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DEPARTMENT STORE
INNOVATION LABS:
A DEEP DIVE
1
2
Executive Summary
This research analyzes the innovation labs of 7
popular department stores in North America,
as well as the lab from Westfield Labs. The goal
is to learn and identify strategies that build a
successful lab venture.
Three years ago department stores embarked
on an ‘innovation race’, with 7 of the top 10
department stores by revenue establishing a
lab between 2012 and 2013.
After reading through media reports, press
reports and the personal profiles of innovation
lab team members and leaders, we came up
with several key findings.
1. Five of the eight innovation lab champions
come from a software engineering
background.
2. Labs have different degrees of focus in four
different areas: branding, technology, design
and culture.
3. Combining technology capability with design
thinking is crucial to success and innovation.
4. Success is measured by both organizational
change (culture impact) and improvement to the
customer experience (shopper impact).
Based on these key findings, we devised four
key suggestions to maximize innovation lab
success:
1.  Run a holistic and balanced strategy that
focuses on all four areas; technology, design,
culture and branding.
2. Put technology at the core. Solid technology
capability ensures that ideas come to fruition.
3. Get closer to customers. By involving
customers in the innovation process, brands go
beyond gimmicks and build products based on
actual market needs.
4. Maximize impact both internally and
externally. Labs provide an opportunity to
affect significant change in both organizational
culture and brand perception.
Outline
3
 Landscape
 Learnings
 Suggestions
4
LANDSCAPE
Research targets
5
LANDSCAPE
This research focuses on 7
popular North American
department stores, as well
as Westfield Labs.
28.0B*
* 2014 US retail sales
19.0B 14.5B 19.3B
12.1B
4.8B 4.1B Not Released
Outcome summary
6
LANDSCAPE
Company Focus Location Employee Start Year Noted Achievement
Macy’s Tech / Culture San Francisco 2,000* 2012 Image Search
Kohl’s Tech / Culture
Silicon Valley /
Milwaukee
250 / 1500 2013 / 2015 Re-platform of kohls.com
Sears Holdings Tech / Design Chicago 30 2012 Connected Shop Solution
Nordstrom Design / Branding Seattle 20 (est.) 2011 (merged to another department in 2015)
J.C. Penney Co. Design New York 20 (est.) 2012 (possibly dismissed in 2014)
Neiman Marcus Tech / Culture Irving 20 (est.) 2012 Memory Mirror
Belk Branding (not permanent) 10 (est.) 2013 (dismissed in Jan 2015)
Westfield Design / Tech / Branding San Francisco 55 2012 Bespoke store concept
* Included employees
Timeline
7
LANDSCAPE
2011 2012 2013 2014 2015
June, 2012
June, 2012
September, 2012
April, 2013
June, 2015
New innovation
center
Early 2015
Merged with
Customer
Experience Center
November, 2012
2012
2013 (est.)
2013 (est.)
Macy’s
8
LANDSCAPE
Macy's Lab was founded by Yasir Anwar in
September 2012 in San Francisco. Before leading
the innovation efforts of macys.com &
bloomingdales.com, he was the Director of
Engineering at Walmartlabs from 2010 to 2012.
Macy’s is working to embrace disruptive innovation
and the lab is leading the cultural change. It is an
extension of Macys’ core engineering group, and
has involved more than 2,000 employees since
2012.
The lab has established a complete pipeline of
delivering qualified ideas for customers using a
Lean approach. The lab has been directly
responsible for a number of Macy’s initiatives such
as Image Search and E-gifting.
Employees are presented with a
new challenge
Employees submit
idea
Employees market for
peer votes
3 days to pitch to the
Idea Lab team
The lab team helps
with prototype
Presented to president an
CEO of macys.com
http://developer.macys.com/App_Gallery_Sample_apps
https://angel.co/david-shapiro-4
https://www.linkedin.com/pub/yasir-anwar/4/110/aa4
http://www.mr-mag.com/macys-inc-announces-omni-innovations/
The Macy’s Image Search technology is an iPhone app that was developed
at macys.com’s San Francisco-based Idea Lab. Consumers take photos of
apparel they see anywhere and the app finds similar items for purchase
online at macys.com.
Final decision
Kohl’s
9
LANDSCAPE
Kohl’s expanded its IT capability into innovation in
Milpitas, California with the opening of Kohls’ Digital
Center in 2015
The center houses 250 employees and is an extension
of the IT team at the Menomonee Falls corporate
headquarters. It’s a centralized location that enables
technology and innovation teams to work
collaboratively, supercharging Kohls’ capability to
innovate and develop innovative services to customers.
The Silicon Valley location allows Kohl’s to attract top
digital talent.
The innovators in the center work with Oracle to
customize the Oracle Commerce solution that powers
Kohls’ e-commerce engine; they are also heavily
involved in the re-platform of kohls.com, playing a key
role in Kohls’ mobile strategy, e.g.the Yes2You loyalty
program.
http://risnews.edgl.com/retail-news/Constructing-Greatness--Kohl-s-Plan-to-be-America-s-Most-Engaging-Retailer100411
http://www.mortenson.com/milwaukee/projects/kohls-innovation-center
http://kohlscareers.com/our-jobs/corporate/information-technology/
http://fox6now.com/2015/06/15/brand-new-kohls-innovation-center-home-to-1500-employees-we-get-so-much-more-done/
Continuing their journey from innovation into
technology, Kohl’s opened the brand new 366,000-
square-foot Innovation Center in Menomonee Falls in
June 2015. The center belongs to the company’s
Information Technology group, and is home to 1,500
Kohl’s IT Associates working in technology.
The center is designed to encourage collaboration, just
a 10-minute walk from Kohl’s corporate headquarters.
It’s part of Kohl’s investment of over $100 million into
the improvement of their corporate campus since
2014.
It’s just so much easier to find people and
work together quickly.
Janet Schalk, executive VP and CIO
Kohls’ new innovation center in Menomonee Falls
opened in June 2015
Sear’s Holdings
10
LANDSCAPE
http://www.chicagobusiness.com/article/20130713/ISSUE01/307139978/can-this-woman-save-sears
http://www.searslabs.com/#aboutus
Sears’ innovation lab, known as “Integrated Retail Labs (iRLabs)” was
established in 2012 by Leena Munjal (now Senior VP of Customer
Experience and Integrated Retail). iRLabs is located at Sears' Chicago
headquarters and runs as a startup, with open workspaces and a cadre of
about 30 casually dressed young employees.
The iRLabs is Sears’ in-house innovation team focusing on creating a “wow”
customer experience. It has holistic capabilities including business strategy,
design, UX, copywriting, project management, development, and testing.
The lab is trying to figure out the secret to “omnichannel” shopping. This
mission is also the 129-year-old company’s focus since 2010.
