FEATURE
PHILIPPINE RETAILING
Marketing or Technology:
Who Owns Innovation
in Retail?
By: Nikki Baird, Aptos
If there is one word on most retail
executives’ minds lately, it’s the “I” word:
innovation. Whether it’s a vertically
integrated luxury brand or a fast-turning
convenience store, retailers are feeling the
pressure to be more innovative.
There are two executives who seem to be
tasked with this mandate more so than others:
the CMO and the CIO. In healthy
organizations, these two people theoretically
work well together, side by side and aligned to
the same goals and objectives. With demand
now coming from boards and CEOs that their
company needs to be more innovative and
digital, either or both the CMO and the CIO
are thrust into the spotlight. In fact, many
retailers are unleashing the creativity of their
teams across the enterprise, increasingly
authorizing projects to experiment around
customer engagement and more digital ways
of doing business.
One unfortunate downside to this is a dilution
of resources. When everyone is “doing
innovation,” the end result is spreading
resources far and wide – but not deep – and
doing so without building core innovation
capabilities.
Part of the problem here is that retail has never
needed an innovation “capability” before.
Even product-driven brands have not had to
focus on things like technology research and
development, despite technology creeping
into every aspect of our lives – from wearables
to automated service delivery – and directly
impacting product design. Retail has too long
depended on positioning around “having the
best selection of brands” – you don’t need
foundational research and development in that
model, you just need to be really, really
efficient at what you do. The internet has
killed that “selection” model. Retailers either
have ALL of the brands – as Lazada tries to be
– or they have to offer unique brands or
products, because curation alone is not
enough to be differentiating. Another
selection of brands in the same category is but
a tab away online.
So when retailers start looking to “be more
innovative,” one of the first challenges they
face is in raw research and development and
determining whether they are willing to make
that kind of investment – and if they are,
deciding who should own that.
Big, mega-tier-one retailers are investing in
Labs, and staffing those labs heavy on the
technology side. But they are creating those
labs far outside the enterprise, sometimes in
cities far away from the corporate
headquarters. And the people who go into
those labs don’t have the experience or the
training to truly relate what they’re doing back
to retail – the industry that ultimately should
benefit from the work the lab is doing.
To answer the question of who should own
innovation, you have to first answer the
question of what kind of innovation is needed.
For retail, there are really only two kinds:
process innovation, which gets to the CMO’s
mandate to come up with new ways to engage
with customers, and technology innovation,
which gets to what the CIO is being asked to
do.
Part of the whole point of digital
transformation is that technology is changing
what process can do. Which means that even if
a CMO wants to come up with a crazy idea for
how to engage customers, technology has to
go along with it in order to enable the process.
That means the CIO should ultimately own
innovation in the retail enterprise – because,
ultimately, we’re talking about using
technology to enable new ways of executing
existing processes or creating new processes
altogether. If retailers continue to rely heavily
on labs that are highly external to the
organization – assuming they can afford one to
begin with – then their innovations will
continue to be challenged by what it takes to
actually bring a cool, new innovation back into
the enterprise.
Ultimately, it’s technology that’s going to
make the new innovation possible – and
certainly it is going to be information systems
that will be responsible for capturing and
using the data that any new process creates. So
while the CMO might have the organization
that is tasked with coming up with new ways of
doing things, it’s going to be the CIO who is
going to have to find a way to make those new
ways possible – in a sustainable way.
Which means the CIO should be the owner of
innovation in the retail enterprise – at least, if
retailers are serious about digital
transformation.
About the Author
Nikki Baird is the vice president
of Retail Innovation at Aptos, a
retail enterprise solution provider.
She is charged with accelerating
retailers’ ability to innovate. She
has been a top global retail
industry influencer for over a
decade, with a background in
retail and technology. To learn
more, visit www.aptos.com.