Castro, who worked on Sears and Kmart’s online initiatives and led the creation of Big Lots’ digital business from the ground up, and Ward, CEO of online used bookstore ThriftBooks, offered a tutorial at the Shop.org Retailers’ Digital Summit on how to navigate the whirlwind of innovation.
The CliffsNotes version of their talk, “How to Thrive in an Era of Constant Change”: Innovation is messy. It’s scary, sometimes unpopular, difficult, uncomfortable and, many times, a flop. So dig in and shake it off.
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“There will be failure in innovation,” Castro told 80 or so e-commerce professionals on the closing day of the summit. “Failure is your friend. Failure is a natural part of the innovation process. So embrace that and get comfortable with it.”
I’ve often written about how retail needs to adopt a Silicon Valley startup mentality. In fact, the notion is often preached from stages like those at Shop.org. But admittedly, I’ve been a little thin on just how you go about getting in touch with your inner-startup.
Broad guidance on tackling innovation
Castro and Ward filled in some of the blanks, not in a paint-by-numbers way, but by offering some broad guidance on how to go about turning your organization upside down — or at least turning part of your organization upside down.
Ward used the example of overhauling ThriftBooks’ automated repricing engine, the machine that adjusts used book prices depending on market conditions. The engine was data-driven, but unable to understand that all books are not created equal. In the eyes of consumers, some are simply more valuable than others.
Here are some of the steps the ThirftBooks crew took in tackling the building of an innovative new engine, according to Ward:
- Identify and evangelize a mission: Not hard to identify here, Ward said. ThriftBooks simply had to fix the way it was setting prices if it wanted to keep keeping on. As important was making sure everyone understood what the mission was and why it deserved mission status.
- Assemble a small and nimble team and give it authority and autonomy.
- Tolerate failure. Ward said he was down with the cliches fail fast, fail well, fail small etc. He also said it’s important to set deadlines and determine a point at which it’s time to recognize the idea was a bust.
- Communicate clearly. Set specific guidelines, including those deadlines. Can the team be expanded? Extended? Under what circumstances? For instance, you might set two-week cycles. Innovate for two weeks. Then meet and assess progress. Agree that you’ll work through two cycles. If there is sufficient progress, go for two more. Repeat.
How’d that work out for ThriftBooks? Ward says the team’s goal was to accurately price every book, every day.
“We surpassed that goal,” he said.
Indeed. ThriftBooks once took days to reprice its entire inventory. Today, he said, it’s done in 15 minutes and involves 7 million items. He said ThriftBook conducts “tens of millions” of price changes every day.
Oscar Castro’s take on innovation
Castro, who now invests in digital retail startups, had his own pointers, dealing primarily with the run-up to taking on an innovation project. Here, then, are his five secrets to success when it comes to thriving amid constant change:
- Understand there are different types of innovation. There is incremental innovation — tweaking a product or service you’re already offering. Think of Heinz turning the ketchup bottle upside down for easy pouring. Then there is disruptive innovation — creating a new industry or an entirely new way of doing something. Think of Uber. Get comfortable with the degree of innovation that you’re willing to take on.
- Be honest. Innovation is a very popular. It’s a buzzword. Everyone wants to be in it, but not everyone is ready to be in it. Make sure your organization is prepared and willing to innovate.
- Plan your portfolio. Know how you are going to allocate your resources to make sure you have what you need. In other words, and in particular, know how much budget can be freed up to try something new.
- Establish a culture that supports innovation. Think about things differently. In corporate America, “failure” is a bad word. In innovation, it’s a natural part of the evolution process. Understand that.
- Prepare to manage differently. You can’t take the way you’ve always done things and apply that way to a new innovation venture.
And so, no. Neither Ward nor Castro have a magic wand, a silver bullet, a slam-dunk solution or whatever else it is everyone is looking for. Innovation is hard work. But it can be incredibly rewarding and — if approached properly — incredibly profitable, as well.
Photo by Mike Cassidy.
Mike Cassidy is BloomReach’s storyteller. Contact him at email@example.com; or follow him on Twitter at @mikecassidy.