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RES Keynote: Corporate Entrepreneurship Thrives at the Edge
By Adam Blair
In South Korea, international grocery giant Tesco faced a challenge familiar to many retailers: competing against another retailer that was already number one in the market and operated more stores than Tesco. So rather than try to compete directly by building more of its own stores, Tesco brought a virtual grocery store to where the people were, rather than making them come to the store.
Tesco placed signage that mimicked product-laden grocery store shelves on the walls of Seoul subway stations, with QR codes that could be read by shoppers' smartphones. Commuters could select the products they wanted while waiting for their trains, with their orders delivered to their homes as they completed their own travels. The results were impressive: Tesco increased its online sales by 130% while boosting the number of new registered members using its services by 76%.
Tesco's ability to find and exploit this opportunity is just one of the "New Models for Corporate Entrepreneurship" revealed by Robert Wolcott, PhD as part of the 2012 Retail Executive Summit keynote address. Wolcott is co-founder and executive director of the Kellogg Innovation Network (KIN) at Northwestern University's Kellogg School of Management.
"I never worry about the companies that I work with missing something that their competitors are doing – they know what you're doing, and vice versa," said Wolcott. "But the big opportunities actually come at the periphery."
Tesco realized not only that South Koreans are hard workers but that their weekly shopping trip was, for many, a dreaded chore. Tesco saw its opportunity by moving its focus away from in-store experiences and focusing on what consumers needed.
"Consumers don't think about their lives in terms of in-store experiences; they think about the things they need to accomplish in their lives," noted Wolcott.
Retailers, and in fact all kinds of businesses, need to find the right balance between fortification and exploration. Fortification involves near-term decisions that keep a company healthy; exploration is required for long-term health. Both are needed: for even the most successful companies, "in a competitive marketplace, eventually you'll be required to do something else," said Wolcott. "The problem is that the better you get at doing things, the harder it is to do something else.
"Great companies don't try to get people who are good at both [fortification and exploration], but they do make sure they have homes for both," he added, noting that the further up executives climb, "the more responsibility they have to achieve this balance."
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