The lab is the creator of Sears’ Connected Solution shop, a 4,000 square-
foot Flagship experience center at the Sears store in San Bruno, California.
It also created Shop Your Way, a modern e-commerce web site and mobile
coupon service.
Shop Your Way, Sears’
popular e-commerce
and mobile coupon
service
Sear's Connected
Solution flagshipshop in
San Bruno
Nordstrom
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LANDSCAPE
In 2012, JB Brown established Nordstrom’s Innovation
Lab, gathering a small team of innovators to explore
new ways to engage with customers. It brought an agile
business mindset with a heart of entrepreneurship to a
113-year old company.
It was housed inside of the company’s broader
technology organization. With a team of techies,
designers, entrepreneurs, statisticians, researchers, and
artists, the lab tested ideas at speed by prototyping,
quickly implementing them in front of real customers to
get feedback and then making an informed investment
devision.
By 2015, lab employees have mostly moved to other
roles at the company, including its Customer
Experience Center (CEC), founded in 2013.
http://www.startuplessonslearned.com/2011/10/case-study-nordstrom-innovation-lab.html
http://secure.nordstrominnovationlab.com
https://nrf.com/news/five-minutes-nordstroms-vice-president-of-customer-experience
https://pando.com/2014/03/27/dancing-giants-nordstroms-innovation-labs-help-a-113-year-old-department-store-chain-to-innovate-on-the-fly/
http://www.geekwire.com/2015/nordstrom-shrinks-innovation-lab-reassigns-employees-shakeup-tech-intiatives/
After 4-year of piloting innovation inside the
organization, Nordstrom decides to refine its innovation
capability, as the company spokesman said:
“To utilize the CEC to its full potential and widen the
impact of innovation, we are moving parts of the
original Innovation Lab into tech/biz teams while
continuing to run a core Innovation Lab focused of
solving specific customer opportunities, in addition to
continuing to foster the innovation practice where
needed,” the spokesman said. He added, “Rather than
just a team focused on innovation, it’s now everyone’s
job.” (Source)
Nordstrom innovation lab before it was merged into Customer
Experience Center, or other projects.
JC Penney
12
LANDSCAPE
In November 2012, Lu Silverstein helped JC Penney
establish the JCP Innovation Lab in SoHo NY, focusing
on cutting edge social, mobile, and in-store
experiences. Lu left JC Penney after 1 year and 4
months and joined as Vice President of Digital Product
Innovation at Westfield, heading up the similar
Westfield Labs.
The JCP Innovation Lab has a team of designers,
technologists and usability experts focused on creating
the shopping experience of the future.
The lab has been sparsely promoted in the press, few
innovation projects are publicly connected to the lab’s
efforts.
Two months after the founder left, JC Penney assigned
a new leader to its innovation team. Dhritiman Saha
joined the company from Kohl’s as a Vice President,
Digital Technology, Product Management, Customer
experience design and Innovation, based in Dallas. It’s
highly possible the previous lab was dismissed and
replaced by a broader Digital Technology team.
https://www.linkedin.com/pub/dhritiman-saha/3/223/781
http://www.haoyangli.com/index.php/user-experience/virtual-closet
Virtual Closet: one of the few ideas JC
Penney Innovation Lab experimented
with.
Neiman Marcus
13
LANDSCAPE
Ideas submitted from teams
across the organization
15-20 ideas proceed to
evaluation phase
3-4 ideas make it to the
pilot stage in store
Results determine which
concepts receive more funding
EACH QUARTER
The Minds behind Neiman Marcus’ Digital Merchandising - Retail Solutions Online
http://www.bizjournals.com/dallas/blog/techflash/2015/04/ilab-updates-4-things-neiman-marcus-is-working-on.html
The Neiman Marcus Innovation lab is located in Irving, Texas and
was established in 2012 by the group CIO Michael Kingston. Scott
Emmons, an enterprise architect at NM, leads the iLab initiative.
The role involves researching, testing and piloting new
technologies that could be applicable to the luxury retailer.
Neiman often partners with startups to provide the hardware and
expertise required to test an idea. In 2014, they partnered with
MemoMi to pilot the smart mirror concept in four stores. In the
same year, they partnered with T1Visions to create a series of
interactive in store look books.
The iLab’s research and development is funded by an internal
oversight committee, company vendors and company executives.
They are not held to a ‘hard and fast ROI equation’, but are
expected to demonstrate value. The lab is set for its third
expansion this year, and at RIC2015 Emmons mentioned the goal
to turn the lab into a permanent, live store in the future. iLab’s
main focus is improving the customer experience, particularly
through strengthening the customer-associate relationship.
Belk
14
LANDSCAPE
Belk has no formal innovation lab or innovation team. According to LinkedIn
profiles of key executives, an innovation team team existed until January
2015. After this time, the change of job titles suggests a restructuring of
innovation in the organization. What was previously the ‘innovation team’
now has split the responsibility across key executives. Each executive
champions a key area across branding, replenishment and forecasting,
omnichannel technology, and digital experience & operations. They are heavily
focused on refining their omnichannel strategy.
Belk’s approach is less structured and formalized. They partner with external
agencies on a campaign basis to bolster innovation efforts. In 2013/14 they
partnered with IDEO and ran the ‘Belk innovation challenge’ at five major
southern colleges. They asked students to come up with ideas to make Belk
a top shopping choice. The winning result was a pop up store/Belk learning
lab hybrid called Belle & Ty, a playful temporary space with an Instagram
wall and weekly trunk events. The store was a learning experiment to
discover more about millennial shopping habits.
http://www.ideo.com/work/belle-ty-pop-up-shop-for-belk
The Belle & Ty store was a learning experiment to inform Belk’s millennial strategy
Trunk shows showcasing collections from local designers were added every Friday
Westfield
15
LANDSCAPE
http://www.westfieldlabs.com/
http://www.adweek.com/news/technology/innovation-lab-designing-mall-future-161539
http://streetfightmag.com/2014/05/20/at-westfield-labs-rethinking-retail-one-mall-at-a-time/
Westfield Labs is the most public innovation lab effort
among all the companies reviewed in this document. It
has a dedicated website, blog, twitter and LinkedIn
page. Westfield Labs is an entity of Westfield
corporation , operating virtually as its own entity.
Their mission is to ‘converge digital shoppers with
physical retail’. The team works to ‘explore ideas and
emerging technologies into viable businesses models
that move the retail industry forward’.
The lab has piloted perhaps more initiatives than most
others, including:
Dine on Time: A mobile app and website that allows
shoppers to order food in advance while they’re
shopping or have it delivered in downtown San
Francisco.
