Image source: Wikipedia
Innovation and claiming to be innovative is becoming a fashion as product development markets become more and more competitive. However, while some product companies are innovating truly and are at the bleeding edge of their space, others are paying only a lip service to it. It is expected for companies in the tech space to be innovating because technology, by its very nature, not just allows but even encourages innovation. However, it is really impressive to see a retail organisation innovating and consequently faring better than its competitors in the wake of a slow market.
I recently had the opportunity to listen to Michael Fagan, GM – Store Renewal at Kmart Australia. It was interesting to learn how Kmart was fostering a culture of innovation and some of the indirect benefits it had reaped as a result of the same. 5 years ago, Kmart was close to bankruptcy and making virtually no profit. It’s an entirely different picture today. First quarter results for 2015 showed a 12.5% increase in sales for Kmart that helped it breach the billion dollar mark to hit $1.1 billion. While its competitors Myers and David Jones struggled to grow, Kmart recorded an impressive growth to increase its lead over them. Here’s a quick summary of points as mentioned by Michael that are helping Kmart thrive in this heavily competitive space:
- When innovating, you have to do things differently from others. Get off the trend line.
- Have high tolerance for ambiguity, risk, failure.
- Fail faster, fail often. If you aren’t failing, you aren’t trying things differently.
- Act fast, fail fast, learn fast.
- Flat structures ensure bad news travels fast.
- Don’t smack people down when they fail, especially in a high pressure environment.
- Don’t be afraid to cannibalise yourself. It’s better to be cannibalised by yourself rather than someone else.
As I continued to hear Michael talk about how the culture at Kmart was transformed, I couldn’t help but realise that new principles fostering innovation were the basic tenets of Agile. When Agile came into being, or should I say “was formalised into a methodology”, the basic principle was to get real – accept that changes would happen, early and fast failures are preferred over the illusion of success, people need to be trusted so they can work at the their maximum potential – be more agile than more prepared.
While all of the above sounds like common sense, it still requires diligence and courage to implement it at an organisation with over 200 stores and 31000 employees. Kmart pulled it off. And not only did it help itself, it also helped its customers and vendors alike in the process.