Digital Transformation in Retail: Innovation, Changes

Michael Krigsman: Innovation is so important. When we talk about digital transformation, culture change, and the role of a business evolution, looking forward, understanding where it’s come from, looking at the industry, all these matter. Today, on Episode #282 of CxOTalk, we are exploring these topics in retail. Boy-oh-boy, we have two people who are world experts qualified to have that discussion.

I’m Michael Krigsman. I’m an industry analyst and the host of CxOTalk. I want to say a quick thank you to Livestream for supporting us low these many years with our video infrastructure. If you go to Livestream.com/CxOTalk, in fact, they will give you a discount.

Now, before we start, I want you to tell a friend. Better to tell five, but at least one. Tell a friend. Tell a colleague. And, subscribe on YouTube. Do that! Tell a friend and subscribe on YouTube.

Without further ado, I want to introduce our first guest. Dana Randall is the head of innovation for Tapestry. Now, you may not know the brand Tapestry, but you sure know the brands that fall under it, such as Coach, Kate Spade, and Stuart Weitzman. Dana Randall, this is your first time on CxOTalk, and I’m so happy that you’re here. Welcome.

Dana Randall: Thank you. Thank you for having me.

Michael Krigsman: Dana, tell us about Tapestry and tell us about your role.

Dana Randall: Sure. I head up innovation at Tapestry, which you mentioned owns Coach, Kate Spade, and Stuart Weitzman. I started the company working at the Coach brand and, over the past few years, as Coach Inc. has evolved into Tapestry and becoming a multi-brand company, my role has been shifted to help drive innovation across the three brands.

Michael Krigsman: Okay, so we are going to explore innovation in retail. You’re in the high-end fashion segment of retail, so I’m very interested to have this conversation.

Our second guest is an old friend of CxOTalk. He is really one of the world’s top researchers on digital transformation, and he wrote a report recently on change agents, and so I’m really honored and thrilled to welcome back Brian Solis to CxOTalk. Hey, Brian. How are you?

Brian Solis: I am doing well. I’m excited to be on Episode 282. My goodness! I think the last time it was 280. You’re just climbing those numbers. Michael, I’ll make you happy. I just subscribed to the YouTube channel. Everybody should do that.

Look, at the end of the day, one of the reasons why I love being on this show is, one, because you have me here. [Laughter] You’re kind enough to do that. But, two, these conversations are super stimulating. I leave inspired every single time. I am definitely a big fan of Dana, so I’m happy to be here.

Michael Krigsman: Well, that’s fantastic. Let’s dive into this conversation. Maybe, Brian, we should start with you to give us an overview of retail. There’s a lot of change in retail, and so why do we need to have the innovation conversation about the retail industry?

Brian Solis: [Laughter] I’m sure Dana is going to have a lot to say about this as well. I am just putting the finishing touches on the State and Future of Retail, some research I’ve been working on over the last year. I think, like any industry, to be honest, everything is in need of innovation. The challenges are pretty much consistent across the board.

The reason why we have to focus on innovation in retail and retail brands is simply because the consumer is changing so rapidly. It’s not just because they’re connected to a cell phone all the time, smartphone, or whatever you want to call it, a new digital appendage. It’s because what happens on the other side of that screen is empowering them. It’s making them more informed, making them more connected, making them more demanding, allusive, and patient – a whole lot of things.

For brands to be relevant, it’s not just about creating great products that people want to pay a lot of money for [laughter] or find their store. It’s about what happens when you connect that brand, retail and also consumer goods, into an experience that matters to someone who is just not the same consumer that, say, when Toys R Us was founded. It’s a different world.

Michael Krigsman: Dana, consumers have changed. How have consumers changed? Why have consumers changed? Give us some insight into that, please.

Dana Randall: Absolutely. The things I like to think about is what’s changed in our lives just overall. With retail, we’ve become a bit more automated, in a positive way, and sometimes more efficient. I think this starts to challenge then what is the role of the store in retail.

We can now shop at 3 o’clock in the morning in our bed or on our couch from an app online, and so the reasons that someone now gets up, leaves their home, and goes to a store has shifted. I think that’s driven a lot of the change about what we think about. What is the experience that we need to deliver for customers now that a lot of their actual purchasing is starting to move more and more to digital?

Michael Krigsman: Brian, I’m sure you have some thoughts on this notion of the role of the store in retail.

