Gap Exec on Innovation Training, Co-Creation, Customer Insights

November 18, 2015

Three Initial Objectives

InnoLead:  I guess where I wanted to start is that you’ve been at the Gap for almost three years, since January of 2013. If we rewind the clock a little bit, can you talk about what your mission was when you came on board?

Michael Perman:  I was brought on initially by Glenn Murphy, the CEO at the time, and Jack Calhoun, who’s the President of Banana Republic. [Both executives left the company toward the end of 2014.] I’d say the mission was really three things. One, to build a culture of creativity that would lead to more innovation happening. Number two is help people understand how to identify the problem that would be solved.

We were doing a lot of work in terms of ideation and so forth, but we weren’t solving the right problems.

The third objective was to broaden the scope of innovation so that it wasn’t just about a great new product, or a great new store experience, but it could be applied to organizational models, logistical systems, social and environmental responsibility, team structures.

The other aspect of it was being methodical about innovation. Sometimes people [say] that innovation method is an oxymoron, but we believe that there are ways to actually teach people how to do innovation — how to teach operational people to be creative, and how to teach creative people to be operational.

We created a program called Mindspark to do exactly that…[we’ve now taught] 3,000 people the fundamental ways to make innovation happen.

InnoLead:  When you started in the role, was it clear, “Here are the top three problems we need to be solved?” And was it clear how you were going to be measured?

Perman:  They were clear: let’s make this an institutional skill and a leadership skill. The actual problems themselves varied from season to season, year to year. When I first started, we were [looking at] how to drive more store traffic.

We worked a lot on social and environmental responsibility, and how to reframe our thinking around that, and get it more integrated with the business.

Then I worked on the logistics system, how to reinvent our global distribution and logistics system.

How I Hired

InnoLead: We just did a big report on hiring, and how innovation teams hire externally. Tell us a little bit about the makeup of your team. Was it people you recruited from within the Gap? Did you do some external hiring?

Perman:  We did some external hiring. I learned quite a bit from that. First of all, we hire for curiosity. We hire for the desire to gain more insight, to constantly learn, and to constantly experiment. Probably the thing I would have done differently is hire more people that were different than me. [The team had many] mini-Michaels [with a] similar range of skills. That worked really well for a while, because the chemistry was great.

More diversity in skills is important. Having operational skills in an innovation environment is super important as well, because things get done more effectively

Mindspark Training Program

InnoLead:  Let’s talk about Mindspark. What did that training system feel like? How did you choose? How did people raise their hands to say, “I want to participate in that”?

Perman:  Mindspark is essentially like a three-day tech conference with a specific purpose and a specific problem to solve. (You can download a Mindspark overview in our Resource Center that includes all of the slides reproduced here.)

We’ve learned a lot about how the mind works. That’s something that has guided me throughout my life, from the day that I was in a small town in Bandon, Oregon, a crab fishing town. I was in the book store, and ran into a book called “Maps of the Minds.” It was a book that had illustrations and points of view from fifty different people about how their minds work.

That inspired me to really understand personally [and] professionally how people’s brains work, and how neuroscience affects it.

Cortisol is a fear hormone that helps you get your butt in gear when you have to solve a problem. Oxytocin is one of the love hormones that provides a sense of trust, joy, and liberation. Dopamine is a craving hormone that stimulates the desire in people to do more. It’s true with consumers, and it’s also true with organization.

With Mindspark, we orchestrated sensory integration that enabled the right combination of all those things to happen. We called it juicing the middle brain, really understanding how the intersection of an operational world and the creative world enabled people to be at their best.

Over a three-day period of time, we would prime them with the right music, the right food, the external stimulation that would enable them to push their spectrum of thinking in new ways.

We had a women who created a violin that didn’t have strings on it, a digital violin. We had as a guest speaker the guy who started the Apple “Think Different” campaign from way back.

You have people who push your spectrum of thinking. Then, the whole Mindspark method enabled people to go through those three days, learn different techniques of making innovation happen, but also evaluate their way of thinking, and transform it to a completely different way of thinking.

We essentially replicated that to a lot of different versions, so that if you couldn’t be in the three-day version, you could be in a one-day version. If you couldn’t be in the one-day version, you could do just a half a day, and eventually 3,000 people had some exposure to the Mindspark method. Overall, that helped create our culture change.

InnoLead:  It sounds like you did a lot of thinking about how do you get beyond the arms-crossed, reluctant kind of fear response of like, “You’re going to force me to learn about innovation,” or “You’re going to force me out of my comfort zone.”

