From stuff up lunches & store experiments: How AU’s biggest retail chain innovates

“Follow the process, follow the methods, and then you’re not going to fail in your project. You’re going to fail throughout your project. Small constant failure is part of what it is.”
Fabio Oliveira

In this episode you’ll hear about

• Defining innovation in 2024: Breaking down the definition of innovation and its associated expectations and misconceptions and understanding how innovation fits differently into the contexts of large and small organisations
• Managing innovation and idea generation: Methods for accelerating employee engagement, investment and idea generation while maintaining order and process in receiving and processing innovation ideas
• Conducting research in innovation: How to gather the necessary information for innovation, keep focus on relevant subject matter and shape project briefs effectively to ensure targeted research efforts
• Physical and digital integration: Exploring innovative experimentation blending physical and digital elements and what we can expect from the future of in-store/retail technology
• Maintaining a wholesight organisation view: The importance of staying connected to your organisation’s strategic direction and challenges through innovation and keeping perspective within your role to ensure effective and meaningful work that aligns to business goals and addresses relevant problems

Key links

Kmart Australia

Amazon Walkout Tech 

RFID 

Dr Tim Baker framework 

Basecamp’s Shape Up Methodology https://basecamp.com/shapeup

Designful Company by Marty Neumeier 

About our guest

Fabio Oliveira is an innovation leader specialising in establishing innovation practices within large companies. Known for his ability to build multidisciplinary teams from the ground up, he has successfully cemented innovation strategies at prominent Australian brands – notably Kmart and WorkSafe Victoria – delivering significant outcomes.

Currently the Head of Innovation and Service Design at Kmart, Fabio is leading several initiatives that are building the future of store operations and customer experience.

About our host

Our host, Chris Hudson, is a Teacher, Experience Designer and Founder of business transformation coaching and consultancy Company Road.

Company Road was founded by Chris Hudson, who saw over-niching and specialisation within corporates as a significant barrier to change.

Chris considers himself incredibly fortunate to have worked with some of the world’s most ambitious and successful companies, including Google, Mercedes-Benz, Accenture (Fjord) and Dulux, to name a small few. He continues to teach with University of Melbourne in Innovation, and Academy Xi in CX, Product Management, Design Thinking and Service Design and mentors many business leaders internationally.

Transcript

Chris Hudson: Hey everyone and welcome to this next chapter of the Company Road podcast. We just went live with episode 40 and things are going really well so I can’t really thank you enough for your continued engagement with the show. And you the listeners are what it’s all about.

So you’ve encouraged me to carry on doing this despite the fact that it takes quite a lot of time and effort to put together but thank you very much for the feedback that I’ve had so far and we’ll keep going as long as you’re happy to consume the content. So thanks so much.

And if you’ve got questions or specific things you’d like me to cover on the show, then feel free to email me at chris@companyroad.co. But running this has also been a huge lesson in adaptation. So I’m always having moments where I’m analysing myself in a lot of detail, obviously, when you hear yourself back it’s quite confronting.

I think about the listeners to the show as well all the time and, what they want and what you would want and what value I can provide or we can provide as a community of innovators really in some way or another. In a way, it’s a process of innovation in itself, where we’re always thinking about the hundreds of things that we could do.

You think a little bit more precisely about the problem that you’re having to solve and then you’re thinking about what experiments you can run to see what sticks and much of what you do in innovation when you consult or when you’re running your own practice is similar to that.

So our next big topic is around innovation and its formula for success and I can’t really think of anyone better to shine a light on this topic then the one and only head of innovation service design at Kmart Australia, New Zealand, Fabio Oliveira. So Fabio, massive welcome to the show.

[00:01:26] Fabio Oliveira: Thanks, Chris. Thanks for having me.

[00:01:28] Chris Hudson: So Fabio, you’ve done some lecturing as well in the past, but you’re a longstanding innovation leader and practitioner in both retail space. We’ve done some work in government and a few other places in between and your day to day is innovation. So every day must be seriously challenging in one way or another and different from one day to the next I’m sure. Innovation is hugely challenging in its nature and the world of work is obviously shifting all the time. So maybe I’ll start with just asking, what do you see as being the things that innovation teams are struggling with today and how has that changed in your view?

[00:01:59] Fabio Oliveira: The struggles of today are very similar to the struggles from maybe, I’d say, 10, 15 years ago when I first started, which is really truly understanding what innovation can do in a large corporation environment, which is in many ways, very different from what you hear in terms of innovation in startups or any other space.

And for me, the key challenge has always been proving value. And being adequate to the context that you are innovating. And I talked to a lot of people that are working in innovation at the moment. And it’s interesting that there has never been a bigger appetite to do innovation, but not with the term innovation.

So there’s a lot of investment in technology. A lot of partnerships, open innovation, working with startups, but companies are not talking about.

[00:02:43] Chris Hudson: So it’s almost like the word is not resonating like it used to, or maybe it was never the right word to begin with. What do you think?

[00:02:49] Fabio Oliveira: Yeah, I think it became quite I’d say. exposed a few years ago, became almost this thing like if it’s not magic, then it doesn’t work. There’s a lot of work that goes behind it to make innovation work. And I think in some ways people end up burning the concept a little bit.

[00:03:06] Chris Hudson: You’re right. The expectation is also very high. So attached with that word is usually an expectation and that can be absolutely incredibly high in terms of how the bar is set. What are you seeing as some of the workarounds for that in one way or another?

[00:03:19] Fabio Oliveira: I think that it starts with being deeply connected to the organisation. And what I mean by being connected is not necessarily being embedded in the business. I think that damages the practice of innovation, but understanding the strategic direction the company is going.