Brian Solis: I was just admiring Dana’s background. I’m a little jealous. [Laughter] She seems to be in a very nice space on a beautiful day.

Look, I think, as she said, what does it mean to shop? What does it mean to go into a store? A lot of times when we have these conversations about innovation, we’re talking to executives who know the world as it was, who came up in that world, who have been successful in that world. They’re making decisions or they’re considering investments about the future of a retail experience that they just can’t simply understand because they’re not their consumer.

In fact, in many cases where we see retail getting into a lot of problems are good old-fashioned things like egos and politics but also leveraged debt and all of this stuff starting to come due, and massive retail rents, employees, overhead, and then the reality of having shareholders and stakeholders who are dictating your investments in the future as being the cost center and not as an investment in relevance. There’s a lot of things that we have to consider when we’re talking about innovation.

At the heart of the matter, and what we can’t overlook, is the fact that the consumer is in control of the experiences that they want to have. That consumer is different. In those cases, success is a poor teacher in the future. At this point, we have to stop resting on our laurels and our experiences that we’ve had over the last 10, 20, 30 years, and start making decisions out of our comfort zone.

I know that this is the world that Dana lives in. She’s not part of just a great brand and on the innovation side of a great brand. She’s been involved with startups for pretty much her entire career, just like I have. Once you start playing in that game, you live by a motto of constraint forces creativity. You have to succeed. You have to focus on growth. You have no choice in the matter. In those cases, shareholders want you to actually break new ground. [Laughter]

But, I’ll stop there because I feel like I’m getting on a soapbox. Who has soapboxes anymore, by the way? Where did that come from?

Dana Randall: You’re preaching to the choir, Brian. This is something that Brian and I actually talk about a lot. As there’s a shift between what’s happening in the consumer, one of the biggest challenges is then what are the necessary shifts within the organization that need to happen to adjust to that? It’s not easy. I think it’s important to be really open and honest about the conversation that it’s very, very difficult to transform a legacy company and organizational structure and silos in order to better serve what this future consumer is looking like.

Michael Krigsman: Brian, I see you nodding at this idea that it’s difficult to transform a legacy company, which is a topic that transcends any industry, isn’t it?

Brian Solis: Oh, I mean the conversations that Dana and I have had have all really been about the human challenges we all face in trying to move people to a new comfort zone or to chase where we need to be and getting people outside of the world that they know. It’s interesting because I think you can’t talk about the future of retail without looking at Toys R Us. I think, when we look at a world through a lens of legacy versus a lens of possibility, you see exactly what happens. You have 14 million or 15 million paid out as part of the bankruptcy settlement to executives. You have 33,000 people who are losing their jobs. You have a board that rewards mistakes with literally money. Until we start to change the incentive packages for executives, until we start to put pressure on the board of looking beyond quarter-to-quarter performance and starting to make the investments that are going to help them be relevant next and ten years from now, the conversation about legacy is just frustrating and it’s killing companies.

It’s people like Dana; it’s change agents like you and me that go into these organizations and try to just knock some sense into folks. But, at the end of the day, the entire incentive structure for how these companies perform and operate is at the root of the problem. It’s not just retail. It’s really any industry.

Michael Krigsman: Dana, go ahead.

Dana Randall: I think the thing to think about is also, there’s a lot of pressure on companies right now to be innovating. While there is a lot of interest in saying, “We’re innovating; we’re changing; we’re transforming; this is important to us,” there is a certain amount of air cover that’s needed in order for this to work. The stakes are very high, and the expectations are very high that everything you do is going to work and is going to be a success. That’s also not really that realistic in typical innovation. I think those are some of the struggles that are industry agnostic. It’s just about company, culture, legacy organizations versus more digitally native brands that are operating under a certain set of success metrics and goals that were designed probably anywhere from 75 to 20 years ago.

Brian Solis: Yeah. I’m just going to jump in there too, Michael. That’s exactly right. We’re making decisions about the future based on standards of the past. It’s incredibly ironic. I’m sure, Dana, you’ve probably seen this a million times. Especially when we talk about innovation, I think we naturally tend to lean on technology too much. What’s our beacon strategy? Can we get some in-store pickup from our mobile app?

