Dancing Giants: Nordstrom's Innovation Labs help a 113-year old department store chain to innovate on the fly
Nordstrom is a 112-year old company. It began in an age where the radio was the cutting edge of communication. In its long lifespan, countless massive new business pressures have come into play, as great in scope as the widespread adoption of the automobile, car, telephone, and television, massive new urban developments, and the advent of the Internet and, with it, mobile shopping.
Today, Nordsrom is the fifth-largest department store in the country with revenues last year of $8.6 billion. But it faces retail landscape changing at a greater speed than ever before. Not the least of which is a new generation of consumers who think of a department store as evidence of old-world thinking.
In 2011, JB Brown was asked to head up Nordstrom’s new Innovation Lab, a small team of futurists looking to meet these new customer demands, often before they’ve even thought of them. He now carries the official title of Director of Innovation and Mobile Delivery. His task: bringing an agile business mindset and effectively operating as a startup within a Fortune 500 company.
[The following is a Q&A between PandoDaily and Brown, edited for clarity.]
How does the Innovation Lab work within the wider Nordstrom structure?
It’s a small group, inside of the company's broader technology organization. We usually start out with a customer problem and see if we can solve it. That’s the genesis of where we start. We meet with a customer, do shop-alongs, go to their homes, have them tell us how they make choices and get grounded in their lives.
Our direction is given by product management to identify the best opportunities for customers, to try and uncover potential to help them, manage risk and provide services that could be built at scale. We’re a small team of designers, ethnographers, and engineers.
I associate Nordstrom with these huge stores that sit like dinosaurs in big shopping malls. As the head of the Innovation Labs how do you want to subvert that?
Well, at first I have to acknowledge that for me to be able to tear at that image, Nordstrom’s had to have invested heavily in technology over the last six-to-eight years, making it possible to bring technology to customers in a way that is seamless. You can go online now and buy an item and pick it up in a store. Something like that requires being able to get near real time inventory across all channels. It’s nice to be the public name of that innovation, but really it’s a very small part.
That initial company level investment is an amplifier that allows us to try new things at speed. We can create some interesting prototypes quickly. The actual implementation for customers to really use those and provide feedback is going to go slow if you’re always trying to build out that backend.
We do things in the Innovation Lab by leveraging this new technology to try new things with customers and get real time feedback and make decisions quickly about what we scale and don’t.
Nordstrom’s has to adapt to a whole new mobile shopping environment, one that seems to be increasingly device – rather than brand – loyal. How hard has that been to adapt to?
It’s definitely been an effort. But the mindset and the way we make decisions is still the same. We’re always making the choices we hope will provide the customers the things that they want. We take that same path, but the avenue is different: today it's mobile, where it used to be the website and before that it was the stores or the catalogs or the racks. We shift the way our customers are shifting, we try to follow them and be where they are.
When you were asked to head up the Innovation Lab, were there certain mistakes you felt the company was making?
At the very beginning with the Innovation Labs we had to create an identity for ourselves and show the company that we could do the things it wanted of us and grow. We made mistakes ourselves, thinking that we were just a tech thing and could just advise on retail implementation. It didn’t work well. We weren’t grounded in our customers and the retail landscape. But we’ve always taken the approach of failing fast and learning and moving on.
Can you give me an example of failing fast and learning?
One of most successful end products in stores is the ability for our customers to ask for help over text message, with an application that protects privacy of both the customer and the clerk, allowing people to be notified of alterations, or refills for their cosmetics or a new shirt or favorite brand. That end result was from us trying to do a similar thing, but over email. But email communication was past its time. We started out, did some tests and the response, the perception, was that it wasn’t going to be something that we were going to spend time trying to build. So we switched over to text and worked with an internal support team to build that privacy infrastructure to do the same thing over text message.
How quickly can you make that pivot?
In that case it was within a few weeks. We attempted it with customers a couple of times. We want to invest in an experiment that is of a size just big enough to remove the risk we’re trying to uncover and invest proportionate to return. We look at just the right demographics and use cases.
How much resistance to change do you come up against?
There’s always resistance. But we hope that resistance is valuable resistance, in telling us whether the change is going to be good or bad. The resistance is usually because we haven’t thought through everything. As you go along in the process, hopefully that diminishes. Sometimes the resistance is because you’re getting on something customers didn’t know they really wanted but can help them still.
What tensions can exist between a smaller, more agile lab like yours and the parent company?
I see myself as a part of the bigger organization. I take ownership of all our results. It may be portrayed that the two sides are opposite, that the innovation and production function are separate, but I don’t think that is a successful way of thinking. I work as hard as I can to make the overall company goals part of every function.
[Note: The "Dancing Giants" series is being sponsored by Atlassian, so you'll only see their ads around these pieces. But the series was conceived, commissioned and edited entirely by Pando. Atlassian had no input whatsoever in the editorial. For more on our policy towards single sponsor series like this one, see here.][Featured image via Nordstrom Innovation Lab, Dancing Giants illustration by Hallie Bateman for Pando]