What are the strategic projects that need help? What are the challenges that your market is facing? What’s happening culturally in the organisation? I think that’s the starting point. If you’re not connected and you don’t know what are you trying to innovate? What are you trying to transform?

Whatever the name people want to give, then it gets really hard to deliver anything meaningful.

[00:03:56] Chris Hudson: I think that the simplicity of the challenge is almost a driver in one way or another. So if it’s very easy to understand what the problem space is, then obviously the result and solution from that can be simpler and it can be simpler to communicate and get people behind as well a little bit.

But when it becomes a little bit more complex and you’re looking to more adaptive challenges where you’re having to navigate quite a complex landscape, is that the world that you sit in? Or do you feel that it’s usually fairly straightforward?

[00:04:21] Fabio Oliveira: Definitely. I think that’s the reality of business is quite complex and it’s easy when you look from the outside. Like I’ve been in retail for quite a few years now and you look from the outside and you see those amazing technologies that are always in the media, amazon just walkout technology, but yeah.

And you say, wow, I want to do that. But in my case, work at Kmart, which is a low cost organisation. We actually want to have a different challenge. Our challenge is to make sure that the business stays productive so it can continue to reduce prices. So that’s amazing technology, but that’s not truly what do we need right now? The investment on something like that would be huge and you can spend years and years innovating on all the areas of the business that might not be seen as sexy as, the heavy technology computer vision or whatever, until it matures. And then when it matures, it can actually go in and do it.

But chasing those complex projects that are not so sexy, but are actually meaningful.

[00:05:20] Chris Hudson: So what’s sexy and what’s not? Just so that we’re clear.

[00:05:22] Fabio Oliveira: I think a lot of the emerging technologies before it is mature enough. And it’s definitely the sexy part. Everyone wants to work with those things. I remember the first time that I heard of Amazon was back in 2015, 16, that they were doing those things. And the technology is still not ready.

But what’s not sexy is working sometimes in operations and making sure that you’re delivering value to the customer by changing how your supply chain works or your store operations work. That’s the kind of stuff that people sometimes aren’t willing to do, but where the value actually sits in.

And it’s where the biggest opportunities for innovation are. Back when I was in government a few years ago, it was the same thing and especially in government, you have the political element, which adds a whole different range of problems. But the problem is usually where people are not willing to go to. It’s things that have been overlooked for many years and you have to spend some time there and investigate.

[00:06:18] Chris Hudson: Yeah. Those ones are interesting. Aren’t they? Where you realise or you come across a problem that somebody or a team have been attempting to solve for quite a while, or you’re into that space where, you’re defining the problem and people are finding that ground is really familiar and they’re thinking, okay we tried this and that two, three years ago, five years ago, there was this and that people have got a memory for that, but obviously when you come to revisit the problem, you’re thinking how do we get past it and actually solve for it?

So what are you finding is working in that space?

[00:06:42] Fabio Oliveira: I think being honest with data and the loud voices in large organisations are very strong. And of course if there is a priority, you’re going to follow that priority. But when you start investigating, trying to understand what’s the real problem behind the problem that was given to you, you have to rely on the data.

I remember there was a story it came up right when I started back in 2013, my boss at the time said, look we gotta find a way to make stores more productive. We are seeing a decline in productivity and I came in started looking at what was happening in stores, I went back to him and I said, the problem is organising replenishment inside the store. And he said, no, that’s not possible, because we have just finished the project doing this. And I’m like, yeah, exactly, because that project opens the door for a lot of things that we can do now. And that’s ended up being where we spend the next few years working with a huge opportunity.

But if I had said, Oh no. Okay. If we’ve done that something before, let’s not do it. Data is always ahead.

[00:07:41] Chris Hudson: Yeah, for sure. And that concept of, where do you start, particularly when there’s a big problem to solve it’s often, okay how do I get to an outcome quickly? And it starts to excite people. And I think a lot of people would obviously think of the huge mountain that’s in front of them and the ultimate goal in trying to either sell in an innovation challenge or to solve for that in some sort of way, but often, like you were saying, it’s actually, quite a lot easier, but also just much more effective when there’s a short term result and you can just get behind it and people can see that it’s actually working and it you know the runway for innovation is then set a little bit more clearly. Have you found that that’s then been the starting point and what have you used typically to keep momentum up through innovation programs?

[00:08:23] Fabio Oliveira: I think what you said there is one of my fundamental beliefs and something that I try to do every time that I started in a new company is to find results quickly, even if it’s not the biggest opportunity that you might have identified. It’s really important to build that cover.

And when I say that cover is just the respect that you’re actually doing work that is going to deliver results. Cause I think the concern when you establish an innovation practice is like I’m investing a lot of money on this because you can’t do that with one person. So any company that is trying to do that with one person it’s probably not going to get there.

But if you’re serious about it, you’re investing that the question will come on day two. So what have you done? So you’ve got to find something that will create that protection and that protection will say, all right, I trust that they actually understand the business. They are delivering something. Now, let’s go and build the next portfolio that might not be that big thing that requires large investment, but you’re going step by step so you can continue to survive on your journey.

The first stage is survive. If you survive as a team, then you can start planning. Okay let’s get bigger on this. Let’s have. bigger scale impact.

[00:09:31] Chris Hudson: Because the other way around and I just want to ask you this because it can happen this way where you’re pretty much given the autonomy and there’s not really that sense of I guess collaboration or alignment or agreement on the thing that you’re delivering, but they love the end goal and they love the fact that you’re talking about all these experiments that are running and everything else but I’ve seen it where you’re pretty much left alone and then you come to do a bit of a reveal at some point later in the process and it’s like, Oh, what’s happened here? It’s not aligned. And then obviously, sometimes things get pulled, but have you been in that situation as well.