Bespoke: A hybrid store that is part co-working space,
part startup demo arena and event venue. Bespoke
encourages retail businesses to test innovative new
concepts and share their learnings in store. It provides
access to shoppers, high speed wi-fi, full AV and even a
catering kitchen to lure brands into the store. They
have hosted events from fashion shows to brand
launches to conferences.
Digital Storefronts: Piloted in 2013 in the San
Francisco center in partnership with eBay, the digital
storefronts have now been rolled out across two
flagship locations. Shoppers can browse the digital
catalogue on a large interactive screen.
Express Parking: A mobile app that allows shoppers
to find a spot, find their car at the end of their shopping
journey and even have items delivered right to their car.
Westfield Labs has allowed Westfield to attract top
digital and design talent and provided the company
with a much needed edge in a world where many are
labeling the conventional shopping mall to be ‘dead’.

The dine on time app empowers people to order food quickly
and easily for delivery or pickup in San Francisco
Bespoke is a co-working, event space for brands that are
working at the forefront of retail and technology.
16
LEARNINGS
Two key challenges
17
LEARNINGS

Every innovation program aims to bring innovation to the core
business on a daily basis through either a series of innovative
executions (new software, services, customer experiences, etc.) or
organizational changes.
In our research, we identified several brands that started their lab in a
very intimate way: establishing them far from headquarters with a
unique design culture and a group of different people to traditional
corporate employees.
This is a good approach to keep cultures separate, however, in the
long-term, the isolation and unilateral strategy brings about two key
challenges:
Lack of execution - an idea means zero when there isn’t a feasible
technology and a viable business to realize it;
Sub-culture - innovation is about behavior change on an
organizational level, a sub-culture in an innovation lab won’t drive
change throughout the organization at large.
To combat these two challenges, we found that the successful leaders
always have two key objectives:
Deliver new and better
experiences to customers
Drive corporate culture and
behavior change
Enterprise Customers
1 2
Innovation at the core
of the business
Highly engaged
customers
TaskGoal
Areas of focus
18
LEARNINGS

Brands are required to work on different things to accomplish changes
to both the corporate culture and the customer experience.
In order to deliver real business results, winning labs establish design
capability, backed up with solid technology capability. Design serves as
a force to discover and experiment new ideas, and technology
expertise works to bring those ideas to fruition.
Organizational changes rely on:
A systematic process that strengthens repeatable and scalable
innovation behaviors;
Mind-sets that allow the company to make better and faster decisions,
and deliver business value in more iterative and rapid ways.
We conclude there should be four different areas of focus of a
department store innovation lab strategy. They are:
TECH
Designed to support IT and extend its capability
to be more responsive to market changes and
experimental with cutting edge technologies.
DESIGN
Using design thinking methodologies to test new
concepts and customer experiences. Usually
driven by a small multidisciplinary team and
independent of the company headquarters.
CULTURE
A long term internal change program that
encourages home-grown innovative ideas from
existing employees. Aims to build new sustainable
processes that build a funnel of innovative ideas
and ensure that the best ones are executed.
BRANDING
Using the lab for marketing and press
opportunities. Leveraging the initiatives so the
brand is seen as cutting edge by customers and
potential employees.
Areas of focus: Tech
19
LEARNINGS

Key Features
‣ Reports to the IT function
‣ Founder has a solid background in
IT
‣ Internal focus; facilitate process
improvement and adoption of new
technology
‣ Close to HQ
‣ Collaborate with IT and have strong
opinions that shape the technology
strategy
‣ Implementation partner for
strategic business initiatives
‣ Skews towards incremental rather
than disruptive innovation
ChallengesBenefits
‣ Demands a culture of entrepreneurship and
continuous improvement of the IT function
‣ Tactical and implementation focused. Leads to
tangible outcomes and more efficient
processes
‣ Experimental by nature. Champions the
evaluation of newer and better ways to do
things
‣ Elevates the company’s digital competencies
‣ Interesting work and technical challenges
attract and retain top technical talent
‣ Low visibility beyond the IT function
‣ Proximity to main organization can thwart
creative pursuits
‣ Difficult to manage the diverse teams and
cultural conflicts
‣ Not explicitly customer facing. Customer can
be absent from the ideation process.
‣ Easy to focus on ‘solutioning’ before ideas have
been validated
Example
Sears has a clear mission and technology focus. Create an integrated store.
Heavily dedicated to the exploration of IoT and how this will manifest in the
retail experience.
Areas of focus: Design
20
LEARNINGS

Key Features
‣ Intimate and diverse cross
functional teams. Composed of
artists, designers, marketers,
engineers, developers and hackers.
‣ Exploratory and often focused on
‘blue sky’ projects.
‣ Follow Lean and agile
methodologies, for example time
boxed validation of new ideas and
rapid prototyping.
‣ Based in locations that allow for
attraction of top creative talent
‣ A corporate culture that is distinct
from the main organization
ChallengesBenefits
‣ Easy to test and validate ideas, customers are
involved in the process.
‣ Sheltered from corporate bureaucracy, free to
focus on innovation.
‣ Easy to attract top creative talent
‣ Collaboration is easier in small teams. Easy to
try new things and gather buy-in quickly.
‣ Diverse teams generate out of the box ideas
and approaches.
‣ Hard to implement good ideas at scale
‣ Fragile business model, often dependent on
one or few stakeholders
‣ Hard to keep top creative talent engaged over
time
‣ Difficult to manage the relationship between
the main corporate culture and the sub-
culture of the lab team
‣ Disruptive innovation is risky and hard to
implement in the main organization
Example
Nordstrom’s lab operates as a multidisciplinary in-house creative team
dedicated to exploring new ways of engaging customers using a design
thinking methodology and collaborative design practices; user research, rapid
prototyping and in market tests.
Areas of focus: Culture
21
LEARNINGS

Key Features
‣ The lab actively seeks new ideas
from within the organization; for
example through hack-a-thons and
innovation drives.
‣ Internally driven; there is a clear
process for gathering, evaluating
and implementing ideas from
within the organization.
‣ Long term program, often involving
significant change and program
management capabilities
ChallengesBenefits
‣ Grows awareness of innovation and builds an
innovation culture
‣ Encourages collaboration between different
departments
‣ Identifies potential leaders and gives everyone
a stage to share their ideas
‣ Wide education of collaboration process.
‣ Employees have ownership and perceive the
organization to be dynamic
‣ Difficult to sustain a continuous culture change
program
‣ Managing the process from idea to tangible
business value
‣ Hard to convince employees to actively
contribute their ideas
‣ Value of ideas can be influenced by level of
seniority
Example
Characterized by attempting to encourage innovation that involves every level
of the organization. This approach builds a funnel of ideas and then shares
them with key stakeholders.
