At the same time, Target needs to be patient, said Nathan Stoll, a former Google executive who recently launched Luvocracy, a social media/e-commerce start-up in San Francisco backed by Yahoo CEO Marissa Mayer and the renowned Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
Building an office is easy. Building a risk-taking culture that encourages failure is much more difficult, especially for a large publicly traded company that answers to shareholders.
“Target absolutely has a chance to make it work for them,” Stoll said. “But they need a steady flow of people who come through that [San Francisco] office. You need the knowledge exchange. Target’s strength has always been knowing what they are about. Now they need to integrate that with their technology efforts.”
Rewards for “big ideas”
Target executives seem keenly aware of this. Every month, David Newman, a former Apple executive who runs the San Francisco office, travels to Minneapolis to brief officials on their technology “hunts.” Projects are divided into three categories: core research, learnings (what’s ready? what’s not) and handoffs (ideas better suited for other departments at Target).
At the same time, Target holds Big Idea contests for employees, in which winners receive time and money to develop prototypes for their projects. Of the 700 submissions the company received during the last contest, four projects are in some stage of production. The retailer also hosts twice-a-year TGT Make Days when techies work on whatever they want.
“We are willing to take bets on ideas that won’t go forward,” Jacob said. “As an organization, we are well prepared to do that.”
Committees representing executives from IT, marketing, merchandise and digital sort through the ideas. The more promising ones go the new Rapid Application Deployment (RAD) office at headquarters, where teams develop prototypes and run small store pilots. RAD is about to launch its first test later this summer, a project targeted at a key group inside the back-to-school market.
Target also recently established a Stores Digital Integration team where store managers work with technologists on improving the in-store experience for customers.
Beyond specific projects and programs, Jacob said Target wants employees to naturally think about innovation on an everyday basis. So the company has made considerable investments in training, education and work tools.
For example, Target recently launched Hi Tech, where downtown employees can attend workshops and receive personal IT help instead of relying on the telephone hot lines most companies use. The program has proved so popular that the company plans to expand Hi Tech to its north campus in Brooklyn Park and perhaps offer “roving” Hi Tech teams to other Target offices.
The company has also rolled out an internal Wiki system so employees can quickly share and access information and digital links to help workers connect their mobile devices to the Internet more easily.
“I’m thrilled and amazed to see the creativity of our employees’ ideas,” Jacob said.
The Missoni misstep
But remaking a clunky collection of stores into a true integrated “omnichannel” retailer requires more than a quick paint job, analysts say.
Take Target. In 2010, after a decade of using Amazon to run Target.com, the retailer decided to take control of its website and revamp it. At the same time, Target was planning to launch its biggest design partnership, a 50-piece collection created by Missoni, the Italian fashion house.
When Target launched the collection that September, the website quickly crashed and customers complained about delayed deliveries and out-of-stock messages even though the website had processed their credit card information. Outside observers blamed Target’s problems on the lack of integration among its merchandising, marketing and online teams.
“Although most retailers are in the midst of one or many initiatives to improve their omnichannel experience, many have yet to crack the code on how their organizations will have to change to support them,” Clementine Illanes, a senior manager at Kurt Salmon retail consulting firm, wrote in a recent report.