[00:10:01] Fabio Oliveira: Yeah, definitely. I think to work in innovation have to be very passionate, sometimes idealistic about what you’re doing. It’s very easy to lose perspective of that context that was talking about. And it happened, definitely happened to me. It happened to me, I came out when I had first started we chose that replenishment path and I got back with the first project was something that I really thought it was the right solution and knowing all the theory I got probably too excited with falling in love with the idea came back with something that was completely wrong to what the business expected. And I had a at that time I was on a work visa so I had 12 months and if I Didn’t make it was probably gonna have to go back to Brazil where I’m originally from.

And I didn’t want that to happen. So I changed direction pretty quickly, but it’s so easy to happen and it happens all the time.

[00:10:50] Chris Hudson: So what are you looking out for during that process as I guess markers of success or like what’s giving you confidence through that process and what are you spotting out there in the culture of your working environment?

[00:11:00] Fabio Oliveira: In our teams, I think we always try to look for excitement. We work a lot with store teams. If the store teams are not excited, there’s either a product problem or a change problem. And usually a change problem is a design problem. So we try to look for that excitement.

How do they see value in it? Because they’re ultimately your customer. If they don’t see value, then there is no value and a very short path to value. So if you’re introducing something, let’s say to store operations, you have to capture results on your first, second, maximum third iteration. If you’re not capturing results, this again, go back to the drawing board, might be a problem definition issue or might be a solution issue. But those very early results are so important because you have to keep stacking wins. Otherwise it’s hard to progress.

[00:11:45] Chris Hudson: Even on the innovation challenges that you think probably on the less sexy side, as you were saying, actually can create a, a number of different reactions, right? People find that the most basic stuff if it’s solved for is, transformative in their organisation.

That can be incredibly powerful too, right?

[00:11:59] Fabio Oliveira: And it usually is I believe that most of the large organisations have a lot of low hanging fruits that are opportunities for innovation. You don’t need to go all out. You can go, but if you want to deliver results quickly, there’s a lot of low hanging fruits that you can capture and improve using different methodologies to deliver those results quickly.

And those are the ones that I usually try to go after in whatever problem space that we are working is like, what are the low hanging fruit sort of the things that no one has touched, but if we do it, it’ll be quite simple to execute and just requires us being a bit courageous in the beginning to touch that area that no one touched in a long time.

[00:12:38] Chris Hudson: Yeah, of course. Yeah. And I think metrics come into it obviously in terms of how you present the result, but what from your repertoire have you found works really well from a metrics and reporting point of view?

[00:12:47] Fabio Oliveira: It is a lot easier when you are operating and trying to innovate in an environment where you have a lot of metrics already we have the luxury say in retail to be able to test something and get feedback in a matter of minutes sometimes hours so you can actually have multiple iterations of products in a week.

In government, you have a lot of metrics, but you can’t influence them sometimes for months

And you operate on lag indicators, sometimes not even that sometimes just qualitative feedback on something that you’re designing, hoping that you’re going to get some feedback. So we try to be, especially in retail, very strong with metrics.

We select the KPIs that we going to impact before we track them because the numbers don’t lie. People might love it, but if you’re not moving the dial, then you’re never going to get a business case signed off. And I think keeping the metric front of mind is really important to keep you honest.

[00:13:41] Chris Hudson: It wasn’t always that way. Was it? Because behavioural data, anything beyond, basic demographics at one point just wasn’t there. And then all of a sudden, through digital channels and like you were saying, matter of hours, you collect data that can give you more of a direction and that level of granularity then informs the next round of work, so have you found it easy enough to adapt to some of those changes and to work with you know ever increasing and more complex data sets data sets?

[00:14:05] Fabio Oliveira: Oh it’s beautiful now.

The amount of data that we have in retail now compared to 10 years ago when I started is so different. It came out, we have implemented RFID, which is the radio frequency tags that can be read every night by a robot. So every night, for example, we know exactly how many items we have of a specific key code.

That’s working apparel at the moment, but imagine every night, exactly. How many items you have, where they are, so you can trigger replenishment, for example, and that’s just the beginning of it. I think this is another thing that back in the day, 10 years ago, everyone’s like, let’s invest on this, but it wasn’t ready.

And now it is, it’s the convergence of multiple technologies that generate that platform, that data platform that never existed. And you can build a lot of products on top of that platform, which is super exciting.

[00:14:53] Chris Hudson: Yeah, that is great I mean there’s always like questions that people have right one of the questions I have is around I guess the things that you put in your basket that you then, you pick up from the shelf, but then at some point later in the shop, you feel like, Oh, no, I can’t buy that.

You put it back somewhere. So maybe through your RFID, you can see where it lands in the shop and, whether it’s near the till or whether it’s not, but it’s always interesting to see how products potentially move within the store.

[00:15:16] Fabio Oliveira: Yeah, you can do all of that. Like you have a map updated every day with location, quantity and location and a X, Y, Z coordinate. Like it’s imagine that it’s just, yeah, it’s so futuristic, but yeah, it’s available.

[00:15:31] Chris Hudson: So that must be helpful. If you’re evidencing, obviously, back to innovation, we’re evidencing things, the fact that they’re working that feels like it’s a little bit simpler. Some people have a bit of a discussion within enterprise level innovation around who should be running it, is it a core team, is it an organic thing that happens in a certain way?

Is it defined by certain rituals? Have you found there’s a formula in any of those areas that seems to be working?

[00:15:55] Fabio Oliveira: I think it’s hard to say a formula, but I have a preference and my preference is for a dedicated innovation team. I remember when I was interviewing for WorkSafe government organisation had a huge transformation agenda and we’re talking about exactly that question. Like when should innovation be decentralised and I said, look, I’ve never seen it happening in a way that is successful.