We’ve talked about this before too, Michael, where we get caught up in technology as a crutch, but what ends up happening is that we’re putting them into the constructs that are 50 years old, 60 years old. Retail itself, how old is that? It hasn’t changed much. But, technology is an enabler, and it’s not the solution in and of itself.

Unfortunately, the biggest opportunity for innovation, I think, is in perspective. How do we see space? How do we see service? How do we see process?

[Laughter] In Episode 280 when we had our friend from Neiman Marcus on, here’s a guy that came from the tech world who really started to preach about understanding the consumer before you could make any tech investments, but being held accountable for the investments that he was making to show that there was legitimate ROI against those investments. I think, when we look short-term in those regards and his battle of trying to get people to see things differently, I just wonder how could we accelerate getting executives to take chances on a consumer that they don’t understand where they can take a step back and look at the four walls of a store and say, “This doesn’t make sense the way it used to.”

Michael Krigsman: Okay. Dana, let me summarize our story so far. We have financial pressures. Look at Toys R Us. We have changing consumer expectations and behavior. We have a notion of what is a store to begin with, right?

What is retail? Is it a physical store? Is it online? We have all of that shifting around. And, we have companies with established ways of doing things. We know that, in general, people are resistant to change. Given all of that, I guess the question is, what do we do?

Dana Randall: What do we do? I think we start with defining terms and getting on the same page to make sure we’re talking about the same thing. Innovation is a very interesting and dangerous word. It almost makes me a little uncomfortable because it’s being thrown around a lot.

One of the things I like to do in these conversations is, first, getting down to basics and say, “What are we talking about? What type of innovation are we talking about?” Are we talking about business innovation, maybe a new business model or transforming the way that a company works? Are we talking about customer experience innovation? That could be something like in-store technology or just general things that touch the customer experience. Or, in the third bucket, are we talking about product innovation?

Generally, the answer is all three. To get more alignment to say, “Okay, what are we going after at this moment or at this table or in this conversation?” because I think one of the traps that we’re falling into, like, “What do we do? Where do we go?” is because we’re actually not aligning right upfront on what it is we’re actually talking about and then what are some of the goals that we’re trying to get to.

Michael Krigsman:Go on, Brian. [Laughter]

Brian Solis: Yeah. That’s exactly right. If you asked 10 people what innovation means, you’re going to get 20 to 30 different answers. Yet, it’s something that’s thrown around so easily and so quickly, but so underappreciated.

Dana, kudos to you. Anybody whose role has to do with innovation–and not saying this is the case at Tapestry, but just in my own research–it’s part of having to understand not only what’s happening outside of your organization and what are the trends that are important, how are consumers reacting to those trends, but also trying to navigate, in a very human way, things that are just tied to good old fashioned change management. How do you translate these insights and these trends into action within the organization and get the support necessary to be able to test, learn, and execute? I think that’s a lot of the times where the roadblock happens. Dana, what have you seen in your experiences?

Dana Randall: I think the first thing is owning your own failures, right? When I started with the company, I actually was not an employee of the company. I worked at an agency. My background comes from the startup industry, tech, and agency, not retail.

I came into this organization with a certain style and a certain approach that was very different from how a typical retail brand operates. The way that I came into this was sort of guns blazing, and that was not the right approach. I learned the hard way about how to get alignment and buy-in from whether it’s your peers or senior leadership.

I think that was sort of the first thing is realizing that this is a journey. There is no blueprint on how to do this. Anyone in my type of role is going to not just fail in some of the tests that we do but also sometimes fail in our approach. To get a bit of forgiveness within the organization to understand that we’re trying something completely new, and we’re not going to be perfect every step of the way.

Michael Krigsman: Brian, when you said, when you made the comment, “Every person who is involved is a change agent in innovation,” and then you paused, I was thinking to myself. The term that came to mind was “masochist.” [Laughter]

Brian Solis: [Laughter]

Michael Krigsman: Because every person who is involved as a change agent is going to be running, right? The basic problem is, organizations have a business model. They have established organizations, a business model, revenue stream. Any time you change, you run the risk of opening up for the future, which requires investment today that may not see an ROI today but, at the same time, disrupting that established revenue stream. And so, there’s a natural, very strong bias against change. Therefore, what are the attributes of a successful change agent given the fact that the role in any company by definition is going to involve a certain amount of masochism? [Laughter]

Brian Solis: [Laughter] Yeah. That’s a good place to start. Any conversation that starts with masochism, let’s go.

