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The role of the innovation hub

Exploring the growing trend and role of innovation hubs (and hackathons) in digital innovation.

A new concept in the last year or so for a number of retailers has been the debut of innovation hubs – people and teams tasked within the business to develop new products, functions and services with a different mind-set to that traditionally seen in retail IT departments.

In these environments agility and responsiveness is key with the isolation – to some degree at least – of resources enabling retailers to better focus on the future whilst also getting on with business today. In our survey more than a third of respondents (37%) said they had innovation labs within their business averaging around 10 people in size but for many of the larger retailers teams of around 100 staff are common – albeit that some of those work across multiple roles within the business.

Respondents to the survey gave a range of business purposes for their innovation labs – from experimentation of ideas and designs to solving internal and customer problems and fast tracking ideas to pilot stage without slowing down the rest of the company through the normal process.

Argos opened its digital hub in January 2014 in an attempt to become more agile in how it delivered new customer experiences. Housed above its store in Victoria the digital hub team is now spread across three offices, growing by 60 people in the last year alone and with a further 120 recruited over the summer.

Staff are encouraged to think outside the box in the centre with a wall dedicated to a list of ideas that allows the retailer to think about how the company could look digitally without the shackles of stores.

Developments from the digital hub have included a Christmas gift finder and a Christmas wish list app aimed at 5 to 7 year olds.

M&S launched its digital lab at around the same time, revealing it with the same aim as Argos – to deliver the entrepreneurial mentality and tech savviness of start-up business together with customer insight to test out new ideas at the retailer. As with Argos’ lab the idea is that no idea is too preposterous and that testing can be down quickly and easily to provide learnings retailer from it.

At the same time ShopDirect took a rather different approach building instead a £100,000 user experience lab at its headquarters in January 2014 allowing it to better understand how customers react to changes and experiments on its websites. The lab features cameras, eye tracking technology and double-sided mirrors allowing its staff to see how innovations and digital changes are greeted by its customers. “A lot of our innovation is underpinned by customers so the user experience lab allows us to get under the skin of why customers are behaving in certain ways. Combine that with data and we can create an important picture,” says Sam Barton, head of user experience at ShopDirect.

In June 2014 Tesco revealed the creation of its own innovation lab – the Tesco Labs, comprising researchers, designers and developers tasked with working on new technologies and customer experiences. The division was founded following the merging of the innovation team with the IT research team. The division claims it works in “a perpetual start-up phase”, incubating promising ideas to allow them the room to develop. One of the company’s most high profile announcements was an app for Google Glass – however it was revealed a day before the tech giant announced it was to stop selling Google Glass.

Boots formally announced its innovation lab project in June this year but in truth it’s been a project since the beginning of the year and now comprises an virtual team that flexes in numbers with external technology partners, based around a small core Boots team of experts. “All are helping us create the roadmap for our digital experiences,” says Robin Phillips, director of omnichannel and development at Boots UK. Like ShopDirect the retailer has chosen a different name tag for its version of the innovation lab. “We called it Betalab as I wanted to ensure we were producing beta products,” says Phillips.

Essentially its task is the same though. “The Betalab is an enabler of our customer strategy which requires us to be better at data and digital than we ever have been before,” says Phillips.

Although innovation labs work as a permanent fixture within retailers a number are increasingly using hackathons to generate innovation too with Argos’ the kid’s wish list app having come from Argos’ 2014 hackathon.

ShopDirect’s head of user experience Sam Barton says that hackathons are being used both for internal staff and external partners. Although primarily coding based he says the concept of a hackathon – where a team are given a problem to solve in a limited timeframe – could essentially be embraced in a number of areas. “Hackathons are really interesting as a concept and now we are looking at how we can adopt it and bring in people across functions. The philosophy is also one we can embed in the business of creating teams and giving them problem statements to work through. We did that with a recent project where we took a team off site and worked through what the user case was in a 24 hour window,” says Barton.

Other retailers are working with start-ups. In June last year John Lewis launched its JLab project – a technology incubator project which offered five start-up companies office space and advice from well-known tech entrepreneurs.

Now in its second year the 12 week accelerator programme has targeted four specific categories targeted. Innovation labs are most definitely in vogue as retailers strive to enhance their digital experiences.

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