Areas of focus: Branding
22
LEARNINGS

Key Features
‣ Collaborate with agencies to design
brand activations and new
customer experiences
‣ Temporary and program based
‣ Experimental pop-up stores
designed to test customer feedback
ChallengesBenefits
‣ A fresh perspective from external talent
‣ Quick implementation; agencies drive the
momentum from idea to execution.
‣ Marketing driven. The implementation often
receives good media and press coverage
‣ Brand alignment with innovation helps to
attract millennial customers and top talent.
‣ Difficult to harness learnings and build internal
innovation capabilities
‣ Hard to move beyond novelty and effect real
business change
‣ Limited internal impact if press is the main
focus
‣ Low involvement from diverse teams as often
controlled by marketing
Example Westfield is a holistic example of balance across the areas of focus. They do a
particularly good job of leveraging their innovation efforts in a marketing sense
to be seen as pioneers in the industry. For example, they were named one of
the most innovative retail companies by FastCo. A solid branding focus gives
them the opportunity to attract top talent and millennial clients.
A holistic and balanced strategy
23
LEARNINGS

In our search, only a few brands
have success in generating real
business results or driving real
organizational change.
Taking a closer look at the most
successful labs, the common
denominator is a holistic focus
across culture, branding,
technology and design
Let’s take a deep dive into Macy’s
holistic approach:
Led by a founder who has a strong
engineering and software development
background. Well-established APIs provide
access to Macys’ rich content that leverage
innovative partners as much as possible.
Strong design capability and design thinking
helps the organization to easily research, test
and implement new ideas.
There is a structured innovation process,
2000 employees have shared their ideas
with key stakeholders who can
implement them
Sharing their innovation efforts with the
press and their customers.
Example
TECH
DESIGN
CULTURE
BRANDING
Technology is still at the core
24
LEARNINGS

Most of the innovation labs apply a design thinking process. However,
this process itself cannot promise real business impact. In our research,
we found over half of the lab leaders come from an engineering
background:
Brand Leader Background
Macy’s Yasir Anwar Engineering
Kohl’s Janet Schalk Engineering
Sear’s Leena Munjal Engineering
Nordstrom JB Brown Engineering
JC Penny Lu Silverstein Product
Neiman Marcus Michael Kingston Engineering
Belk - -
Westfield Kevin McKenzie Marketing
Below are four instances of putting technology at the core:
Extending IT to become a source of innovation- almost all of the
innovation labs started as an extension of the IT department, and are
sponsored by a CIO.
Partnering with a 3rd party company to quickly acquire existing
technology - in 2014, Neiman Marcus partnered with startup company
MemoMi to pilot the smart mirror concept in four stores. In the same
year, they partnered with T1Visions to create a series of interactive in
store look books.
Highly focused technology roadmap and priority - Sears has a
clear mission and technology focus. Create an integrated store. Heavily
dedicated to the exploration of IoT and how this will manifest in the
retail experience.
Leveraging existing IT assets - Many of the innovations from Macy’s
lab took advantages of current IT infrastructure, particularly for APIs, so
that new applications can easily reuse Macys' rich content such as their
product catalog, store events calendar, promotions, coupons, shopping
bag, registry and more.
Get closer to customers
25
LEARNINGS

Innovation cannot happen without customer engagement. Nearly all of
the labs in question chose to be geographically close to key customers
from the beginning.
Being closer to customers enables quicker validation and decision
making. In addition, the labs are built around a startup model with an
independent culture to keep away from bureaucracy and empower fast
decisions.
Customer journeys also feature in many of the labs. They are a great
starting point in assessing how to better serve and sell to customers.
This may include discovering new ways of engaging customers,
expanding existing customer journeys into new services and extending
existing relationships between the brand and the customer.
To augment this process, the labs rely heavily on engaging customers
throughout the creation process. They use many innovation techniques
to encourage co-creation. Nordstrom is a very good example.
Nordstrom Labs adopted a lot of Lean Startup methodologies to
continue pivoting their ideas to real product. Especially these two
methodologies:
One-week design sprints - Slowness kills innovation, especially in a
large organization. The Nordstrom Innovation Lab shrunk their
innovation cycle to only one week, meaning they build an entirely new
product over a one week period.
Get out of the building - By starting with research from customers,
associates and managers in a real store setting, innovation lab teams
can quickly identify and validate opportunities. It’s not a quick visit and
walk of the retail shop floor, instead lab staff actually set up a space
within the store for an entire week. This allows them to build
prototypes, test new features and gather rich feedback from
observation and real customer interviews.
Maximize impact
26
LEARNINGS

Innovation is a social sport. Successful lab leaders aim to maximize the
impact their lab can generate both internally (organizational impact)
and externally (customer impact). Impact brings a lot of value to the
innovation initiative, it may include:
‣  Engaging all employees to create awareness
‣  Listening to employees, this aids the discovery of good ideas that would
otherwise be hidden
‣  Employee participation helps to identify new innovation leaders
‣  Press exposure attracts new customers and innovative talent
‣  Engaging with customers directly strengthens the brand connection
‣  Social hub gathers new possibilities from new partners
Westfield’s newly opened ‘Bespoke’ is a great example of how
innovation can be harnessed to maximize impact.
The Bespoke concept is relatively simple. It’s a co-working space, an
event space and a demo space. Bespoke brings many layers of value to
Westfield Labs and more broadly, Westfield itself:
‣  Events pull customers into the center, strengthening relationships and
aligning the Westfield brand with excitement and newness. They also
allow Westfield to test new product lines and concepts.
‣  Technology Demos give them access to innovative startups, top talent and
new ideas
‣  Co-working brings many different types of people into the space, from
students to professionals, allowing Westfield to identify prospective talent.
27
SUGGESTIONS
4 Take-aways
28
SUGGESTIONS
Run a holistic and balanced strategy1
Covering technology, design, culture, and branding
Put technology at the core2
Building a competent and responsive delivery team with a strategic technology roadmap
Get closer to your customers3
Getting out of the office, reaching out to your customers, designing and building to serve them better
Maximize impact both internally and externally4
Influencing employees, stakeholders, press, institutions, startups, etc., listen to them, and share your stories
Growth strategies at different stages
29
SUGGESTIONS
Kickoff Sustain Growth
TECH
DESIGN
CULTURE
BRANDING
Involve a small but dedicated
development team from the existing
IT group (who understands the
current IT context)
Coordinate with company’s longer-
term technology roadmap and focus
on one specific technical area
Build up a strategic tech stack for
experimenting with the most cutting
edge technologies
Build a multidisciplinary design team
including talent from research,
product, branding, visual and
interaction design
Expand the design team’s
contribution to other departments
so they are in a better position to
innovate
Consider establishing a corporate
design venture to boost innovation
in a large organization or acquire
from the market
Encourage culture diffusion by
holding periodical innovation events
that include all employees
Aim to establish an innovation
funnel. Share the methodologies,
processes, and practices with the
organization at large.