Michael Krigsman: [Laughter]

Brian Solis: I’m going to also let Dana add to what I’m about to say because she is in the throws of it. I think you had this idea of what it takes when you go in. I don’t know 100% of the time that anyone hiring for innovation really knows what they want. When you get in, you have this idea of what it means to be successful and what you need to do to get the job done.

I think, over time, you learn characteristics and you gain expertise that you didn’t necessarily know you would have to have, things like thicker skin, less emotional attachment to pushback and skepticism, things like becoming a politician [laughter] within your own organization to bring people together and survive all of the different attacks or sabotage efforts that happen along the way. Other things are being a cheerleader to yourself and to those who believe in what you’re trying to do around you because it’s hard and not everybody has been successful, previously, in bringing people together. Those are all very human traits.

I think the other thing, though, in terms of real characteristics of what it takes to be successful is really understanding the dynamic of the technology world, which is, as we all know, its own language, its own speed, and being able to translate that up to the language of the C-suite, translating these trends into real business value, business growth opportunities, and addressing sort of not just the skepticism. But also, people don’t know what they don’t know. It’s sort of the job of the change agent to be a translator and to be an empowerer of helping people understand that this is exactly how we connect the dots not only to success, but business growth over time.

On that, I’ll turn it over to Dana because she is there. She lives this.

Dana Randall: Yeah, I think the other piece of the puzzle that happens is blocking and tackling the buzzwords that end up driving a lot of initiatives or at least driving the interest in an initiative that doesn’t always make sense. For example, people will start talking about blockchain a lot, or they’ll start talking about augmented reality. What will happen is there’s a general interest in what we’re doing about this; we need to do something with this. You’re often in a role where you have to say, “I understand you’re excited about this particular topic, but we have to take a step back and figure out does this really make sense for us. Are we interested in something just because everyone is talking about it and we want to be a part of that conversation, or is this actually meaningful and transformative for our business?”

That’s also hard because, while on my end, let’s say, I’m used to rejection all the time because failure is part of my business, on a more executive level they’re not necessarily used to someone saying, “No, we’re not going to do that.” There’s a balance and there’s a collaboration that needs to happen and, again, education on top of that. I think these are some of the things that this is industry agnostic. It doesn’t matter if you work in grocery, automotive, or retail. These are just some things that will happen on an ongoing basis. Figuring out how to navigate them is probably the hardest part of my job.

Michael Krigsman: We have an interesting question from Twitter. Arsalan Khan asks kind of a broad question about retail. He says, “What is the future of retail from internal operations to customer service? Talk about changes. Why do we even need to have inventory in retail stores anymore?” I think this is the change in innovation question, “What bridges can we build now to achieve this future vision?” I see this as the, “How does retail stay relevant?” question. Brian, you brought up Toys R Us earlier. I guess, therefore, that demonstrates it’s a pretty important question even if you are a very large company.

Brian Solis: Yeah. I’ll kick it off. Obviously, this is the world that Dana lives in. When is the last time you’ve been in a Toys R Us store? It hasn’t changed much since 1970. The challenge is, you had a company there that had so much debt that they couldn’t afford to invest in things like customer experience. The best they could do was build a website, build a mobile app, and just give the semblance of being modern.

In reality, the reason why I love this question is because it’s all of the above. I think things like conversations about inventory are lower on the pyramid of innovation for me in terms of what is the experience supposed to be now and over time that the consumer expects? The challenge is that retailers look to each other to kind of see how they’re going to one-up one another or what someone is doing in terms of case studies.

I look at companies like Uber, Tinder, and just random apps and services that are changing the consumer mindset for the types of experiences that they want to have and use those insights, much in the same way a UX designer might, to design physical experiences and processes that a consumer would want to have. That’s what Starbucks does, right? Starbucks and Dominos as well, these are two companies that don’t look at themselves as coffee or pizza companies, respectively.

Starbucks considers themselves a mobile technology company and they make decisions that way. They’re staffed that way. Dominos, of the 800 people that are employed in their headquarters, 400 of them are software programmers, and they’re testing robot delivery. Literally, there are robots that hit my ankles around where I live as they’re testing autonomous deliver. There are trucks that can drive themselves and bake pizzas as they go.