And I think the reason is that the BAU as we like to say the core business. It’s too strong. You have to protect your business model and asking people to leave that behind and innovate and sometimes challenge their own ways of doing things. The chance of that happening is very small. You can talk about the exceptions, Google or Netflix or one of those companies.

Yeah, they can do it. But a large organisation, I think, requires someone that is going to be pushing the agenda forward. Not that innovation doesn’t happen everywhere. It happens, but it’s also killed very fast. Like we have 45,000 team members in our stores. How many great ideas come up every day and how many ideas doesn’t get to us?

Some do. And we’re trying to facilitate a channel for that to happen. But most ideas probably die without even connecting to the next person. So it’s a lost potential. If you don’t have a team that is actually, that’s their sole mission is to improve the business with exponential results. It’s hard for that to happen.

[00:17:19] Chris Hudson: Corporately there are various systems that come into play sometimes that are trying to gather those ideas and basically bring them into one central view. Have you seen anything like that work? Hmm.

[00:17:30] Fabio Oliveira: In some ways yes, but not in an indiscriminate practice. We have tested this in the past. We got the point we had thousands of ideas and we just didn’t know what to do with those. The recent attempt which has been pretty successful. We are targeting a small number of stores that we know relatively open and they always keep pushing ideas. So we work, let’s say with 10 stores at a time, all around the country, New Zealand, and they will work with us to suggest ideas in a specific topic.

And then once that’s done, we move to the next group of stores. And we actually got some really amazing ideas coming from those champions, let’s call it. That doesn’t overwhelm my team to analyse, answer back to the team members, but you get some high quality things because the people are motivated because they can see what’s happening with those ideas.

[00:18:18] Chris Hudson: Yeah, nice. There’s certain people that are on side in a way. They’re almost like your allies or your silent innovation workforce. You’re always thinking of things and they come up with improvements and that’s really great. How do you spot those people?

What characterises them? Just for other people that listen to the show, they might be thinking who can I lean on to help with some innovation stuff? And, what kind of characteristics spring to mind for you?

[00:18:38] Fabio Oliveira: The first thing that came to mind was they’re willing to to speak, they’re willing to come to you and say things but not just complaining, for example.

Start with, this thing doesn’t work, but they usually come with a very constructive view of how things could be better, even if it’s not a solution, might be just a well articulated problem.

At WorkSafe, every project had what are called design crew, that are people that will join us from the business, and that was the same thing. It wasn’t as distributed as Kmart and Target with, 45, 000 people around the country. But those people had a very keen interest on doing something different and connecting with the innovation practitioners that have the tools, the methods, it gets a really good combination.

And that’s what we try to do is you come with the expertise, you come with the knowledge and we’ll help you with the methods and we’ll help you to get it done.

[00:19:29] Chris Hudson: Yeah. So you’re almost like a support function in a way because you’re seeing in a sense what they’re hoping to solve and you’re able to reframe that. And then obviously provide the systems, tools, people, processes, whatever it is to help them move that thing along from here to here.

And obviously come up with a tangible result, which is great. There’s also the other part around, probably influence more broadly, but it’s around what people do with information around innovation projects and how they absorb the information, what you’re expecting them to pass on.

There’s kind of ownership of the initiative, which is one thing, but then there’s the pool of influence that you can create to get a lot of more significant programs underway. So have you worked in some of those scenarios?

[00:20:11] Fabio Oliveira: Yeah. And this is critical. I think this is the the change management part, the beginning of it, where you need to get the people that are going to be running those products, those transformation initiatives when they become part of core business and you want to get them at the beginning of the journey. At Kmart, we have an innovation store that we actually live there.

My team doesn’t even have desks in head office. We work from a store, from this innovation store. if they are not on board, then, it’s really hard. And then you go to the next group of stores for that initiative. You’re for trialing. And it’s the same logic. So getting, I think, getting them on board is critical there’s no way you can’t do anything without starting with that, piece of change management.

[00:20:54] Chris Hudson: I was looking, I don’t know if you know the model, but I was looking back at a, like a Dr. Tim Baker framework earlier on. Do you know that one? Where you’re basically got different strategies for influence and it’s around push and pull and then logic to emotion and there are different quadrants and, one of them has got your investigator where it’s basically you’re asking a lot of questions, there’s another one where you’re about a motivator, then you’re a calculator or a collaborator, are there different ways to gather up influence and to work with people to create collective influence, do you think?

[00:21:22] Fabio Oliveira: Oh, yeah. And you’re only gonna realise what are the buttons you need to push if you involve them from the beginning that the population of, say, of store managers is very diverse, but there is some commonalities in objectives and, this metrics that they have to achieve and that drive certain behaviours.

So if you don’t understand that then it’s really hard for you to make an impact. I think it’s part of that empathy that you have to have at the beginning when you start the design process.

[00:21:52] Chris Hudson: Yeah. And how do you find out about people and their relative strengths and working preferences in a way that works? Do you think?

[00:21:59] Fabio Oliveira: We don’t have any specific methods at the moment, although I think we have a really good understanding of the different profiles of install managers, let’s say that we work with and the time that they’ve been in the business what’s their background in when we were at WorkSafe, which is more like a corporate setting, we would do a lot of personality tests for the teams that would come together, including the design crew because we wanted to understand who we’re working with.

And that was a really good way to just accelerate collaboration without bumping on each other. There’s so many personality tests, but it was just a good way to level everyone and say, this is what we do. But it came out. We just try to get to know the individual and what they do and what their preference is.

[00:22:40] Chris Hudson: Personality tests are interesting. What do you think they tell you over and above what you think, do you believe?