The innovation lab matures enough
to lead organization wide innovation
initiatives
Invite customers to join the
conversation by using pop-up
stores, innovation days, hack-a-
thons, etc.
Actively participant in different
communities like tech, design,
hackers, makers, etc. and build the
community network
Large scale social hubs regionally
and globally to demonstrate
commitment to innovation to both
employees and customers.
3〜~6 Months 6~18 Months 18~24 Months
Get in touch:
ThoughtWorks Retail
THANK YOU

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Department Store Innovation Labs: A Deep Dive

  • 2. 2 Executive Summary This research analyzes the innovation labs of 7 popular department stores in North America, as well as the lab from Westfield Labs. The goal is to learn and identify strategies that build a successful lab venture. Three years ago department stores embarked on an ‘innovation race’, with 7 of the top 10 department stores by revenue establishing a lab between 2012 and 2013. After reading through media reports, press reports and the personal profiles of innovation lab team members and leaders, we came up with several key findings. 1. Five of the eight innovation lab champions come from a software engineering background. 2. Labs have different degrees of focus in four different areas: branding, technology, design and culture. 3. Combining technology capability with design thinking is crucial to success and innovation. 4. Success is measured by both organizational change (culture impact) and improvement to the customer experience (shopper impact). Based on these key findings, we devised four key suggestions to maximize innovation lab success: 1.  Run a holistic and balanced strategy that focuses on all four areas; technology, design, culture and branding. 2. Put technology at the core. Solid technology capability ensures that ideas come to fruition. 3. Get closer to customers. By involving customers in the innovation process, brands go beyond gimmicks and build products based on actual market needs. 4. Maximize impact both internally and externally. Labs provide an opportunity to affect significant change in both organizational culture and brand perception.
  • 5. Research targets 5 LANDSCAPE This research focuses on 7 popular North American department stores, as well as Westfield Labs. 28.0B* * 2014 US retail sales 19.0B 14.5B 19.3B 12.1B 4.8B 4.1B Not Released
  • 6. Outcome summary 6 LANDSCAPE Company Focus Location Employee Start Year Noted Achievement Macy’s Tech / Culture San Francisco 2,000* 2012 Image Search Kohl’s Tech / Culture Silicon Valley / Milwaukee 250 / 1500 2013 / 2015 Re-platform of kohls.com Sears Holdings Tech / Design Chicago 30 2012 Connected Shop Solution Nordstrom Design / Branding Seattle 20 (est.) 2011 (merged to another department in 2015) J.C. Penney Co. Design New York 20 (est.) 2012 (possibly dismissed in 2014) Neiman Marcus Tech / Culture Irving 20 (est.) 2012 Memory Mirror Belk Branding (not permanent) 10 (est.) 2013 (dismissed in Jan 2015) Westfield Design / Tech / Branding San Francisco 55 2012 Bespoke store concept * Included employees
  • 7. Timeline 7 LANDSCAPE 2011 2012 2013 2014 2015 June, 2012 June, 2012 September, 2012 April, 2013 June, 2015 New innovation center Early 2015 Merged with Customer Experience Center November, 2012 2012 2013 (est.) 2013 (est.)
  • 8. Macy’s 8 LANDSCAPE Macy's Lab was founded by Yasir Anwar in September 2012 in San Francisco. Before leading the innovation efforts of macys.com & bloomingdales.com, he was the Director of Engineering at Walmartlabs from 2010 to 2012. Macy’s is working to embrace disruptive innovation and the lab is leading the cultural change. It is an extension of Macys’ core engineering group, and has involved more than 2,000 employees since 2012. The lab has established a complete pipeline of delivering qualified ideas for customers using a Lean approach. The lab has been directly responsible for a number of Macy’s initiatives such as Image Search and E-gifting. Employees are presented with a new challenge Employees submit idea Employees market for peer votes 3 days to pitch to the Idea Lab team The lab team helps with prototype Presented to president an CEO of macys.com http://developer.macys.com/App_Gallery_Sample_apps https://angel.co/david-shapiro-4 https://www.linkedin.com/pub/yasir-anwar/4/110/aa4 http://www.mr-mag.com/macys-inc-announces-omni-innovations/ The Macy’s Image Search technology is an iPhone app that was developed at macys.com’s San Francisco-based Idea Lab. Consumers take photos of apparel they see anywhere and the app finds similar items for purchase online at macys.com. Final decision
  • 9. Kohl’s 9 LANDSCAPE Kohl’s expanded its IT capability into innovation in Milpitas, California with the opening of Kohls’ Digital Center in 2015 The center houses 250 employees and is an extension of the IT team at the Menomonee Falls corporate headquarters. It’s a centralized location that enables technology and innovation teams to work collaboratively, supercharging Kohls’ capability to innovate and develop innovative services to customers. The Silicon Valley location allows Kohl’s to attract top digital talent. The innovators in the center work with Oracle to customize the Oracle Commerce solution that powers Kohls’ e-commerce engine; they are also heavily involved in the re-platform of kohls.com, playing a key role in Kohls’ mobile strategy, e.g.the Yes2You loyalty program. http://risnews.edgl.com/retail-news/Constructing-Greatness--Kohl-s-Plan-to-be-America-s-Most-Engaging-Retailer100411 http://www.mortenson.com/milwaukee/projects/kohls-innovation-center http://kohlscareers.com/our-jobs/corporate/information-technology/ http://fox6now.com/2015/06/15/brand-new-kohls-innovation-center-home-to-1500-employees-we-get-so-much-more-done/ Continuing their journey from innovation into technology, Kohl’s opened the brand new 366,000- square-foot Innovation Center in Menomonee Falls in June 2015. The center belongs to the company’s Information Technology group, and is home to 1,500 Kohl’s IT Associates working in technology. The center is designed to encourage collaboration, just a 10-minute walk from Kohl’s corporate headquarters. It’s part of Kohl’s investment of over $100 million into the improvement of their corporate campus since 2014. It’s just so much easier to find people and work together quickly. Janet Schalk, executive VP and CIO Kohls’ new innovation center in Menomonee Falls opened in June 2015
  • 10. Sear’s Holdings 10 LANDSCAPE http://www.chicagobusiness.com/article/20130713/ISSUE01/307139978/can-this-woman-save-sears http://www.searslabs.com/#aboutus Sears’ innovation lab, known as “Integrated Retail Labs (iRLabs)” was established in 2012 by Leena Munjal (now Senior VP of Customer Experience and Integrated Retail). iRLabs is located at Sears' Chicago headquarters and runs as a startup, with open workspaces and a cadre of about 30 casually dressed young employees. The iRLabs is Sears’ in-house innovation team focusing on creating a “wow” customer experience. It has holistic capabilities including business strategy, design, UX, copywriting, project management, development, and testing. The lab is trying to figure out the secret to “omnichannel” shopping. This mission is also the 129-year-old company’s focus since 2010. The lab is the creator of Sears’ Connected Solution shop, a 4,000 square- foot Flagship experience center at the Sears store in San Bruno, California. It also created Shop Your Way, a modern e-commerce web site and mobile coupon service. Shop Your Way, Sears’ popular e-commerce and mobile coupon service Sear's Connected Solution flagshipshop in San Bruno
