Retail Cool: What’s Next?

This article was published in the October 2016 issue of STORES Magazine.

How brands are pushing the boundaries of innovation

Miki Berardelli, the new chairwoman of the NRF Chief Marketing Officer Council and a veteran of Chico’s, Tory Burch and Polo Ralph Lauren, led a discussion of innovation in retail — how brands are pushing the boundaries of what’s next. Joining her for the conversation at August's NRFtech conference in San Diego were Scott Emmons, head of the innovation lab at Neiman Marcus, and Emma Rodgers, monetization product marketing lead for commerce at Facebook.

What follows is a condensed version of their conversation.

Miki Berardelli:

I want to start by allowing our illustrious panelists to introduce themselves and tell you a little bit about what they’re responsible for at their respective companies.

Emma Rodgers:

I lead our commerce product marketing efforts within our modernization team, and so what that means is that we are partnering with engineers and product managers to build experiences to make shopping and product discovery easier for people and for businesses on mobile.

Scott Emmons:

I head their innovation lab, which I founded four years ago.

Berardelli:

A lot of companies are wrestling with how to organize around innovation, or as some call it, research and development. Can you tell us a little about how the Innovation Lab is organized and how it’s evolved? Also, can you share any insights about organizational structure as it relates to supporting innovation?

Emmons:

We started with customer-facing technology, which was something Neiman Marcus didn’t have very much of — point-of-sale terminals were about it for in-store technology. So we decided to go find some interesting technologies that we could put in front of our customers. Senior management liked it, and things took off from there.

Berardelli:

You obviously have a multi-brand competitive set. How much inspiration or information do you draw from direct competitors?

Emmons:

I think all of us watch what our competitors are doing, but I don’t think that’s where our primary inspiration comes from. The disruptive stuff are the things they haven’t thought of yet.

Berardelli:

Absolutely. Emma, can you share your thoughts around innovation and how Facebook tackles it?

Rodgers:

We don’t have a single team devoted to innovation. Instead, innovation is baked into every team that is building core pieces of our app. And when I think about what’s successful in terms of driving innovation and what’s also successful with some of the more disruptive businesses on our platform, there are a couple things that rise to the surface as commonalities.

The first one, from a pure org-structure perspective, is really just breaking down the hierarchy and the matrices and the silos, and I see this also with more disruptive businesses and innovators on our platform. But beyond the org structure, I think there are a number of things that are also really important for us.

One is just putting the right processes in place. Something that’s worked well for us is establishing processes that encourage experimentation with rigorous A/B testing. Another factor is the key performance indicators you put in place. Some of the more innovative brands on our platform have very few (key performance indicators) they’re trying to optimize against. The disrupters tend to be really rigorously focused on one outcome and constantly iterating and testing and optimizing against that particular outcome.

Berardelli:

In today’s marketplace we all run the risk of what appears to be innovation for innovation’s sake. Scott, can you talk a little bit about the process for the business case, if there is one, and then how you measure results, and what is the process from proof of concept to launch?

Emmons:

In the early days we had a bit more freedom to go out and do things just because they were cool. If I come to the table today and say, “Hey, I’ve got this big project and I want funding because this is cool,” the answer is going to be “No, I need some kind of return-on-investment plan.”

Not all these projects are easy to measure that way, and in fact sometimes building the infrastructure required to measure the ROI is more expensive than the project itself would be.

So sometimes part of the innovation process is to get creative on how you can prove this thing will pay for itself. Can I use it for new customer acquisition? Can I use it as a co-op advertising platform? Can I get my vendors to come help buy in and underwrite the cost of doing the project?

Berardelli:

How about Facebook?

Rodgers:

Most of the experimentation we do is rigorous A/B testing, so our engineers don’t need to ask for management’s approval any time that they want to experiment or test something. With that comes flexibility and creativity in moving quickly, but also some risks. And we’ve learned to put some constraints in place.

Berardelli:

With the race to stay ahead, it comes down to talent. Any tips you can share with the audience on interviewing or attracting talent would be great.

Emmons:

I’d have to say first of all that if there was a specific set of questions you could ask to find an innovator, I probably wouldn’t be sitting here today. I got to where I am at Neiman Marcus based on a track record of [being] willing to not accept the status quo and not accept the “This is how we always did it” mentality. I think that’s what you’re looking for, but I also think that it takes a mix of different kinds of personalities and skills.

Rodgers:

I agree. There’s not a set of questions we’ve been able to ask to screen [for] innovative talent, but we do tend to probe on the intrinsics and motivators. To what extent does someone have a proven track record of embracing and driving change? To what extent is someone an owner and a maker? To what extent are they motivated by a rapidly changing environment, and how have they proven that?

Things at Facebook are moving really quickly, and roles are often ambiguous. There’s only a certain type of person who can really thrive in that kind of environment.

Berardelli:

It’s an interesting point to bring up. Being OK with ambiguity is something that I think’s affecting all of us, whether we have worked for companies who have been around a long time or companies that are just getting started, so I think that that’s an industry trend as well.

Rodgers:

Absolutely.

Berardelli:

Could you each share something that’s happening at your companies that falls under the umbrella of innovation?

Emmons:

Sure. We had great success with MemoryMirror, and by that I mean an incredible success. We’re continuing down that path.

Berardelli:

And your solution provider …

Emmons:

That’s Memomi in Palo Alto [Calif.]. Beyond that, I think across our organization, innovation has risen to being a top priority, whether you’re a marketer or a sales associate in the store.

Rodgers:

At Facebook, there are a few areas of innovation that I’m most excited about. The first one is around connectivity. There are a lot of investments we’re making to basically bring affordable Internet connection to more remote parts of the world. Another is artificial intelligence and our efforts to help organize and distill the massive amounts of information online.