My point is this. We don’t know, and that’s the conversation we need to start having is we can’t be too radical overnight, but we do have to start investing in the infrastructure and the expertise necessary to test and learn what’s possible with the space we have. I’ll just [say], before I turn it over to Dana, that means things like product innovation, sure, but service innovation–the same type of thinking that went into Disney Land and Disney World–process innovation, experience innovation, and then all of the operational innovation to sort of bring those things to light. We have to start making decisions based on what you would do if you were starting from scratch versus how we’re going to make what we have work because that makes things sluggish and often wrong.

Dana Randall: Perfect segue. [Laughter] Thank you, Brian, because what I was just thinking in my head is when you work at a large brand, if you’re a publicly traded company, you have a responsibility. You cannot just tear it down. You have to keep this massive cruise ship moving along. That’s probably one of the biggest challenges. The business still needs to continue to grow and succeed at the same time you’ve got someone like me who is sort of operating a speedboat going around this ship and annoying a few people along the way. But, that’s probably one of the biggest challenges.

I think that often people will come into the conversation and they say, “You’re doing it all wrong. You need to tear it all down.” There’s a reality. You’ve got thousands of employees. You’ve got shareholders. You just can’t tear it all down and say, “We’re going to start over.”

Some companies have gone with the approach of, “We’re going to either build or acquire a small, nimble brand where we can do these things here.” I think one of the other challenges is when you have a larger global brand; you have a little less ability to do some of these really risky moves because of, again, all these responsibilities, as well as the fact that you can’t completely alienate your customer.

One of the approaches that I see a lot of companies do is through saying, “We’re going to build this other brand,” or, “We’re going to acquire this other brand. We’re going to use that as essentially our lab to test and learn.” That’s one approach, but it can’t be the only solution.

Michael Krigsman: I love that. I love that notion that you can’t alienate your customers. I think Dana just described the fundamental challenge that large, established organizations face with innovation. I still think we’re sidestepping the question, the important question, that innovation is absolutely necessary because, if we don’t innovate, whether it’s retail or any other business, we end up like Toys R Us.

Brian Solis: [Laughter]

Michael Krigsman: Despite the difficulty, despite the masochism that every change agent takes on, it’s still absolutely necessary. Therefore, what are the conditions that need to be in place, and how do we ensure that this type of transformation and investment occurs?

Dana Randall: Sure.

Brian Solis: I’m just going to say something real quick, Dana. One other thing to add to that question is, how do you convince decision makers? Dana, not to throw too many questions at you, but how do you convince decision makers who don’t live the brand the way that, let’s just say, ModCloth consumers do or Bonobos consumers do? How do you convince decision makers to take chances on a world that they don’t understand or know?

Dana Randall: I think the answer is, you’re essentially forced to work on two types of initiatives. You need to work to build the credibility and the trust within the leadership of the organization to have a couple wins and wins that are aligned with goals of that executive. These might be innovations that the customer never sees, but they are revenue generating. They are helping address some business issues that need attention. These are not typically the sexy things that I want to work on, but it’s necessary. It’s a matter of balancing driving towards initiatives that are going to help maybe operationally or organizationally the company and then, at the same time, have a couple smaller, more conservative investment innovations that touch the customer.

I think where I see a lot of failure is when someone throws several millions of dollars at an initiative that is customer-facing. I mean to say it’s 50/50 that will succeed, actually, it’s more like 80/20. These types of investments, when they don’t succeed, really you end up shooting yourself in the foot. I think that’s the sort of how. It’s to build the trust and credibility within the executive suite to drive towards programs that are really helping the bottom line and the share price of the company and, at the same time, sort of peppering in some of these more sexy, customer-facing innovations.

Michael Krigsman: We have a question that has just come in from Twitter. Olga Reinholdt asks, “What are the formal skills/educational and the soft skills that one needs to possess to successfully lead retail innovation and to cultivate the organizational trust that’s required?” I think it’s a great question. Dana, thoughts from you?

Dana Randall: Well, there’s not a single answer. I think that the answer varies based on the company that you’re going to be a part of. My particular background is, I was a programmer, so I’m definitely tech savvy. I understand how to talk to engineers. I wouldn’t write a line of code today, but that was part of my background. I was also a designer.