  • 11. Nordstrom 11 LANDSCAPE In 2012, JB Brown established Nordstrom’s Innovation Lab, gathering a small team of innovators to explore new ways to engage with customers. It brought an agile business mindset with a heart of entrepreneurship to a 113-year old company. It was housed inside of the company’s broader technology organization. With a team of techies, designers, entrepreneurs, statisticians, researchers, and artists, the lab tested ideas at speed by prototyping, quickly implementing them in front of real customers to get feedback and then making an informed investment devision. By 2015, lab employees have mostly moved to other roles at the company, including its Customer Experience Center (CEC), founded in 2013. http://www.startuplessonslearned.com/2011/10/case-study-nordstrom-innovation-lab.html http://secure.nordstrominnovationlab.com https://nrf.com/news/five-minutes-nordstroms-vice-president-of-customer-experience https://pando.com/2014/03/27/dancing-giants-nordstroms-innovation-labs-help-a-113-year-old-department-store-chain-to-innovate-on-the-fly/ http://www.geekwire.com/2015/nordstrom-shrinks-innovation-lab-reassigns-employees-shakeup-tech-intiatives/ After 4-year of piloting innovation inside the organization, Nordstrom decides to refine its innovation capability, as the company spokesman said: “To utilize the CEC to its full potential and widen the impact of innovation, we are moving parts of the original Innovation Lab into tech/biz teams while continuing to run a core Innovation Lab focused of solving specific customer opportunities, in addition to continuing to foster the innovation practice where needed,” the spokesman said. He added, “Rather than just a team focused on innovation, it’s now everyone’s job.” (Source) Nordstrom innovation lab before it was merged into Customer Experience Center, or other projects.
  • 12. JC Penney 12 LANDSCAPE In November 2012, Lu Silverstein helped JC Penney establish the JCP Innovation Lab in SoHo NY, focusing on cutting edge social, mobile, and in-store experiences. Lu left JC Penney after 1 year and 4 months and joined as Vice President of Digital Product Innovation at Westfield, heading up the similar Westfield Labs. The JCP Innovation Lab has a team of designers, technologists and usability experts focused on creating the shopping experience of the future. The lab has been sparsely promoted in the press, few innovation projects are publicly connected to the lab’s efforts. Two months after the founder left, JC Penney assigned a new leader to its innovation team. Dhritiman Saha joined the company from Kohl’s as a Vice President, Digital Technology, Product Management, Customer experience design and Innovation, based in Dallas. It’s highly possible the previous lab was dismissed and replaced by a broader Digital Technology team. https://www.linkedin.com/pub/dhritiman-saha/3/223/781 http://www.haoyangli.com/index.php/user-experience/virtual-closet Virtual Closet: one of the few ideas JC Penney Innovation Lab experimented with.
  • 13. Neiman Marcus 13 LANDSCAPE Ideas submitted from teams across the organization 15-20 ideas proceed to evaluation phase 3-4 ideas make it to the pilot stage in store Results determine which concepts receive more funding EACH QUARTER The Minds behind Neiman Marcus’ Digital Merchandising - Retail Solutions Online http://www.bizjournals.com/dallas/blog/techflash/2015/04/ilab-updates-4-things-neiman-marcus-is-working-on.html The Neiman Marcus Innovation lab is located in Irving, Texas and was established in 2012 by the group CIO Michael Kingston. Scott Emmons, an enterprise architect at NM, leads the iLab initiative. The role involves researching, testing and piloting new technologies that could be applicable to the luxury retailer. Neiman often partners with startups to provide the hardware and expertise required to test an idea. In 2014, they partnered with MemoMi to pilot the smart mirror concept in four stores. In the same year, they partnered with T1Visions to create a series of interactive in store look books. The iLab’s research and development is funded by an internal oversight committee, company vendors and company executives. They are not held to a ‘hard and fast ROI equation’, but are expected to demonstrate value. The lab is set for its third expansion this year, and at RIC2015 Emmons mentioned the goal to turn the lab into a permanent, live store in the future. iLab’s main focus is improving the customer experience, particularly through strengthening the customer-associate relationship.
  • 14. Belk 14 LANDSCAPE Belk has no formal innovation lab or innovation team. According to LinkedIn profiles of key executives, an innovation team team existed until January 2015. After this time, the change of job titles suggests a restructuring of innovation in the organization. What was previously the ‘innovation team’ now has split the responsibility across key executives. Each executive champions a key area across branding, replenishment and forecasting, omnichannel technology, and digital experience & operations. They are heavily focused on refining their omnichannel strategy. Belk’s approach is less structured and formalized. They partner with external agencies on a campaign basis to bolster innovation efforts. In 2013/14 they partnered with IDEO and ran the ‘Belk innovation challenge’ at five major southern colleges. They asked students to come up with ideas to make Belk a top shopping choice. The winning result was a pop up store/Belk learning lab hybrid called Belle & Ty, a playful temporary space with an Instagram wall and weekly trunk events. The store was a learning experiment to discover more about millennial shopping habits. http://www.ideo.com/work/belle-ty-pop-up-shop-for-belk The Belle & Ty store was a learning experiment to inform Belk’s millennial strategy Trunk shows showcasing collections from local designers were added every Friday
  • 15. Westfield 15 LANDSCAPE http://www.westfieldlabs.com/ http://www.adweek.com/news/technology/innovation-lab-designing-mall-future-161539 http://streetfightmag.com/2014/05/20/at-westfield-labs-rethinking-retail-one-mall-at-a-time/ Westfield Labs is the most public innovation lab effort among all the companies reviewed in this document. It has a dedicated website, blog, twitter and LinkedIn page. Westfield Labs is an entity of Westfield corporation , operating virtually as its own entity. Their mission is to ‘converge digital shoppers with physical retail’. The team works to ‘explore ideas and emerging technologies into viable businesses models that move the retail industry forward’. The lab has piloted perhaps more initiatives than most others, including: Dine on Time: A mobile app and website that allows shoppers to order food in advance while they’re shopping or have it delivered in downtown San Francisco. Bespoke: A hybrid store that is part co-working space, part startup demo arena and event venue. Bespoke encourages retail businesses to test innovative new concepts and share their learnings in store. It provides access to shoppers, high speed wi-fi, full AV and even a catering kitchen to lure brands into the store. They have hosted events from fashion shows to brand launches to conferences. Digital Storefronts: Piloted in 2013 in the San Francisco center in partnership with eBay, the digital storefronts have now been rolled out across two flagship locations. Shoppers can browse the digital catalogue on a large interactive screen. Express Parking: A mobile app that allows shoppers to find a spot, find their car at the end of their shopping journey and even have items delivered right to their car. Westfield Labs has allowed Westfield to attract top digital and design talent and provided the company with a much needed edge in a world where many are labeling the conventional shopping mall to be ‘dead’.  The dine on time app empowers people to order food quickly and easily for delivery or pickup in San Francisco Bespoke is a co-working, event space for brands that are working at the forefront of retail and technology.
