Innovation is a recurring theme at many retail-oriented conferences nowadays. That’s hardly surprising given the hard push the entire industry is getting from consumer adoption of technology, particularly smart mobile devices and social media. These technologies trigger two really big changes for the industry; mobile enables the consumer to carry the store around in her purse, and social media enables the consumer to engage in an active dialogue either with or about the retailer. That having been said, it’s still early days for both capabilities in retail, and that’s why the subject of innovation comes up so frequently.

Last month we reported on a talk given at the NRF Technology Leaders conference (NRFTech) by John Kao, CEO of the Institute for Large Scale Innovation. As we reported then, Kao bluntly told the audience of over 100 retail CIOs, “We’re at a ‘reset’ moment — it’s time to break down operational models and then rebuild them “. The good news he delivered is that the cost structure of innovation has improved significantly, and that can increase the frequency of experimentation. But the underlying message was clear: innovate or die.

At last week’s IBM Smarter Commerce Summit in San Diego, that message was reinforced by one of the legends of technology innovation, Guy Kawasaki.

Apple’s Bright Halo

Mr. Kawasaki was one of the original Apple Macintosh team in the early 1980’s, along with Steve Wozniak and Steve Jobs. He became Apple’s Chief Evangelist and did two stints with Apple in the 80’s and 90’s. Guy is the author of several books, including Enchantment, Reality Check, The Art of the Start, Rules for Revolutionaries, How to Drive Your Competition Crazy, Selling the Dream, and The Macintosh Way. The technologist and author is now a venture capitalist (Garage Technology Ventures) and co-founder of Alltop.com, an online magazine rack of popular topics on the web.

One of the small ironies of Kawasaki’s presentation at the IBM event was that his pedigree is Apple, at one time a competitor for the hearts and minds of PC users with IBM. Things change, and perhaps that’s an important message for retailers: don’t be stuck in the past.

The speaker amused the audience with a few anecdotes about working with Jobs and the original Apple team (who he described alternately as interesting and arrogant, explaining that although the Apple II produced the revenue, the Macintosh team worked in a separate building and wouldn’t let any of the Apple II team in to take a look at what they were doing). Then he got down to the essence of his message, and much like John Kao, conveyed to his audience that businesses must innovate to survive. But Kawasaki went a step further, offering a prescription for the Art of Innovation.

The Art of Innovation

The speaker offered the following ten steps (plus a bonus step) for companies who seek to innovate in the new marketplace:

1. Make Meaning. Guy explained that innovators focus on changing the world, while making money is a natural outcome of that. The speaker claimed that companies whose primary objective is to make money invariably fail, whereas companies that innovate usually get rich in the process.
2. Make Mantra. Guy used a personal story about being the father to several hungry teenagers to explain the point that a mantra is a “two or three or four word explanation of why you exist “. His example: fast food restaurant Wendy’s. Saying that he loves Wendy’s, he then explained that their mission statement isn’t a mantra. According to the speaker, a mantra for Wendy’s might be, healthy, fast, cheap. He challenged the audience to come up with a mantra for their companies.
3. Jump to the next curve. Kawasaki explained that innovation isn’t better sameness, but different. He exhorted the audience to ask themselves, “what do our customers get from us, and what’s a better way to deliver it? “
4. Role the Dicee. Guy explained his play on words; true innovation has Depth and is Intelligent, Complete, Empowering, and Elegant.
5. Don’t Worry (Be Crappy). Playing off of the title of the popular Bobby McFarrin song Don’t Worry Be Happy, Kawaskai explained that version 1 of any innovation doesn’t have to be perfect. Echoing the Voltaire proverb that perfection is the enemy of good, the speaker urged the audience not to worry about perfection, but instead to fail fast.
6. Let 100 flowers blossom. Requisitioning a quote from Mao Zedong (not often regarded as a great business innovator), Kawaskai explained that “your best-shot marketing will be wrong ” and that products will be used in ways that the innovators didn’t anticipate. Using the Macintosh as an example, he explained that the original team thought of the Mac as an innovative word processing and spreadsheet machine, but that it was Aldus Pagemaker that saved the Macintosh and Apple from oblivion.
7. Polarize people. The speaker explained that some will love the innovator’s product while others hate it, but that “great products polarize people “, whereas products that seek wide acceptance often fail.
8. Churn, Baby, Churn. Once again playing off of a song title (Burn Baby Burn by Ash), the speaker said that one of the hardest things for innovators to do was to switch from revolutionary to evolutionary after a new idea is launched.
9. Be Unique and Valuable. Poking some fun at analysts’ favorite tool, the magic quadrant, Kawasaki built his own value quadrant, with not unique, no value in the lower left quadrant and valuable, not unique in the lower right, with unique, no value in the upper left and unique, very valuable in the upper right. He then explained that businesses that are in the lower right quadrant are forced to compete on price, while businesses in the two left quadrants were either stupid or really stupid. Businesses in the upper right are special (the speaker used online move ticket service Fandango as an example, pointing out that people willingly pay an extra $1.50 per ticket just for the convenience of not having to stand in line at the theatre).
10. Perfect your pitch. This part of the prescription had to do with how innovators should present their idea to would-be investors or customers. Kawasaki urged the audience to “customize your intro ” for the intended audience, add value with information, insight, and assistance, and to follow the 10/20/30 rule, which he tongue-in-cheek explained as “10 slides, 20 minutes, and 30 point fonts “ (pointing out that the very talk he was giving broke those rules).
11. Don’t let the bozos drive you down. This was the speaker’s bonus step, and he advised the audience against what the former U.S. vice president Spiro Agnew once called “nattering nabobs of negativism “. Said the speaker, “winner bozos (those who have been successful in their own businesses) are the most dangerous — don’t listen to them “.

The Race Is On

At the IBM event, there was a palpable buzz about the business challenges and opportunities that mobile and information-empowered customers create for businesses, as well as the breadth of IBM’s solution set to help businesses address those challenges and opportunities. Underlying Guy Kawaski’s talk was the message that businesses cannot wait for functional use-cases and ROIs to be established – they must take chances and innovate. That may be a tough message for retailers and other businesses to absorb right now, given the faltering economy. But consumers are forging on, and those that serve them have to run to catch up.