[00:22:44] Fabio Oliveira: I think it’s for us was really an interesting way to understand how the person that you’re working with prefer to work. So it was more like a work kind of assessment. So some people that’s obvious, but if, when you put everyone on a matrix. And those are the people that prefer to work on their own.

Most of the time, those are the people that actually require heavy collaboration. How do we have a team that has a lot of people that want to work by themselves, let’s say. So how do we balance that a little bit? We continue to collaborate. So it was just a way to navigate the teamwork, basically.

[00:23:17] Chris Hudson: Yeah. And those moments around collaboration, do you think there’s a, there are lots of different ways to do it, but what do you see working well and maybe less well?

[00:23:24] Fabio Oliveira: I think innovation doesn’t happen without heavy collaboration. So if you’re someone that don’t like to work with other people and in a sometimes uncomfortable way. Because it means that you’re going to, people are going to disagree with you you’re going to go through some really tricky moments that you have to endure together, then innovation is not for you.

So that’s the starting point. The second part is knowing that I think the process, although there’s a lot of collaboration is not only collaboration. We encourage people to spend a lot of time together in the store, but we also encourage people to spend time on their own producing, creating and designing whatever form design happens software or graphic design or whatever.

And then coming together having solid critique of the work and then coming back and working on their own again. So it ebb and flow on collaboration and individuality. But when you’re together. It’s really intense.

[00:24:15] Chris Hudson: Yeah, everyone brings a certain colour or flavour to the work, obviously. And I, diversity of perspective is obviously incredibly important within the innovation landscape. And there’s also another debate around generalists and specialists and where people sit and where people prefer to lean, if you’re thinking about Double Diamond or any of the processes there are fewer people that basically go across the end to end or maybe sit, there are some that sit in certain parts of that and feel very comfortable, obviously. But do you find that there’s a mix in terms of specialist or generalist, any of those stages that seems to work well?

And do you think you need to be involved from the start to be able to output something that’s brilliant at the end?

[00:24:50] Fabio Oliveira: We have a few people that can actually do the entire diamond and those are the ones that actually stay from beginning to end. ‘ cause they tend to be more generalists and be able to navigate the ambiguity of the beginning, but also the crush that he had at the end to deliver something.

We don’t try to get because of the diversity of thought, we want to get people that have different types of mindsets. I love the people that are specialists. I love the people that are like, I’m a, UX, UI designer. I love innovation, but my thing is the second diamond. That’s amazing. But at the same time, without someone that can take you through the whole thing and have that elevated picture of the challenge, are we actually hitting the marks?

It’s hard. I’ll say there’s those two different profiles of working innovation. You can be an expert that is in one area, but it’s very hard to find a journalist I find.

[00:25:40] Chris Hudson: Yeah, I think you’re right. There’s a need for that. But it’s not always something that anyone who’s trying to fill a role will put their finger on necessarily, because usually there’s a gap that something that somebody needs to fill. I was just thinking about, the projects that you’re working on and, what other formulas work well. Research comes up as well. There’s a lot to do with design research. And I guess across the end to end actually it’s really interesting to see that there are a lot of shortcuts popping up through AI and other areas.

Have you found anything there that is looking worrying for you?

[00:26:09] Fabio Oliveira: No, I don’t think so. I think that shortcuts has been around forever, through the use of technology or just people trying to save time on, one less interview or different methods. I think methods are a really interesting way to trying to get a shortcut on a research project, for example.

I’m a big believer on just enough research philosophy, which is basically to just enough so it can progress to your next learning goal. A lot of the especially in government that happened a lot. There was an overuse of research without a solid outcome, and that’s so dangerous because you open up, the diverging phase of your project so much that it’s hard to pull back.

We operate on this just enough research philosophy. And just try to leverage the technology to help.

[00:26:55] Chris Hudson: How do you go about scoping that? I know I’ve done research myself. It feels you can sometimes have more questions or the expectation is again, like we’re going to have to solve for the whole thing at once. We’ve got 150 questions. We’re going to have to prioritise those in some way.

What are you finding is the way to get to the just enough version of what you want to do.

[00:27:13] Fabio Oliveira: For us, it’s shaping the brief, the initial brief really well, which is a constant challenge. We are not there yet. I don’t think we’ll ever be going to be able to say we have the perfect shaping process. But the more you shape, the easier it is go out and talk to the right people, narrow on the right problem space because you might not know exactly the problem and choose the right methods as well. And it’s normal sometimes that if you don’t have the shaping you basically have a three, four diamond, but it’s a lot of the first diamond repeating. So you can actually narrow down on something, but we have now a deliberate practice to shape projects before we hand them over to the teams that are going to be working on.

[00:27:54] Chris Hudson: That sounds really good. Let’s talk a bit about results. How do you think it’s going? And what have you been able to achieve through some of the things that you’ve been describing so far?

[00:28:00] Fabio Oliveira: I think we’ve been really lucky with the group of people that accepted to join this journey. It came out. So we have a really amazing group of people a mix of designers, developers, and a lot of former store people that joined the team. And we were able to do some really cool things.

But I think the most important thing for me is creating this repeatable innovation process that we can get whatever challenge that is thrown at us and we can come out with something that is meaningful for the business. Some things are pretty quick. Some others will take a long time, but we’ve been really lucky to have a group of people that believe in that journey.

We started this a couple of years ago and now I think that everyone is very confident that we can deliver. And we have done some really interesting working RFID extension to all the products outside of apparel, the deployment of those robots in store, a lot of things related to profit protection that are, it’s a very interesting scenario that I had never worked in before.

So yeah, it’s been an amazing journey and very happy.

[00:29:03] Chris Hudson: Profit protection sounds good. Can you explain what that’s about a little bit?

