Innovation Is the Only Competitive Advantage

Professor and author Soren Kaplan kicks off day two of the in-person NACS Leadership Forum.

May 13, 2021

NACS Leadership For Success Stage

By Pat Pape Soren-Kaplan-High-Res-200.jpg

KANSAS CITY—“An innovative culture is the only competitive advantage [in business] today,” according to Soren Kaplan, award-winning author of Leapfrogging and The Invisible Advantage and an affiliated professor at the Center for Effective Organizations at USC’s Marshall School of Business.

As a keynote speaker at the NACS Leadership Forum this week in Kansas City, Mo., Kaplan stressed the need for businesses to innovate quickly and take advantage of the opportunities presented from disruptions caused by the COVID-19 pandemic, including changes in e-commerce, consumer shopping habits and digital technology.

The pandemic also has inspired people to want to do good. “They are worried about climate change, and they want to reduce food waste, but plastic is the evil villain these days. That’s an area that’s going to be critical for any retailer or consumer products or food provider,” he said. “Plastic bashing will continue to increase, and doing good for the environment represents a business opportunity.”

And people will continue to demand convenience, “but expectations may be different from the way we’ve traditionally defined convenience,” Kaplan said. “There’s this notion that we want to be relaxed in our safe homes and have convenience at the same time.”

He pointed out several examples of how businesses used innovative thinking in response to challenges. One is Chili’s, the Brinker-owned chain that saw sales crash as restaurants closed last year. In response, Chili’s created a digital brand called “It’s Just Wings” and used its underutilized kitchens to prepare wings and fries that were promoted and delivered by DoorDash.

“Overnight they created a virtual pop-up brand, a $150 million a year business,” Kaplan said.

Another success is the startup Bottomless, which sells roasted-to-order coffee by mail. Each customer places her bag of coffee on Bottomless’ digital smart scale, which is connected to Wi-Fi. The scale keeps track of the package’s weight and communicates to the Bottomless team when the customer’s supply runs low. Then, another bag of coffee is automatically shipped.

“The customer never runs out of coffee, but this is not just about coffee,” Kaplan said. “This platform could provide automatic replenishment on anything. It’s just another example of digitization of the supply chain and enhancing the convenience experience.”

So, how do business leaders create a culture of innovation in their own organizations?

First, define innovation for your organization. Are you in the food business or fuel business? Kaplan suggests that c-stores are in the “helping people in the morning” business or “meeting people’s basic needs any time” business. “If you broaden what business you’re in, you see new opportunities,” he said.

There are three different levels of innovation: incremental, evolutionary and disruptive. The first can be simple and has low risk, such as finding a new product to merchandise on the checkout counter. Evolutionary is a big step but doesn’t change the way you operate. Disruptive describes innovation that can impact the entire industry.

Innovation is simple, Kaplan said. Determine the problem, come up with ideas, prioritize them and then test them. You always want customer feedback. “Convenience stores are a petri dish,” he said. “You can test things in stores and talk to customers in real time.”

When you have a winner, publicly celebrate that successes and recognize those employees who were responsible.

“Know that not every idea is going to work, but the process is not about failure. It’s about learning,” said Kaplan. “Opportunities are ready to be capitalized on.”

The invitation-only NACS Leadership Forum convenes retailers and suppliers to explore future-focused issues relevant to the convenience industry. It’s a powerful catalyst to align leaders, develop solutions to problems, explore new strategies and fuel collaboration. This year’s event is taking place in-person in  Kansas City, Mo., where NACS was founded 60 years ago.

Pat Pape worked in the convenience store industry for more than 20 years before becoming a writer. Her portfolio can be seen at patpape.wordpress.com.

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