TORONTO, Canada — In 2012, US grocery chain Kroger announced what it hailed as a significant innovation in customer experience. The company had begun employing a technology platform that would help shorten the time its customers spent waiting in line to pay. With checkout lines being one of the oldest and most persistent points of friction in retail, Kroger had been exploring potential solutions to the problem for a number of years. As one executive put it, “We asked a question: If we could open up a lane exactly when we needed it, what would happen?” What happened was that the average waiting time in Kroger line-ups went from 4 minutes to less than a minute — a significant improvement to be sure.
A mere five years later however, Amazon would announce the advent of its Amazon Go store concept. Go store shoppers need only to scan their mobile device on the way in, take what they like and go. No lineups, no cash registers, no cashiers. Amazon Go not only eliminated checkout lines, it obliterated the check out entirely.
And Amazon wasn’t alone. Chinese start-up Bingo Box had actually been operating its own un-manned store concept for some time in Shanghai.
Examples like this highlight the fundamentally different headspaces between incumbent retailers and disruptors like Amazon and others. While retailers talk at length about radical innovation, much of what they produce pales when compared to the concepts and ideas that relative outsiders bring to the market.
So why are retailers struggling to reinvent themselves and their industry when the existential threat posed by the status quo seems so abundantly clear? If the battle cry is truly “innovate or die” why are so many retailers seemingly choosing death? There is a myriad of reasons but here are the most pressing among them.
Innovation Versus Iteration
I speak with retail leaders frequently who describe “innovative” projects and initiatives within their organisations. In truth, however, much of what they’re describing is not innovative at all, it’s iterative and there’s a big difference between the two. By definition, innovation means developing products or processes that are entirely new, that have never existed before, while iteration is a process of incremental experimentation and development along a known path. While there’s nothing wrong with linear, continuous improvement, problems arise when we start characterizing it as innovation. It simply is not.
The bias toward iteration stems from the fact that it’s generally more readily accepted than innovation. Iteration is safe and non-threatening whereas truly innovative ideas carry inherent risk — something executives, board members and markets alike often fear. The funny thing about innovation is that while most leaders say they want radical ideas, few demonstrate a willingness to embrace them when they’re presented. Innovation can be messy, scary and unfamiliar.
A good starting point for fixing this problem agreeing on an organisational definition of innovation. Think…