[00:29:06] Fabio Oliveira: Profit protection, loss prevention is like a retail term for avoiding theft. As I think many retailers are experiencing now it’s going through the roof and we are trying to solve that problem.

[00:29:18] Chris Hudson: There’s lots of really good stuff in that, I think, in terms of progress and there are many things, it feels hard to quantify all my, it’s like, how do you decide on how much to do and what to do?

And how does that initiation of where to focus tend to stop?

[00:29:31] Fabio Oliveira: It starts with the strategic programs that we have in the business. So we have a couple of key strategic programs that we attach to. Not all of them. Those programs will have a roadmap and we usually pick parts of the roadmap that are unknown or the brand new areas that the program wants to work.

For example, if we’re thinking about digitising tasks in stores there is a program happening digitising certain tasks. But if you say we need to digitise replenishment, we don’t know how to do it. My team will come in and do it. So that’s the first thing in connection to strategy. The second one is we have a limited capacity.

Because we have limited number of people and limited budget. So what do we do is that we divide our working cycles six weeks cycles, and then two weeks of in between cycles to wrap up documentation showcase and decide on the next cycle and in those cycles, each project can only have two maximum three people.

So that basically creates our capacity. Sometimes we have projects that we call off cycle that, for example, if we’re going to trial something requires more than six weeks, we take people out of the cycle so that limits the capacity. So we follow the Shape Up Methodology from Basecamp.

That is a lite agile, let’s call it. I don’t know if that’s the right way to describe it. But we come to a bedding table with some key stakeholders that say, this is the stuff that we want to work on this cycle, usually more than the capacity. So we have some sort of friction and then the best ideas survive.

[00:30:54] Chris Hudson: Yeah. It sounds pretty well organised. Often there’s a design ops angle to it, but for innovation, is it falling in line with that or is it something that you have to set up separately as an operational system?

[00:31:04] Fabio Oliveira: It’s another just enough philosophy we use is just enough governance. So we try to be very light on governance because we believe that the more governance, the less innovation you have, there is a definitely a minimum level that you need to have. So you don’t go to the no go zones that are usually saved, privacy, cybersecurity procurement, we respect all those rules, but everything else, it’s kind of up for grabs for us to try and work a little bit faster. So we try to be as light on governance as possible and push a lot of autonomy to the teams. They can make any decision they want. They have a pre approved budget that is quite small. But they can use that in whatever way they feel they need buying equipment rostering people to perform tasks.

We only want to see at the end of six weeks that they have got you to the point that they need and the managers Are doing what we call, in cycle shaping so if there’s something else that can deliver or something less like maybe we didn’t shape right we need to reduce the scope so that happens in real time, but that’s it.

We don’t do a lot more than that

[00:32:08] Chris Hudson: Okay, cool. That sounds really good. It’s contained but open, it’s obviously time boxed. So there’s some degree of like risk mitigation, I guess For the fact that it’s not huge, it’s not like we’re signing off six or nine months or 12 months worth of work here but that’s cool.

And then the expectation from it through that six weeks. How do some of the rituals play out?

[00:32:26] Fabio Oliveira: It depends on, we have two types of cycle, one cycle called solve cycle, which is from problem definition to problem solution fit. That means in design language, you go all the way to low fidelity prototypes. So you have six weeks, just find out what the problem is and generate a few solutions that you think will solve that.

If you’re successful you move to a build cycle and the build cycle is just building fidelity. So you pick one of those prototypes or maybe a couple together and you then build fidelity to the point that at least one store can see the benefit. Like we have to see on the dashboard, like the metrics change with the caveat here that depending on the complexity of the solution, it might need multiple build cycles because, it might be the future feature here, then another feature. What is important is that every six weeks we stop and decide if that project is still worth the risk. As you said, like we only have an appetite for six weeks then we have to check. And if a project doesn’t finish in time, it doesn’t get an extension. We have to see what happens. Is that a product issue or a shaping issue?

It might get an extension, but it might not get an extension. And that helps keep the momentum going and then the rituals will follow whatever cycle you’re on. So if you have a lot of research happening, you’re going to have, your cycle is all about downloads and synthesis, but in view it’s all about fidelity. Are you getting the numbers kind of more like a daily thing.

[00:33:52] Chris Hudson: What are some of the experiments in terms of how you experiment, is it mostly leaned on digital? Is there a lot of everything else that’s thrown into the mix as well? In store, how physical does it get? I guess some of those questions around how to decide on the validity of the tests through the way in which you’re doing it.

[00:34:10] Fabio Oliveira: It gets very physical. It’s a, I think we operate on that combination of physical and digital because anything that we do has to be executed in stores. So either from a customer point of view or a team member point of view. So an example, we have been testing different ways to use the RFID technology.

And one of the things that the moment is can we have RFID in feeding rooms so that customers come in and they see what they’re bringing. And you can build a lot of use cases on that. Especially for profit protection is another way to help clarify what customers are doing and potentially not doing so we actually got readers RFID readers and we hacked a setup that was huge.

We had a a monitor a laptop, all inside a plastic box in a feeding room. And we were testing it with ourselves. When we saw the technology was working we invited customers in and that’s, that how I go. And now, we’re building the fidelity up and the hardware down, like reducing the size of hardware.

So that’s the part that is really rewarding to be in retail because it will get you to make things physical and test tomorrow. It’s really cool.

[00:35:13] Chris Hudson: Yeah. That’s incredible. Very responsive way of doing it, obviously. And you can just jump into a store and do something one day. Are you finding that all those stores are quite, I guess cooperative when it comes to that sort of thing, or have you got, I’m sure there are people that, arrive for certain experiments, but maybe not others.

