How’s this for a daring career move? Kyle Nel, the Executive Director of Lowe’s Innovation Labs, hired a team of science fiction writers, asked them to envision the future of home improvement, and then turned their ideas into a comic book. He brought the book to a meeting of the retailer’s senior executives and asked them to read through it.
“It was a gamble,” Nel acknowledges. “But they loved it. They totally got it, and started building on the ideas in the comic. For all the talk about telling stories in business, no one actually does it.” (Click the image at right to see a larger version.)
A little more than a year after that meeting, Nel still has his job, and last month he unveiled one of his lab’s big bets on the future: a 20-foot by 20-foot “holoroom” that enables consumers to use an iPad to try out different design ideas. With a few clicks, the holoroom can change from a bathroom to a mudroom to a master bedroom, fitted out with different fixtures, furniture, and paint colors. When a consumer is happy with the design, the system can spit out a complete list of the products and parts required.
We spoke with Nel recently to understand how it was developed, and what his $53 billion employer expects from Lowe’s Innovation Labs. Founded in 1946, Lowe’s has more than 1,800 stores in the United States, Canada and Mexico, and employes roughly 260,000 people.
Q. So tell us about your approach to “science fiction prototyping.”
A. For all the talk about telling stories in business, no one actually does it. They may put things in chronological order, but that is not a story.
Science fiction writers are trained to create possible futures. So science fiction prototyping is the foundation of our labs. You give all your marketing research, trend data, Forrester-type stuff to published science fiction writers. You give them a time horizon, like, “What is the possible future in two years, five years, ten years?” And they write actual narratives. How will these trends and technologies influence people’s behavior? The stories have conflict, characters, resolutions. [Lowe’s worked with a firm called Sci Futures.]
One of the stories that came out of that process was that in the near future, someone will create a system that allows you to perfectly visualize everything you could do to your house, using augmented reality — and if we aren’t a part of it, we’re going to be cut out of the loop. Lowe’s needs to be part of the inspiration part, not just the “get supplies” part.
Everyone was unified in the belief that that is going to happen soon. So the next question was, “Kyle can you build it?” I said, “Sure.” But I had no idea how difficult it was going to be.
Q. So how did you approach it?
A. We just focused on the story. Within that, there were really two huge technological problems we needed to solve. One was a way to easily and inexpensively scan everything Lowe’s sells, and create a 3D model without having artists build it. And the second was a cloud-based database that would let you pull down all those 3D model files to our own augmented reality platform, which can run on a tablet.
I think augmented reality is going to be even bigger than e-commerce. It will be e-commerce, and you need to be out in front of it.
Q. You have three labs, in Los Angeles, Boulder, and Silicon Valley. Was it a conscious choice not to put one at Lowe’s headquarters in North Carolina?
A. I’m a firm believer that you cannot have a lab inside of the mothership. The goal of the company is to be efficient and to keep the ship going. But when you’re the innovator, you should be on the outside making the next thing that is going to get you to the next place. Sometimes, those things are in conflict, and they’re not part of the same workstream.
Also, if you’re the innovation person, you get asked to be in every single meeting, and the face-time alone is a killer.
Q. How does your innovation team relate to the business units?
A. We work hand-in-hand with our internal clients through this storytelling process. They share in the process of development, and we act like an in-house consultancy. But a real innovation group is not an incremental improvement team — and most are just that. The way we define innovation here is big, platform change. We’re working on the problems that haven’t arrived yet.
My goal is not to impact next quarter. It’s like the story of Theseus’s ship. I look at what we’re doing as replacing planks on the ship. And we need to be replacing a lot of planks if we want to be a different ship eventually.
Q. So what are you measured on?
A. I report to the CIO. IT in itself is an expense, but it is a shared service in the organization, so that makes us a shared service as well. The report card we show includes the projects we’re working on, and how those are tracking with the original plan. We take into account the benefit of the press that we get. We look at the pull from the stores when we test things out. And we consider how these new projects might change perception of the brand.
But it’s definitely not sales-driven, because what we are working on is too far away to impact sales. But we are conscious of making sure that what we’re working on will change consumer behavior or the perception of the Lowe’s brand.
Demos are also a big part of what my team does. I firmly believe you have to produce something right away, that it’s not just about telling a story or showing a PowerPoint. You need to be able to say, “Here’s the thing and it works.” So within five weeks of the holoroom story being written, in February of 2013, we had a demo ready and in a store in Toronto.
Q. Tell us how you work with startup companies when you’re developing stuff.
A. We’re partner-agnostic. We’re like a general contractor. We just want to get the stuff done. Sometimes it may require funding startups, partnerships, or acquisitions, and we can do all of those things. The reason that we built our own platform for augmented reality is that we wanted it to be usable with a tablet, a headset like the Oculus Rift, or Google Glass. We’re definitely working with all of those partners.
Q. So you have a lab located in Silicon Valley, and we’ve written about lots of Fortune 500 companies setting up outposts there. What’s your take on that trend?
A. In the Valley, there’s this “innovation by association” thinking, that because you have a shingle up in Menlo Park, and you go to a networking event or two, that innovation will happen. It’s like going to the doctor, but not taking any medicine. We think that the only way to make things happen is to go in and get your hands dirty. You have to be able to know what’s real and what’s not, what will work and what won’t. When you come to one of our labs, my goal is for visitors not to be able to tell who works for a startup, and who works for Lowe’s.
Q. How about one challenge you’re still grappling with there?
A. The hardest thing is taking all of the great ideas and triaging them in the appropriate way. We live in an exponential world. Something like Oculus Rift was a Kickstarter campaign not long ago, and now it’s worth several billion. [Facebook acquired the startup earlier this year for $2 billion.] Uber has completely disrupted the taxi business. All of these stable institutions are being changed in ways they could never have predicted. So how do we as an organization know that the ideas we’re working on are the ones we should be developing first in this exponential world?
I see speed to market as the solution. You develop an idea, get out what you can as soon as possible, and see if it works in the market.
Here’s a Lowe’s-produced video featuring Nel, the holoroom, and customer reactions: