Former Crate & Barrel CEO on Innovation

August 26, 2017

Sascha Bopp spent five years as CEO and COO of Crate & Barrel, the housewares and furniture retailer founded in 1962 and owned by Germany’s Otto Group. He’s now Co-Founder and COO of the architectural technology startup Blueprint Robotics.

This interview is from our CEOs on Innovation report, in the Fall 2017 issue of InnoLead magazine.

When it comes to innovation, it really only works if the CEO is the champion of it. The main reason is that in an organization, you constantly have a ton of pressure and competing priorities. Innovation is something that never pays off right away, and it has no certainty of paying off. If you have other priorities that have immediate payoff, you will always come back to what is most urgent, right now, and put on the side any investments for the future.

But the organizations that have the spending power and the mission to dedicate entire branches to innovation—having a Google lab or Apple lab—are exceedingly rare. At Crate & Barrel, I was the key guy for anything innovation. If I thought it made sense, then it was going to happen. If I wasn’t behind it, then somewhere in the organization, someone would put the brakes on: “This is great, but right now, we have other priorities.”

A small example: there was a company in California that was developing a technology that was supposed to track phones that came into your store—a wifi sniffer [from a startup called Euclid Analytics.] It’s completely anonymous, but it does tell you where they were in a store, and how long they were in the store, and if it was a repeat customer coming back. Somebody in our e-commerce department had seen it and referred the guy to me. I said, “This sounds great.” He needed a pilot customer, so we did it in all our San Francisco-area stores. I called the regional sales manager in charge of those stores, put her in touch with the entrepreneur, and they worked together to get it done. I would get reports on its progress. It worked really well.

A much bigger example would be that when I joined in 2009, the company had just opened a store in Dubai. It was a franchise. My predecessor, the founder, was behind that, but he later distanced himself from it. I felt it was important to the company to have franchising; it was a big change, if not a typical innovation. The bigger it is, the more you have to own it, and communicate that it’s something you want. You need to make sure people don’t shut it down. When I left, we had [franchised stores] in Mexico, Peru, Chile, Columbia, Singapore, Russia, the Phillipines, and Turkey.

Former Crate & Barrel CEO Sascha Bopp, now COO and Co-Founder of Blueprint Robotics.

In general, you want people who will say, “I want to try,” and are open to it and enjoy the challenge of change. At the same time, you don’t want people who are not being realistic or transparent, or are not brave enough to tell you about the trouble you will run into. I always try to [understand] where people have doubts. As CEO, ultimately you have to make the decisions about whether you want to do something or not, and you want to do that on the best available information.

‘Fake It Before You Make It’

I have rarely seen a situation where the choice of goingtoward innovation is backed by data at the point that you need to choose. If you’re lucky, down the road, the innovation can be validated as being useful or not based on data. At some point, you have to say, “Is it worth it?”

I always talk about nice-to-have information, versus information that is going to make you change your decisions. Information that confirms what you already knew, it’s not very valuable.

The other really critical point about innovation is, are you able to fake it before you make it? Is there a way to bring the hurdle for trying something down, so you can make a decision even though you don’t know whether it’s right or not? The lower the hurdle in terms of money, attention, and resources, the easier you can go after it. Make it as simple as you can on [senior management] to find out whether the thing is a good idea.

The Euclid Analytics [founder] laid out a plan that was zero cost, very low attention, and very low tech involvement on our side. It was only about…wanting to do it.

When the Going Gets Tough…

I would argue that when you are in that cycle [of being pressured on costs, or being disrupted by new entrants], it’s when you have to [experiment] even more. Not everything that delivers value requires a big investment.

The high-pressure environment can be better for generating innovation than a comfortable environment…but it depends on the commitment of the CEO. If the CEO has a really short-term focus, and is only thinking about the next quarter, then innovation will be less relevant. But if pressure is high and you have someone thinking long-term, there will be an even greater desire to find innovations that help. You can’t cut your way to success and growth; only to short-term earnings.

Incentives for Innovators

I think that setting performance goals [for employees based] on intangibles like innovation—those are hard to administer and very subjective. They take time to come up with, time to monitor, and time to debate whether you achieve them.

What’s more important is letting people in the organization know that the leadership, in principle, is very open and eager and wants to work on innovation. You find the people who have a personal purpose—which is stronger than financial incentives. [Working on new ideas creates] a way for them to get more exposure and to be appreciated by their leadership. So it’s about career development, more than short-term financial incentives.

What I saw at corporate and in the field is that you have those go-getter people, and if the organization has this innovation mission, they say, “I need to find a way to get on that project.” They throw themselves at it, and not just for financial reasons. There’s this sense of belonging and doing something for the future.

When CEOs and leadership spend time with those people, it matters a lot—you just give them a call and say, “How’s it going?”