Can you give an example of a tool or an exercise that you felt was really effective within the Mindspark program?

Perman:  We taught them how to do what we call “in/out listening.” The average person can only hold their attention on an excellent speaker for eight seconds, before their mind starts to wander to a different place.

All that mind wandering is really accessing your subconscious brain, and there’s a lot of juicy stuff in that subconscious brain. Most people dismiss it [as] daydreaming. What we did is teach people how to recognize what was going on in their brain that they’re thinking about, but not saying. To write it down and to bring it back, and to force-fit it into the problem that we’re solving.

Little things like that brought up a lot more ideas, and, I think importantly, enabled people to have more courage to express the ideas. There’s plenty of people out there who consider themselves operational and not creative. One of the things we wanted to do was enable them to have the comfort to express what was on their mind.

Collecting Consumer Insights

InnoLead:  Let’s move on to talking a little bit about staying on top of consumer preferences and trends, and what you’ve learned about how that consumer insight work can lead to really effective innovations.

Perman:  [We are trying to get people to make] a transition between what some people think of as a binary point of view for insights, versus an exploratory point of view.

A binary point of view is “they liked my thing,” or “they didn’t like my thing.” It’s a green light or it’s a red light, as opposed to more of an experimental mindset, and to transform from observations to insights. We are doing a few things with regard to that.

First of all, one of the things we did in terms of the language of innovation is take the word “risk” out of that, because I’ve heard in many instances where people believe that a tolerance of risk is important. I kind of get that, but it also sets a negative tone in a way. What we did is just form more of an experimental mindset, that you were going to try this thing, that you’re going to learn from it.

We’ve emphasized co-creation quite a bit, a co-creation either with customers, or with our external vendors, and fabrics, and mills, and so forth. Just say, “This is a loose idea. It’s half-baked, and what we want to do is gain insight in order to create it into a different place.

“There’s nothing better than enabling [a] high-level executive to be in front of a customer and learn the art of observation and insight. Importantly, learn how to transform that into a design principle. We’re a creative-oriented company. We’re a design-driven company. Designers have a strong point of view about what they want to accomplish.

We are balancing always not wanting to have a consumer dictate what’s happening, but we [have]  emphasized and taught people how to do the art of design thinking.

InnoLead:  Let’s dive a little bit more into that, because there’s a question from a listener at VF Corporation asking more about design thinking. In what areas did you use design thinking specifically, and how well do you feel adapted using the principles of design thinking today?

Perman:  We used it consistently in product development. We’ve done it in our in-store experience development. I wish that we had a ton of resources to have it be part of everything we do all the time.

It’s more of a matter of how do you get more and more people to devote the time in the day to experience the customer interaction, to transform their observations into insight, and to transform the insights into design principles that enable you to create things. There’s an appetite for sure, but it’s more like a time and availability issue.

Organizational Transformation

InnoLead:  Can we talk about organizational transformation, and how you think about what is achievable? What’s possible? What’s not achievable? A lot of executives have trouble figuring out where do you push? Where do you spend your political capital?

Perman:  [My definition of innovation] is the ability to perceive, and the courage to act upon, alternative realities that lead to change.

What I have is a fortunate situation with the team here, a CEO and high-level executives that were comfortable with that definition. Comfortable with the ambiguity of it. Really focused on identifying the problem to solve. Really focused on creating that innovation brief.

Sometimes this is a matter of personalities, circumstances, hierarchy, timing. When I was at Levi’s, our CEO…had come from Quaker. He [had been] a brand manager, [and] he had an experience with an insight that led to innovation in the dog food business…

He asked us to develop an insight-to-innovation curriculum, which we eventually taught to 5,000 people. That was transformational, and it led to a number of different strong innovations in the jeanswear business there. Sometimes it is personality and sometimes it is timing and what’s right at that moment.

Co-Creation Efforts

InnoLead:  One listener wants to know more about co-creation. When it comes to co-creation, do you ever reach out to vendors that aren’t existing Gap ones or more specifically, unusual vendors that are in adjacencies, and repurpose their product, or technology, or process into your specs or what you need.

Perman:  There’s a few different ways that we look at co-creation. One is, we do a lot of co-creation with our actual vendor partners who have resources and a point-of-view that we’re not necessarily seeing. We do co-creation with complementary partners.