My role today is much more strategy focused, but the foundation of my background was in Web development and actually working in tech. Now, you’ll have someone like Scott from Neiman Marcus and his profile is very different from mine. Yet, we have the same job in similar organizations. Scott is able to be successful at his company. He has been there for several years. It was a role that was created from within. Again, it has to do with the culture of the company that he works at.

I think that the answer, in a general sense, is the person who runs innovation has to have a little bit of everything. I hate to say jack of all trades and master of none because you want to be a master of innovation, but you need to have the diversity of experience. If you’re just purely IT, you’re going to have a hard time understanding the other necessary parts of what your job needs to be, whether it’s soft skills, more creative skills, ideation, [and] strategy. You need to possess a little bit of everything, and that’s a hard role to hire for.

Michael Krigsman: Brian, your thoughts?

Brian Solis: Guys, I was just geeking out because I started as a programmer as well. [Laughter] I don’t know that I can write a line of code anymore.

There is just something there to balance both sides of the brain. I think what Dana was hitting on at the end is I think what I want to talk a little bit about, which is culture. One of the things that I found in this Future of Retail report was that a lot of brands are opening up or building innovation centers and innovation labs.

One of the things that I had found was, when you talk to the people running these labs, get a glass of wine into them or a beer into them and you shift from analyst to therapist. You start to really hear the challenges that they have, which is that you’re going to bump into challenges or you might even fail completely if you’re trying to bring new models and new initiatives into a culture that is still gripping onto the past. How do we keep our consumers? How do we woo consumers from our competitors? In addition to having conversations that are, “Well, what about the people we don’t reach? How could we be that next startup?”

I have this cartoon that I’m drawing that was inspired from the research with my friends over at Gaping Void that says you can’t hipster or millennial your way to innovation. At the end of the day, you actually have to have a culture that supports taking risk, that empowers or incentivizes people to unlearn and learn new things, that protect their renegades within the organization who are just simply trying to answer the question of, “How do we stay relevant and how do we compete for the future?” Then also, help those who are holding onto the past, realize that their future as an individual, as a professional, relies on the success of these change agents, that they’re creating their future jobs for everybody. It’s a tough balance but I think, at the end of the day, you have to have a culture that supports that.

Dana Randall: Another piece I want to add to that, which we haven’t talked about, is the reality that a big part of my job, and I know my peers’ jobs, is working with startups and helping these startups that are being more innovative and introducing technologies to our organizations, helping them succeed within the culture of our organization. That’s actually a really big part of my job. Brian is my therapist. But, at the same time, I’m often the therapist to the startups that we work with to help them navigate our organization to help them make the right decisions for their company and their success because, the same way I want to succeed and need to succeed, I also need them to succeed.

Michael Krigsman: What advice do you offer to those startups in terms of navigating your organization or other similar large companies that, by definition, a large company has a need to innovate?

Dana Randall: I think a couple of the key things that I will say on a pretty regular basis is, it’s okay to say no. That’s a very hard thing for a startup to do when they’re really, really eager to work with one of your brands. Another piece is, don’t build something just for us. I see a lot of these companies fall into the trap of ultimately taking their product, losing their product vision, and building something to the specific needs of this particular brand. The question that I often ask these founders and cofounders that I work with is, “Does this particular feature or does this pivot align with where you’re going to go, and is this scalable for other companies that you want to work with?” If the answer is no and they don’t see the endgame being acquired by the company that they’re custom building software for, then that’s a lot of the guidance that I feel that I have to give on a regular basis.

Michael Krigsman: Brian, I keep pausing for you to jump in because I know that you have opinions on all of these topics. [Laughter]

Brian Solis: [Laughter] Yeah. No, I’m just trying to figure out the flow. I don’t want to jump over people. I absolutely love what she’s saying.

I think we could all laugh about it now, but it makes all the sense in the world that when Walmart acquired Jet.com and tried to impose the Walmart culture on the Jet.com office, you famously heard that they banned alcohol from the building. That killed the spirit of what made Jet.com Jet.com. You could take a great team and a great technology, and you could try to tweak it and bend it against your aging business models, or you can acquire companies and talent, and task them with creating your future. That, I think, is the balance that we have to understand. What innovation do we apply to scaling what we know and what we do very well, and what balance of innovation goes to opening new markets and creating new value propositions? In the end, that’s the difference.

