Social Innovation In Retail

Innovation across all aspects of the retail marketplace from shopping methods to the partner services support is driving the retail transformation and social interaction is driving this innovation.  Social interaction driving the innovation change to drive social innovation in the retail marketplace that is driving the disruption in the retail marketplace. The social innovation drive is bringing about a significant change in the marketplace by changing the control from centralized and driven by a small number of key players to a decentralized control mechanisms that are driven by the social interaction of the consumers with a wide range of partners that support the marketplace.  This decentralized control mechanism is driven by consumers and supported by point solution innovators in the retail marketplace to experiment with support of the changing consumer lifestyle.

Consumers have been going through a series of innovations in their shopping and purchasing over the years and now we have reach a point of technology capabilities and network capabilities that allows and more importantly, encourages the innovation to increase in velocity.  We have reached a point of convergence in the retail market with technology, consumer demands and retail partner collaboration where the market is now forcing retailers to participate in this social collaborative network. There is really no choice for retailers in this current environment and the retailers must engage in the network in order to prosper.  We are seeing the results of this across the marketplace in the reactions and plans, or lack of plans, from major retailers in their efforts to expand and integrate the consumer shopping experience seamlessly across all channels.

This integration of the consumer shopping experience across all channels provides the foundation for the social collaborative innovation in the marketplace.  I find it especially fascinating that you can see the difference in results between major large legacy retailers that have embraced the consumer demands from the retailers that have not embraced the consumer demands in the marketplace.  Forward looking retailers have embraced the consumer demands and the collaborative network capabilities and demands that buffeted the market over the recent years. These forward looking retailers have stepped up to understand and incorporate the capabilities into their practices and these are the retailers (I’m thinking of Macy’s and Walmart as key examples) that are preparing for the future innovations in the market and these are the retailers that will also drive the partners to view and understand and incorporate the capabilities to support the collaborative network to navigate and embrace the innovation.

Retailers really have a choice in this matter and the choice unfortunately is to embrace and drive the innovation in the market to survive, or to hold back and wait for the dust to settle and potentially fail.  The key force now is the velocity of the innovation that is driving the retail marketplace. In the past, retailers have been divided between innovators and large major retailers and the large retailers waited for the dust to settle and history to select the innovations that were accepted by consumers in order to change.  Unfortunately now because of the velocity of the innovation the large retailers no longer have an option to wait for the dust to settle, instead these retailers must develop the framework that allows efficient and quick change capabilities to incorporate new innovations and drop innovation that fails.

Maintaining The Innovation Chain

Maintaining the innovation change is both deceptively simple yet exceedingly difficult at the same time.  It's simple because it doesn’t cost a great deal of money to maintain, the key requirement and effort to maintain the innovation chain is simply to maintain a line of open and active communications across the partner network.  It is difficult because keeping a line of open and active communications requires a culture change that embraces the importance of the communications required to maintain the innovation chain. The culture change is the hangup that will lead to the failure and is really the most difficult to ensure over the long term.  The culture change must be allowed the time and the encouragement to success while the change is taking hold and becoming a mainstay of the innovation chain.

Many retailers and their partners embrace the culture change over the short team however do not have the patience to nurture and allow the change to become ingrained and part of the nature of the organization.  In addition to the the partners must have the patience to encourage the same changes in culture across the entire collaborative network in order to allow the change to become part of the network culture. This is very difficult because each partner is at different levels of change and different levels of engagement.  The commitment and engagement is a cyclical factor in maintaining the change and this is also encouraged by the active participation of the partners across the network, along with the resulting benefits derived by the engagement of the partners. This is where the change will most often fail, its not that the partners do not see the benefit, and it's not that the partners do not want to participate,  it is more that the partners feel they cannot sustain both the level of commitment and the level of engagement required to ensure the long term success of the innovation chain.

You see, partners can maintain short bursts of engagement across a large number of partners for a short period of time and these same partners seem to lose their focus and commitment after a period of time if they see no change or improvement in the key measurements.  The partners in the innovation chain must be encouraged to participate and this must be a constant and continuous encouragement to participate otherwise the partners will stop the methods and practices that encourage participation. The partners in the innovation chain will only try for so long without benefits and without the encouragement to participate.  This is a bit of faith that must be practiced so that when one partner is down another picks up the slack and takes on the responsibility for encouraging the others.

Just like everybody has an off day in life, every partner will have the off day or number of days where there must be another partner willing and able to step up and support the innovation chain while the others recuperate.  This is one of the benefits of the innovation chain, every partner does not need to be on their game all the time in order to succeed. The benefits of the collaborative network and the partners in this network is that they will carry each other during the ups and downs to support the demands and the needs of the innovation network.  There is really not a very high cost of entry and yet there can be a very high benefit achieved as a result of the active participation of the partners in the chain.

Innovation Chain

The collaborative network provides the foundation and the framework to support an innovation chain that will drive the continued retail marketplace transformation.  The market must address develop and maintain a means to interact directly with the entire chain of partners and consumers in order to react and direct the change demands from consumers.  Consumers have the means through technology to take a major role in these new developments and the retail market transformation. This collaborative network is the best vehicle to integrate emerging technologies and new services into the retail marketplace in an efficient and effective manner that supports the transformation without a great deal of disruption.  This is an important concept that the the partners across the marketplace must be aware and account for in the transformation so that momentum is not lost to address disruption and the transformation.

Consumer technology has been driving the transformation for a while now and in many cases during the initial days of eCommerce channel sales the retailers maintained control of the market and the shopping and purchasing.  During this time retailers were at the center of the marketplace and controlled the shopping and the purchasing, For all intents and purposes the early eCommerce offerings were electronic catalogs that provided consumers another channel to make purchases of the same products. During this time though the consumer technology and network technology were changing and consumers started using the technology for shopping and purchasing practices that supported their lifestyle changes and these changes really started pushing the transformation of the market.  

The center of innovation now has shifted from the retailer to the consumer and omni market service providers with the retailers now taking advantage of the services and capabilities that can be provided by the collaborative network.  The collaborative network is still in the conceptual phase of the transformation and there are still many areas for improvement along the way. The key though is the focus on the social network aspect of the collaborative network that provides a means to communicate and connect with partners and consumers through the social network framework.  This provides a great boost to the innovation chain in that it provides the framework to easily change with the consumer transformation of the retail marketplace.

The key benefit to the social network framework is the distributed connectivity supported by the framework that supports and encourages distributed connectivity that does not depend on any single centralized network connection routing.  This is a bit of a mouthful but the concept is simple; the distributed network encourages and supports non-centralized connectivity that allows the network partners to build and utilize connections based on the demands at the time and not based on centralized network connectivity requirements.  The challenge for the retailer is breaking the habit to control the activities and relationships as the center of the market and center of innovation. The shift now is to the consumer and the specialized service providers that are developing and supporting new services. This shift will only increase in velocity as new innovations and the new specialized service providers join the collaborative network based on consumer demands.  This innovation chain requires acceptance and support from retailers and one of the key benefits of this model for retailers is that the retailer can take advantage of innovation without a huge investment or risk of failure to deliver change.