For example, with Banana Republic last year, we did a co-creation event with Marimekko. That was more of a collaborative brand partnership.

We have used external co-creation vendors that do a combination of crowdsourcing and co-creation from a consumer’s standpoint. It’s such a trend out there to do this that there are people that have evolved unique expertise in that.

We do look for non-traditional partners to help us think differently and get us to new places.

Learning from Failure

InnoLead:  This may be a question that wasn’t under your bailiwick, but maybe you can address it. The question is about launching new online brands like Piperlime, which I guess was an online retail site that the Gap launched. It was shut down earlier this year because of not enough revenue. What was the learning there?

Perman:  The learning with Piperlime was you have to be really clear on your reason for being. When that business was originally started, the rest of our online digital business was not quite as robust, [and Piperlime] enabled us to expand our product line more significantly.

At the end of the day…brands still mean something. I think that’s one of the things that’s very challenging about this environment, the Amazon environment, where Amazon is getting into every single category.

I still feel like there is a place in the world for brands [that] have a clear identity, that can develop loyalty, a point-of-view, experiences that are irreplaceable. Piperlime was one of those that lacked a little bit of the reason for being at the time. It also enabled us to focus organizationally on the parts of our business that are overall stronger…

Reporting and Organizational Structure

InnoLead:  One of my last questions is just about organizational structures for doing really disruptive innovation as opposed to structures for doing training programs or reworking existing businesses or existing store formats. That’s a topic you and I have discussed before. Where is your thinking today about what is the right organizational structure for being able to really think new thoughts, create new kinds of businesses? To do “exploration” as opposed to “exploitation,” which is the way the Lego CEO put it to me recently.

Perman:  I’m landing on a hybrid model where you have a center that has clear expertise in doing this kind of work that’s commercially relevant. You have innovation design directors, innovation technical help, innovation merchandise and strategy insights that set the pace for how the work is done, and then facilitate the transference of those skills into the business units.

It’s a bandwidth issue, though. Even though a lot of innovation work rightfully belongs in brands — because that’s where the work’s going to get done — it’s hard, especially in a business like ours, [where you are] very operationally driven and we have daily numbers to make. It’s hard to get that work done.

InnoLead:  We almost always get this question and I almost always forget to ask it but who do you report to? Do you report to the CEO?

Perman:  No, I’m kind of a rogue wave in a way. I’ve reported to a number of people, I had a dotted line to the CEO and the head of Banana Republic initially, that’s where the funding for this comes. Now I primarily work with the head of strategy.

There were times, by the way, during my tenure, that I was essentially in HR, because this became more of a capability-building program.

Working with the Brands/Business Units

InnoLead:  You touched on this a little bit when we were talking about organizational structure, someone wants to know, can you talk about your philosophy to building relationships with the business units? I presume they mean the businesses that are under the Gap umbrella.

Perman:  Part of it is understanding the dynamics of the business in a really clear way. Sometimes when you’re in a center function, you’re not completely tuned in to the pressures [that] individuals and executives have in the business at the time. Developing that level of empathy is super-important.

Also, solving small problems first. Take a particular issue and demonstrate the model of how innovation and creativity that may be foreign to a team can work in a specific product or specific experience. Gain some success there, and then it spreads like wildfire. There is more of a craving, and more of an appetite for it after that. Those are the key things. Also, we devoted a lot of time and attention to communication of these methods at the very broadest level, at the sales force level, so that we could demonstrate our way of thinking over time. In every meeting that would take place subsequently to that, people would have some version of that innovation method in their language and shaping the language made a difference as well.

InnoLead:  We’ve covered a lot of ground here. What other advice would you share? What’s one more experience that you would share insight about? Maybe the challenge of doing innovation in a big organization, or something that you try to keep as your north star while you’re doing it.

Perman:  My north star is, don’t forget the role of creativity. Just the raw, pure, essence of enabling people to make things that they haven’t seen before, and see things that they haven’t seen before. Sometimes I lost track of that, or sometimes you get pressure to not emphasize that aspect of it because it doesn’t feel as commercial.

[It] requires some tenacity as well. Innovators face lots of walls, lots of hurdles, but still they crave that dopamine rush [they get from] the times when it worked well. I’d say keep that tenacity, keep focused on how creativity happens, and make sure that’s part of the process.

InnoLead:  That is a great message to wrap up on. Thank you so much for joining us, Michael. This was really great.

Perman:  You’re very welcome. Good luck to everyone.