How Walmart keeps its innovative edge

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Since acquiring Jet.com a year ago and making its founder Marc Lore head of ecommerce, Walmart has been a flurry of acquisitions and announcements. The company acquired Bonobos, Jet.com, ModCloth and ShoeBuy; started a tech incubator in Silicon Valley; is testing home delivery options that have associates delivering packages on their way home; and is even delivering groceries direct to customers’ refrigerators — just to name the big stuff.

In a keynote presentation at NRF's Shop.org conference in Los Angeles on Tuesday, Lore joined Fortune magazine’s Andrew Nusca to provide insight into the retail giant’s ecommerce strategy and how it steers such a big ship while continuing its rapid pace of innovation.

Technology is driving a lot of change in retail, although Lore cautioned against “chasing the tech,” since the technology itself will soon become commoditized. Instead, he said, consider the merchandising impact.

“It’s important to not just look at the technology, but what it enables,” he said. “For example, with voice, I think one best answer is going to be more important than ever before because you can’t just get a list of 50 different things through voice. So, having that one-to-one personalization and being really good at it is going to separate the winners from losers.”

The structure of the retail organization has become as important as anything else in Walmart’s pursuit of innovation. Lore described its new "Store No. 8" — a Silicon Valley technology incubator exploring virtual reality, personalized shopping and delivery via driverless vehicles and drones — as an internal incubation arm that operates and is evaluated separately from the core business. 

The key to keeping the entrepreneurial spirit in a large organization is about empowering people within it.

“It’s really hard for big companies to innovate inside the company, because I think people have competing priorities," he said. "We wanted to focus on what the next 10 to 20 years look like and where the future of retail is going. We wanted to take some bets and a position, and we couldn’t do it from within.” 

Lore also prioritized restructuring how customer-facing departments are operated. Rather than have customer care and experience departments report to different parts of the organization, those areas now report directly to him.

“I think it’s really important to have that customer-centric view, and there’s no better way to make that point than have those people report directly," he said. "Not only do you get better people when they’re on that level, but it just elevates the customer within the organization.”

From a high-level perspective, Lore said the key to keeping the entrepreneurial spirit in a large organization is about empowering people within it. “If you give people information, and you trust them and empower them… if you have them know that they’ll be rewarded for taking risks, not penalized for them, I think that’s the kind of environment and culture you need to create to allow people to run and be comfortable moving fast.”

For more insights, including how Walmart leverages its vast network of stores as distribution centers, watch the complete session video below.

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