[00:35:27] Fabio Oliveira: Yeah, I think depends on the experiment. I think anything that has to do with technology. I would say most doors are very open if it’s more process because we do a lot of process innovation as well, then depends on how the store is tracking at the moment. Some stores get really busy at certain times of the year, and then you probably don’t want to get close to those stores because it’s not fair to them.

But overall there is an appetite for innovation, especially when it’s not top down when you come and say, Hey, we don’t know exactly what we are gonna do, but we want to solve this problem. Can you help me in this journey, and we have never heard no, there might be some resistance down the track, but they’re usually happy with that.

[00:36:05] Chris Hudson: Yeah, I mean it reminds me a bit of the innovation work I was doing in London and almost the project itself is basically the start of a kind of community building exercise in one way or another. So you’re thinking about employee experience and a bit about building culture as the fact that you’re solving for customer problems together, bringing people together from different teams.

And obviously in a retail environment, you’ve got people that are on the floor and seeing customers all the time. And I think that mix of energy and input and insight that kind of comes about that is, it’s just really rare. When it works well, it works really well and you can obviously get a lot from it.

Feels like that’s a kind of cultural experience for a lot of people that work there that they get to work on the innovation with you. Is that a fair assumption?

[00:36:46] Fabio Oliveira: Yeah, and I think a lot of it is the nature of retail that people are so focused on the customer and you feel solving a problem that is impacting that. Definitely. They want to help. There is also, I think a very entrepreneurial mindset that came out. We recently started working with target as well, but it can definitely say from came out where I spend most of my time that people want to do new stuff and you just have to use that energy like in your favour, because people are actually willing to help and propose and criticise and build together.

[00:37:16] Chris Hudson: Yeah, nice. I mean that, that sounds really good. Are there any other big sort of cultural initiatives that you think bring innovation together or make it more easy?

[00:37:25] Fabio Oliveira: I’m a bit against those big scale training. I just think that it takes a lot of time and you don’t get a lot out of it. I prefer to work with, say with design crew, one, two people that are actually going to go and disseminate the thinking. We did something really interesting at WorkSafe instead of training people on methods, we started to get people together on what we call F nights from startup, someone from the team said, Oh, let’s do one stuff up lunch. Internal and it blew up. We’re getting more than a hundred people per lunch to hear stories of people stuffing up. And what we did, we started bringing in the senior executives. So we got the CEO to come in and talk pretty much the entire C level came in and told stories about when they stuffed up and what happened because we wanted to get people more not to glorify failure because no one likes to fail, but just to glorify trying and that you can survive on the other end if you’re responsible and you’re doing the right things with a good intent, everyone will make mistakes.

And I think that was probably the highlight that I have seen to generate this momentum for, I wouldn’t say innovation, but more like the appetite and courage

[00:38:32] Chris Hudson: I saw this in a talk the other day, but it was the moment at which SpaceX had basically launched a rocket into space and it blew up and there was a cut. The camera just pans across to the SpaceX HQ is what it was. Everyone’s just like cheering and cheering and like the crowd’s going wild as if the best thing had happened that they were able to learn from something and they were all just really happy about that. So I think, failure if framed in the right way and obviously through experimentation it can be incredibly valuable can bring a sort of sense of progress in a funny sort of way as well.

[00:39:03] Fabio Oliveira: I think the reality is the journey of innovation is. 95 percent failure, but small failures. You don’t want to get your big failure. What I always like to say is follow the process, follow the methods, and then you’re not going to fail in your project. You’re going to fail throughout your project, but you don’t want to get to the end with something, as we discussed in the beginning an idea that you had that you thought was better than anything else. That is a huge failure. Small constant failure in the beginning. That’s part of what it is. But if you’re not used to it and you feel that someone’s going to judge you, what’s going to hurt your career, you don’t move past step one.

You need to get to step a hundred.

[00:39:39] Chris Hudson: Yeah, that’s really good advice. I think, in terms of it’s not all success and it’s not all failure, but there might be smaller versions of each of those that happen that you can make more manageable in a way, which is great to hear. Was there a it was, there’s like a, if you think back to your career so far, was there a big learning or something that characterises your approach that springs to mind?

[00:39:58] Fabio Oliveira: Having worked with stores and has been a very interesting way of looking on how you can influence people. I think my approach that I have today of being that extra extreme empathy you’ve got to be embedded in the store. And when we were, all the businesses have got to be embedded in the problem that you actually solving.

And the more you can do it, the better it’s because of the experience that I had back in 2013, when we decided that we’re going to do innovation inside, it was the Altona store, which is a suburb here in Melbourne. And it was really hard because I was basically new to Australia, new to the business, you didn’t understand anything.

And I had to go through a change of management approach or say a culture change approach before anything landed. And that just made me appreciate sometimes the product can be the best if you don’t truly understand people, it’s not going to land. And I think that impacted a lot of how I approach things.

Sometimes can be seen a bit inefficient, that you spend too much time with people trying to understand them, making them understand you. Only then you go and start delivering what you are there to deliver. And yeah, that has been a very interesting experience that I’ll never forget. And it became like a secret sauce of what we do.

[00:41:16] Chris Hudson: Yeah. Yeah, there’s that other triangle that says, tell, ask, listen, where do you find you spend most of the time on that triangle in the way that you work?

[00:41:24] Fabio Oliveira: We like to spend a lot of time on observing and doing. We call Ask, Observe, Do.

[00:41:30] Chris Hudson: Okay. Yeah.

[00:41:30] Fabio Oliveira: The beauty of retail, we can actually do the work in government, we’re looking at injured workers, for example, you could ask, could sometimes observe parts of a recovery but mostly it was asked, you couldn’t observe or do, and now we can truly get the triangle, and the truth is in the middle.

