Evan Schuman's StorefrontBacktalk

A different approach, Dorf wrote, is an organic approach, along the lines of what Tesco and Wet Seal have done. But he then taunts chains: “This approach requires strong leadership, vision, and a willingness to fail so it’s not for every company.”

Strong leadership and vision is necessary for any of these strategies, especially the acquisition route, so I’m not seeing that as a differentiator.

As for having “a willingness to fail,” that is also certainly something that is needed for all of these approaches (so, again, no differentiator). But “willingness to fail” means several things. It usually means a willingness to see a bad outcome as not “failure” at all, but a useful piece of information. For example: “We need to know what will work and what won’t in (fill in the blank – mobile, social, geolocation, etc.). The fact that this approach did not work is great, as it told us what we shouldn’t deploy. Thanks, team. This is extremely valuable data.”

This presumes that everything has been properly analyzed so the proper conclusions are drawn. Did it not work because we’re too early? Was the deployment flawed but the idea valid? Did it not resonate because of the geography tested or the demographic that we used?

Part of the challenge with any tech trial is that the trial is based on a lengthy series of assumptions (guesses) that the team made. If it doesn’t work, it’s almost impossible to truly know why. Without knowing why a trial delivered or didn’t, it’s very difficult to make the right extrapolations from the data. One thing is certain, though: A trial that didn’t deliver invariably delivers much more valuable data than one that succeeded.

The key point is that if management is even using the word “failed,” it’s a pretty strong heads-up that they have no “willingness to fail.” A trial is a research tool, a learning experience. To equate a negative outcome with having failed misses the whole point of a trial.

(In the media business, useful feedback is a rare and beautiful thing. But nice and happy comments [Great work! Keep it up] are much less useful than specific negative thoughts, assuming our goal is to constantly improve what we deliver. That’s how trials should work.)

The third category Dorf wrote about was “partner collaboration” and he cited Lowe’s (NYSE:LOW) quite properly as a good retail example of that approach. Dorf’s words here are precisely on-target: “The danger retailers face is losing focus on their core competency—retailing. Running a start-up within a large company can be costly, reliant on key individuals, and sometimes a distraction to the core business. An alternative approach is to partner with technology companies so as to share some of the burden. Lowes, for example, invites technology partners to present innovative ideas then chooses a few projects for collaboration. This can be an excellent way

to stay on the leading edge of innovation without some of the mentioned downsides.”

The only nuance missing here is that most chains have two conflicting pressures that it’s up to the COO and CEO (and, ideally, the CFO) to resolve. While all of this change and exploration is going on, store and online management must focus on the day-to-day business of running a profitable business.

The CEO message to LOB managers should be: “People, we’re going to be exploring and toying with a lot of things and some of those trials will be happening in your sites and stores. I absolutely need you to shout and scream if any of this in any meaningful way starts to undermine your goal of running that profitable business. I’m going to be trying a lot of things and I’m relying on you to tell me if it hampers you in a dangerous way.”

But the opposite is also true. For a chain to grow and to be effective 2-3 years down the road, sometimes day-to-day operations and profits must be sacrificed for the future, for the greater good of the chain. That’s where the willingness to fail (I still hate that word) becomes so critical. How can an executive know whether the current non-traditional experiment is wasting time or a valuable research tool?

The way it’s supposed to work is the CEO gets lots of feedback from experts who report to the CEO. But there are historical biases: CIOs embrace the future and generally love to experiment while store management is scared of those efforts and sees them (sometimes correctly) as distractions that waste time and money.

Bottom line: It’s not as much a culture of research (willingness to fail) that is essential as a COO/CEO who are confident enough in their decisions to make those moves—and to not necessarily see a negative outcome as proof that they were wrong.