  • 17. Two key challenges 17 LEARNINGS  Every innovation program aims to bring innovation to the core business on a daily basis through either a series of innovative executions (new software, services, customer experiences, etc.) or organizational changes. In our research, we identified several brands that started their lab in a very intimate way: establishing them far from headquarters with a unique design culture and a group of different people to traditional corporate employees. This is a good approach to keep cultures separate, however, in the long-term, the isolation and unilateral strategy brings about two key challenges: Lack of execution - an idea means zero when there isn’t a feasible technology and a viable business to realize it; Sub-culture - innovation is about behavior change on an organizational level, a sub-culture in an innovation lab won’t drive change throughout the organization at large. To combat these two challenges, we found that the successful leaders always have two key objectives: Deliver new and better experiences to customers Drive corporate culture and behavior change Enterprise Customers 1 2 Innovation at the core of the business Highly engaged customers TaskGoal
  • 18. Areas of focus 18 LEARNINGS  Brands are required to work on different things to accomplish changes to both the corporate culture and the customer experience. In order to deliver real business results, winning labs establish design capability, backed up with solid technology capability. Design serves as a force to discover and experiment new ideas, and technology expertise works to bring those ideas to fruition. Organizational changes rely on: A systematic process that strengthens repeatable and scalable innovation behaviors; Mind-sets that allow the company to make better and faster decisions, and deliver business value in more iterative and rapid ways. We conclude there should be four different areas of focus of a department store innovation lab strategy. They are: TECH Designed to support IT and extend its capability to be more responsive to market changes and experimental with cutting edge technologies. DESIGN Using design thinking methodologies to test new concepts and customer experiences. Usually driven by a small multidisciplinary team and independent of the company headquarters. CULTURE A long term internal change program that encourages home-grown innovative ideas from existing employees. Aims to build new sustainable processes that build a funnel of innovative ideas and ensure that the best ones are executed. BRANDING Using the lab for marketing and press opportunities. Leveraging the initiatives so the brand is seen as cutting edge by customers and potential employees.
  • 19. Areas of focus: Tech 19 LEARNINGS  Key Features ‣ Reports to the IT function ‣ Founder has a solid background in IT ‣ Internal focus; facilitate process improvement and adoption of new technology ‣ Close to HQ ‣ Collaborate with IT and have strong opinions that shape the technology strategy ‣ Implementation partner for strategic business initiatives ‣ Skews towards incremental rather than disruptive innovation ChallengesBenefits ‣ Demands a culture of entrepreneurship and continuous improvement of the IT function ‣ Tactical and implementation focused. Leads to tangible outcomes and more efficient processes ‣ Experimental by nature. Champions the evaluation of newer and better ways to do things ‣ Elevates the company’s digital competencies ‣ Interesting work and technical challenges attract and retain top technical talent ‣ Low visibility beyond the IT function ‣ Proximity to main organization can thwart creative pursuits ‣ Difficult to manage the diverse teams and cultural conflicts ‣ Not explicitly customer facing. Customer can be absent from the ideation process. ‣ Easy to focus on ‘solutioning’ before ideas have been validated Example Sears has a clear mission and technology focus. Create an integrated store. Heavily dedicated to the exploration of IoT and how this will manifest in the retail experience.
  • 20. Areas of focus: Design 20 LEARNINGS  Key Features ‣ Intimate and diverse cross functional teams. Composed of artists, designers, marketers, engineers, developers and hackers. ‣ Exploratory and often focused on ‘blue sky’ projects. ‣ Follow Lean and agile methodologies, for example time boxed validation of new ideas and rapid prototyping. ‣ Based in locations that allow for attraction of top creative talent ‣ A corporate culture that is distinct from the main organization ChallengesBenefits ‣ Easy to test and validate ideas, customers are involved in the process. ‣ Sheltered from corporate bureaucracy, free to focus on innovation. ‣ Easy to attract top creative talent ‣ Collaboration is easier in small teams. Easy to try new things and gather buy-in quickly. ‣ Diverse teams generate out of the box ideas and approaches. ‣ Hard to implement good ideas at scale ‣ Fragile business model, often dependent on one or few stakeholders ‣ Hard to keep top creative talent engaged over time ‣ Difficult to manage the relationship between the main corporate culture and the sub- culture of the lab team ‣ Disruptive innovation is risky and hard to implement in the main organization Example Nordstrom’s lab operates as a multidisciplinary in-house creative team dedicated to exploring new ways of engaging customers using a design thinking methodology and collaborative design practices; user research, rapid prototyping and in market tests.
  • 21. Areas of focus: Culture 21 LEARNINGS  Key Features ‣ The lab actively seeks new ideas from within the organization; for example through hack-a-thons and innovation drives. ‣ Internally driven; there is a clear process for gathering, evaluating and implementing ideas from within the organization. ‣ Long term program, often involving significant change and program management capabilities ChallengesBenefits ‣ Grows awareness of innovation and builds an innovation culture ‣ Encourages collaboration between different departments ‣ Identifies potential leaders and gives everyone a stage to share their ideas ‣ Wide education of collaboration process. ‣ Employees have ownership and perceive the organization to be dynamic ‣ Difficult to sustain a continuous culture change program ‣ Managing the process from idea to tangible business value ‣ Hard to convince employees to actively contribute their ideas ‣ Value of ideas can be influenced by level of seniority Example Characterized by attempting to encourage innovation that involves every level of the organization. This approach builds a funnel of ideas and then shares them with key stakeholders.
