Philippine Retailing 2019 Philippine Retailing 2019 Q4_Digital - Page 13

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.