 people is unlikely to be as successful for 1,500 or more. This is now the case for many of the digital innovators from the early 2000s, who are also carrying legacy technology of their own.

Levels of structure and governance have been introduced, and centralised prioritisation and delivery functions now tether portfolios of tech activity together.

We’ve also seen traditional retailers who enthusiastically jumped to the uber-agile end of the spectrum, rolling back from a world of ultimate autonomy (approaching anarchy) to a more comfortable place where greater focus on coordination can restore calm and keep the operational trains running to time and budget.

We know that there remains reticence to embark on major multi-year traditional technology transformations, but if Agile proves too agile and traditional corporate approaches are too stiff, where’s the sweet spot?

“There will always be trade-offs to negotiate between CEO, CFO, and IT, with systems builders’ desires for flexibility grinding against the necessities of corporate structures”

As with many technological challenges, the answer lies somewhere in the middle. I usually see the concept of ‘freedom in a framework’ as the most optimal solution, but it requires a significant investment of time to define the most effective blueprint; one that perhaps anchors back to the original principles of Agile, but with the right level of structure to still maintain momentum.

There will always be trade-offs to negotiate between CEO, CFO, and IT functions, with systems builders’ desires to operate in a more flexible way grinding against the realities – and necessities – of corporate structures.

For example, finance functions in large organisations must undertake structured year-end budgeting, quarterly reviews, audit committee presentations, etc, all of which are much less critical in a start-up scenario.

Then there’s the need to measure value from technology investments beyond purely financial metrics. Value measurement frameworks must intrinsically link the cost of tech investments to the value delivered, with horizons expanded past the capex ROI.

Take AI as an example, powering, say, an inventory management system. Traditional metrics may only measure the upfront costs and immediate returns, failing to capture the broader value, such as improved customer satisfaction, reduced waste, and optimised supply chains.

For this reason, considering one or two methodologies in isolation won’t help you settle on the right solution. How teams work together, governance constructs and company culture also play vital roles. These are all foundational principles around how cross-functional and complex organisations can work harmoniously.

“Upskilling leadership is essential. Chief executives and chief financial officers must build, at minimum, a basic understanding of the methodologies and technologies in play”

Finally, returning to that human element, upskilling leadership is also essential. Chief executives and chief financial officers must build, at minimum, a basic understanding of the methodologies and technologies in play.

This knowledge enables them to scrutinise tech strategies with the same rigour they apply to other business areas – they should be able to make the same informed decisions in technology as those that they make every day regarding stores and merchandise.

Technology promises – and in many cases, delivers – enhanced agility and flexibility. But we mustn’t forget that these are but tools, requiring similar characteristics from the people responsible for them.