  • 22. Areas of focus: Branding 22 LEARNINGS  Key Features ‣ Collaborate with agencies to design brand activations and new customer experiences ‣ Temporary and program based ‣ Experimental pop-up stores designed to test customer feedback ChallengesBenefits ‣ A fresh perspective from external talent ‣ Quick implementation; agencies drive the momentum from idea to execution. ‣ Marketing driven. The implementation often receives good media and press coverage ‣ Brand alignment with innovation helps to attract millennial customers and top talent. ‣ Difficult to harness learnings and build internal innovation capabilities ‣ Hard to move beyond novelty and effect real business change ‣ Limited internal impact if press is the main focus ‣ Low involvement from diverse teams as often controlled by marketing Example Westfield is a holistic example of balance across the areas of focus. They do a particularly good job of leveraging their innovation efforts in a marketing sense to be seen as pioneers in the industry. For example, they were named one of the most innovative retail companies by FastCo. A solid branding focus gives them the opportunity to attract top talent and millennial clients.
  • 23. A holistic and balanced strategy 23 LEARNINGS  In our search, only a few brands have success in generating real business results or driving real organizational change. Taking a closer look at the most successful labs, the common denominator is a holistic focus across culture, branding, technology and design Let’s take a deep dive into Macy’s holistic approach: Led by a founder who has a strong engineering and software development background. Well-established APIs provide access to Macys’ rich content that leverage innovative partners as much as possible. Strong design capability and design thinking helps the organization to easily research, test and implement new ideas. There is a structured innovation process, 2000 employees have shared their ideas with key stakeholders who can implement them Sharing their innovation efforts with the press and their customers. Example TECH DESIGN CULTURE BRANDING
  • 24. Technology is still at the core 24 LEARNINGS  Most of the innovation labs apply a design thinking process. However, this process itself cannot promise real business impact. In our research, we found over half of the lab leaders come from an engineering background: Brand Leader Background Macy’s Yasir Anwar Engineering Kohl’s Janet Schalk Engineering Sear’s Leena Munjal Engineering Nordstrom JB Brown Engineering JC Penny Lu Silverstein Product Neiman Marcus Michael Kingston Engineering Belk - - Westfield Kevin McKenzie Marketing Below are four instances of putting technology at the core: Extending IT to become a source of innovation- almost all of the innovation labs started as an extension of the IT department, and are sponsored by a CIO. Partnering with a 3rd party company to quickly acquire existing technology - in 2014, Neiman Marcus partnered with startup company MemoMi to pilot the smart mirror concept in four stores. In the same year, they partnered with T1Visions to create a series of interactive in store look books. Highly focused technology roadmap and priority - Sears has a clear mission and technology focus. Create an integrated store. Heavily dedicated to the exploration of IoT and how this will manifest in the retail experience. Leveraging existing IT assets - Many of the innovations from Macy’s lab took advantages of current IT infrastructure, particularly for APIs, so that new applications can easily reuse Macys' rich content such as their product catalog, store events calendar, promotions, coupons, shopping bag, registry and more.
  • 25. Get closer to customers 25 LEARNINGS  Innovation cannot happen without customer engagement. Nearly all of the labs in question chose to be geographically close to key customers from the beginning. Being closer to customers enables quicker validation and decision making. In addition, the labs are built around a startup model with an independent culture to keep away from bureaucracy and empower fast decisions. Customer journeys also feature in many of the labs. They are a great starting point in assessing how to better serve and sell to customers. This may include discovering new ways of engaging customers, expanding existing customer journeys into new services and extending existing relationships between the brand and the customer. To augment this process, the labs rely heavily on engaging customers throughout the creation process. They use many innovation techniques to encourage co-creation. Nordstrom is a very good example. Nordstrom Labs adopted a lot of Lean Startup methodologies to continue pivoting their ideas to real product. Especially these two methodologies: One-week design sprints - Slowness kills innovation, especially in a large organization. The Nordstrom Innovation Lab shrunk their innovation cycle to only one week, meaning they build an entirely new product over a one week period. Get out of the building - By starting with research from customers, associates and managers in a real store setting, innovation lab teams can quickly identify and validate opportunities. It’s not a quick visit and walk of the retail shop floor, instead lab staff actually set up a space within the store for an entire week. This allows them to build prototypes, test new features and gather rich feedback from observation and real customer interviews.
  • 26. Maximize impact 26 LEARNINGS  Innovation is a social sport. Successful lab leaders aim to maximize the impact their lab can generate both internally (organizational impact) and externally (customer impact). Impact brings a lot of value to the innovation initiative, it may include: ‣  Engaging all employees to create awareness ‣  Listening to employees, this aids the discovery of good ideas that would otherwise be hidden ‣  Employee participation helps to identify new innovation leaders ‣  Press exposure attracts new customers and innovative talent ‣  Engaging with customers directly strengthens the brand connection ‣  Social hub gathers new possibilities from new partners Westfield’s newly opened ‘Bespoke’ is a great example of how innovation can be harnessed to maximize impact. The Bespoke concept is relatively simple. It’s a co-working space, an event space and a demo space. Bespoke brings many layers of value to Westfield Labs and more broadly, Westfield itself: ‣  Events pull customers into the center, strengthening relationships and aligning the Westfield brand with excitement and newness. They also allow Westfield to test new product lines and concepts. ‣  Technology Demos give them access to innovative startups, top talent and new ideas ‣  Co-working brings many different types of people into the space, from students to professionals, allowing Westfield to identify prospective talent.
  • 28. 4 Take-aways 28 SUGGESTIONS Run a holistic and balanced strategy1 Covering technology, design, culture, and branding Put technology at the core2 Building a competent and responsive delivery team with a strategic technology roadmap Get closer to your customers3 Getting out of the office, reaching out to your customers, designing and building to serve them better Maximize impact both internally and externally4 Influencing employees, stakeholders, press, institutions, startups, etc., listen to them, and share your stories
  • 29. Growth strategies at different stages 29 SUGGESTIONS Kickoff Sustain Growth TECH DESIGN CULTURE BRANDING Involve a small but dedicated development team from the existing IT group (who understands the current IT context) Coordinate with company’s longer- term technology roadmap and focus on one specific technical area Build up a strategic tech stack for experimenting with the most cutting edge technologies Build a multidisciplinary design team including talent from research, product, branding, visual and interaction design Expand the design team’s contribution to other departments so they are in a better position to innovate Consider establishing a corporate design venture to boost innovation in a large organization or acquire from the market Encourage culture diffusion by holding periodical innovation events that include all employees Aim to establish an innovation funnel. Share the methodologies, processes, and practices with the organization at large. The innovation lab matures enough to lead organization wide innovation initiatives Invite customers to join the conversation by using pop-up stores, innovation days, hack-a- thons, etc. Actively participant in different communities like tech, design, hackers, makers, etc. and build the community network Large scale social hubs regionally and globally to demonstrate commitment to innovation to both employees and customers. 3〜~6 Months 6~18 Months 18~24 Months
  • 30. Get in touch: ThoughtWorks Retail THANK YOU