The key theme for the second day of the NRF BIG Show was ‘innovation’; or more definitely how start-up culture can benefit traditional, mature businesses.
The day started with an economics history lesson from Dr. Ben Bernanke, but quickly flicked forward into the future, with sessions from NRF’s iLab (start-up promoter), beauty start-up Birchbox founder, Katia Beauchamp, Uber’s ‘Head of Everything’, Jason Droege, Travelocity/Kayak.com founder, Terry Jones; culminating in the Annual Award for Innovation going to start-up Warby Parker.
As you can see it wasn’t a celebration of how traditional retailers have embraced the future, but rather the ones setting the pace – the start-ups. The reason: culture.
This was best acknowledged by Droege, who said ‘(Uber) are building the organization to be resistant to all the trappings of larger companies’. So what makes the culture of a start-up different? According to serial entrepreneur, Terry Jones it’s 3 things:
1. Agility: as retailers get larger, they have more employees, and therefore more hierarchical structures. In essence it takes longer to get things done, and maybe even worse than this, great ideas from the bottom get lost in ‘middle management’ – or as Jones called it the ‘Bozone layer’. Agility requires smaller teams to work together, in less hierarchical structures. So good ideas can be nourished not seen as a distraction from ‘business as usual’.
2. Clarity of vision: start-ups tend to have a higher purpose, traditional retailers tend to come from an old marketing model of ‘product and price’…which leads them to create visions based on ‘revenue maximisation’ (ie. To be the most profitable brand in our category). These aren’t great for innovation – in fact it leaves the most important stakeholder out of the equation – the customer. Compare this to Droege, who when asked what Uber would focus on in 2015, said: ‘Learn the market and get to know their needs’.
3. Relentless Focus (+ Courage) to get it done: I would say start-ups have it easier in this regard. Their businesses are maybe a little simpler. But added to this is the courage to fail. Anywhere you look, whether that’s the art world, science…or retail, failure is a prerequisite for innovation. Like Jones said: ‘Innovation is like baseball (not a running race) if you fail 70% of the time, you’re still good’.
All of this might sound damning to traditional retailers, but it’s really not. Start-ups have the ability to provide the architecture and environment to help traditional retailers change – whether that’s inspiration for a new way to operate or a new way to source innovation (through a partnership with a start-up).