We’ve had this conversation before. That’s the difference between iteration and innovation. Iteration is doing the same things better and innovation is doing new things that create new value. That leads to disruption, which is doing new things that make the old things obsolete.

When you look at all of the different accelerators and incubators that exist around the country and around the world about the future of retail, you have traditional brands that are coming in and tasking these awesome startups with solving problems against their past or their legacy business models. I don’t want to say it’s laughable, but it’s laughable. [Laughter] At the same time, we need people like Dana to be fully empowered to go out there and task startups with creating what the future of retail is going to be. That’s how the future unfolds. We don’t know what it is. Like Dana said earlier; there’s no playbook for it. But, the way to do it is to do it.

Michael Krigsman: Actually, we’re reaching the point in the show where we have about five minutes left, and I have many questions that I would like to get answered. This is the point in the show where I have to ask you rapid-fire questions and ask you to answer quite quickly so we can get through because I have all this stuff that I need to know. How’s that? [Laughter]

Brian Solis: [Laughter]

Michael Krigsman: Brian, let me start with you. Where, in the organization, should innovation report? Where does it belong?

Brian Solis: I will look at, in the quick answer, the Westfield model, which is now become OneMarket. They spun it out because it was reporting to corporate. They spun it out as its own company to have its own P&L so that it can perform as necessary even if the culture of the organization isn’t going to allow it to be successful. I think that’s one interesting model that I’m exploring. Was that quick enough?

Michael Krigsman: You can elaborate slightly more like, precisely who should own innovation?

Brian Solis: Innovation should own itself. It’s almost like innovation as a service, as a model within the organization, that it is brought in as an internal expert and funded as such to deliver against solving problems and creating new opportunities. It could report to a new type of role. It could be a chief innovation officer. But, it shouldn’t report to a traditional CEO or a traditional board.

Michael Krigsman: Let me try this one more time. See, I’m trying to pin you down, and you’re not letting me do it. [Laughter]

Brian Solis: [Laughter] I’m trying to be fast.

Michael Krigsman: [Laughter] Okay. What I want to know is, inside the traditional corporate hierarchy where we want to change, and we don’t want to change, where should innovation go?

Brian Solis: None of the above.

Michael Krigsman: [Laughter]

Brian Solis: [Laughter] Why would you have innovation report to a traditional hierarchy of executives that don’t understand innovation?

Michael Krigsman: Because we want to change, Brian. We want to change.

Brian Solis: That’s why I think this OneMarket is a really interesting, promising example. They spun it out, and they’ve created their own hierarchy. It reports to itself, right? It’s tasked with helping the company change, so it’s almost like an internal/external consultancy. In that case, it has to report to the CEO of the traditional organization, but that CEO has been empowered and rewarded for innovation. Other CEOs aren’t.

Michael Krigsman: Okay, so I’m not getting the simplistic answer that I was hoping for to the question.

Brian Solis: Well, I’m sure Dana will be able to tell you the same thing. She talks to brands all the time. Where should it report? None of the above because it’s going to fail.

Michael Krigsman: Okay, Dana. Let me ask you a question. In the situation that most companies face, which is, of course, we want to. How can you even ask if we want to innovate? That’s a totally lame question.

But, at the same time, we don’t really want to innovate. Why are you going around trying to make changes? We have a business to run here.

In that kind of environment, which is almost every company, where should innovation report? How about that, Dana?

Dana Randall: I think the answer to the question can be, it has to be the C-suite, right? You have to be talking to the top of the organization. It could be the CEO. I’ve seen it sitting inside IT. I’ve never seen that work particularly well.

You’re going to yell at me because I know I’m not going to directly answer the question. I think it comes down to the entire structure is in the process of changing, so where does it report now versus where maybe can it report a year from now? I think there’s not a clear answer. I know where I sit in the organization, and I think this is a conversation that we’re constantly having is, is that the right place? Does it make sense? Also, as the company grows and changes, that also shifts.

My role sat under the Coach brand. When we became Tapestry, all of a sudden, I am working across three different brands. Now, how do you plug that in to now you have brand CEOs and then you have the Tapestry CEO? There’s no really simple answer. If I had the answer, I think this wouldn’t be as challenging of a conversation.

Michael Krigsman: Okay. I get it.

Brian Solis: [Laughter]

Michael Krigsman: It’s hard. I get that. I get that. Okay. That’s basically what you’re both saying. Let me ask the question this way. This is not going as I had wanted. See, I thought, okay, I’m going to ask you these quick Twitter-type questions, and you’re going to give me back soundbites. That’s okay. We’re talking substance, you guys. I get that. That’s fine.

Let me ask the question this way. I’m particularly familiar with the enterprise software industry having worked or consulted, involved with most of the major enterprise software brands. At least in that industry, and I have to suspect that since human nature is the same, therefore, this must be true in the fashion industry as well, which is, when somebody tries to introduce business model change, there are these anti-innovation antibodies that scurry around and shut it down. “No, no, no, no, no, no. You can’t do it.”

Brian Solis: [Laughter]

Michael Krigsman: You need to have air cover from senior management. Even if you have air cover from senior management, senior management doesn’t always have the control that we like to think. So, let’s talk about air cover. Brian, air cover, what’s the role of air cover from senior leadership in protecting innovation because otherwise, let’s face it, innovation will die?

Brian Solis: I think about Sephora in that model as being the answer to your question. The CEO is specifically charged by the board to foster innovation. They’ve tied ROI to it. They’ve opened up an innovation lab and all of those things. They’re able to trace it to revenue.

In that case, though, how it got there, as Dana was explaining, it started with an executive sponsor within the organization who was willing to attach their name to the investments of innovation. That sponsor then was able to demonstrate upwards and around that their programs were having successes.  They were able to further grow the innovation effort by getting the C-suite to invest in a team that was beyond just any one person, and that team reported directly to the CEO and also to the board on innovation investments and progress. Now they literally sit in the C-suite.

Michael Krigsman: Okay. It looks like we’re out of time. Dana, it looks like you’re going to get the last word on this topic. What is the role of senior management in an ideal world, whether it’s in retail or other businesses, because this is a human issue; it’s not an industry-specific issue, I think? What is the role of senior management in providing air cover to make sure that innovation can actually take hold and can happen?

Dana Randall: I think the role is first being very clear on what you’re looking for and be very clear on what you’re looking for this person or this department to accomplish. Be very clear on what success looks like to you as an executive. Then be a bit forgiving in what’s appropriate, right? Again, it’s about air cover and very direct, clear communication.

Michael Krigsman: Fair enough. We’re out of time. I feel like we’re not done yet.

Brian Solis: [Laughter]

Michael Krigsman: Right? We’re out of time. Any final, Brian? Any very quick, final thought just to close this out?

Brian Solis: Well, if you’re like Dana and me, and you’re trying to fight for innovation, if you get anything from this conversation, it is to don’t give up. Even though you’re not appreciated, your company or a company needs you more than ever.

Michael Krigsman: Okay. That’s pretty good. Dana, would you like to have the final, final–like really now I’m actually telling the truth–the real final word?

Dana Randall: The final-final?

Michael Krigsman: Exactly.

Dana Randall: Be nice to the people that run innovation in your company. We’re usually weirdos.

Brian Solis: [Laughter] I love that.

Michael Krigsman: With that, that’s how we have to end, with that cliffhanger.

Dana Randall: Yes.

Michael Krigsman: [Laughter]

Dana Randall: We’re weirdos.

Michael Krigsman: Okay. Well, change agents, you know my friend David Bray, who has been on this show a number of times, talks about the role of being a human flak jacket as a leader of change agents, I think that’s a pretty good way to summarize it at the end of the day when we talk about senior-level air cover.

Well, this has been a fast 45 minutes. You have been watching Episode #282 of CxOTalk. I want to say a deep thank you to our guests today. Brian Solis is one of the most prominent researchers in digital transformation and change agents in the world. Brian Solis, thank you for coming back, and I can’t wait for you to come back again.

Brian Solis: Thank you, and I can’t wait.

Michael Krigsman: Dana Randall personifies being a change agent. She is the head of global innovation with Tapestry, which owns the top retail brands, fashion brands Coach, Stuart Weitzman, and Kate Spade. Dana Randall, thank you for being here. I hope you will come back again as well.

Dana Randall: Thank you so much for having me.

Michael Krigsman: Now is the time to subscribe on YouTube. Do it! Check out our website, CxOTalk.com. We have amazing shows coming up, extraordinary shows. Everybody, thank you for watching. Thank you so much. Have a great day. Bye-bye.