That’s why I always say the truth is in the middle. If you can. Take the three things. The truth is in the middle. And yeah, so we probably spend too much time asking and observing, but it should spend more observing and doing.

[00:41:57] Chris Hudson: There’s a lot of thought obviously around lean and how to get things out into market quickly. And, I think the do is obviously it’s what people want to see for it to be believable in a way, you got to report back on something. But that’s really, yeah, that’s an interesting way to look at it on a different triangle to what I was describing.

Yeah, let’s talk about innovation again. And what’s one big mistake that you see happening all the time?

[00:42:16] Fabio Oliveira: I’ll say, I’ll probably go back to my first answer is doing projects that might look easy or might look sexy or flashy, it’s just a use of technology, but they don’t actually solve a real problem that the business has. Over and over and over again. If there was one thing that I would say to people working in innovation is please find the real problem.

Immerse yourself. Choose the hard not the shortcut, the long cut. Usually at the end you get the reaction like, what is this innovation? That’s not what I expected to happen.

[00:42:48] Chris Hudson: Yeah, that’s it. Hey, maybe we can just finish on a bit of a walkthrough of how you’ve ended up doing. What you do and you know what some of the kind of key moments in your career have been in getting into innovation, but also evolving your practice. So for anyone out there who is, feels creative in some way, I’m sure but feels frustrated perhaps, and wants to move into the field of innovation, yeah, it’s obviously incredibly interesting field but what are some of the things to be aware of as options as you go through your career?

Do you think?

[00:43:15] Fabio Oliveira: A multidisciplinary background, I think helps a lot. Being able to do a lot of different things because at the end of the day you need to connect dots. and to connect dots you need to have a lot of dots. So exposing yourself to multiple realities is one thing that I highly recommend and it’s one of the things that we try to have as a hiring I won’t say filter, but one of the hiring criteria is the diversity of background that someone might have.

My background was until I had my first role in innovation, which was in Australia back in 2013. It was a mix of a lot of things that had, an underlying tone of innovation called new products, new business strategic projects, but I would never call it innovation. And I remember when I started applying for jobs, when I moved to Australia, no one like your background is not, you don’t have enough time in banking, have a little bit, not enough time in pharmaceutical, just a little bit, not enough time in consulting, just a little bit.

So I heard that over and over again. But when I came to and was able to convince them that it was a good option for that role. It was basically because I could see problems in a way that other people couldn’t see. And my recommendation is if you have this diverse background, don’t hide it.

A lot of the advice that it gets like off focus on this thing. But if you’re looking for a job in innovation, highlight the fact that you have that dot forest. And you can connect those dots. There’s nothing that can replace that.

[00:44:39] Chris Hudson: Yeah, wonderful advice. There’s so much kind of niching going on. It feels like within resumes and I’m sure you see them all the time portfolios. And actually there’s a lot of second guessing involved in people saying I think they’re going to be hiring on this. And obviously the job description, it might give some clues to how to set that up but often it’s maybe not showing you enough about the candidate that you’re looking at.

[00:44:59] Fabio Oliveira: Yeah. And I think be willing to for the people that are hiring and setting up innovation teams, be willing to have a goal with people that have those backgrounds that don’t actually fit the model. In both WorkSafe, Kmart, we really, truly tried to get people that are very different from each other.

We try not to have a culture, like that you have to be part of this cult. It is a different group of people that is harder to manage, because people don’t behave in that way, but that’s what you need. Is it’s different from hiring people for, a product team or finance team that you want them to be similar in that sense.

We want people to be different and it’s just a different practice.

[00:45:38] Chris Hudson: Yeah. Nice. Nice. What else? Any other resources that you think people should be looking at to, to think about innovation today or anything that you find useful?

[00:45:45] Fabio Oliveira: A couple of things that I would highly recommend. Design led innovation is the Bible that I follow. There’s a couple of books that I would recommend. I think the first one for people that are trying to introduce design lead change to any big organisation. It’s called the design for company from Martin Neumeier.

It’s a notebook, but some old examples there, but definitely worth it. And another one that is quite obscure. People don’t talk a lot about it’s called Naked Innovation. It’s actually free. So go to the website and you can download it for free. I’ll say those are the two like starting points to understand this revolution of design, led innovation.

Very important to read a lot as well on those methods, but those will be the two starting points for me.

[00:46:27] Chris Hudson: Yeah. Nice. Nice. And what excites you about innovation or what excites you about work more generally if you’re looking ahead?

[00:46:33] Fabio Oliveira: I think we’re at the point of convergence of multiple technologies that 10 years ago were a dream and it’s really cool to be part of this moment and able to finally deploy those technologies at a cost that is reasonable so you can understand and you can deliver things. So I’m really excited by the future and what are we going to be able to do.

[00:46:55] Chris Hudson: Let’s finish with one more question just around your superpower. If I could ask you what you think your superpower is, that’d be interesting.

[00:47:01] Fabio Oliveira: I’ll probably say that’s what people usually say I’m very good at looking at an idea and or project and translating that into a spreadsheet, and I’m not a finance person, but that’s, I can see that into, how that plays out in a P&L or business. So, that’s my superpower that is a bit random.

[00:47:20] Chris Hudson: When did you start doing that?

[00:47:21] Fabio Oliveira: I think it was when I was working pharmaceutical business we did a lot of innovation. It was a new product, but everything had to be translated into a spreadsheet. So I think my brain, changed into how to see opportunities is how much does it cost? How much the value of it?

[00:47:36] Chris Hudson: Are there a few Fabio dashboarding templates that you’ve used or that you use?

[00:47:40] Fabio Oliveira: Yeah, definitely. Yeah.

[00:47:41] Chris Hudson: Yeah, nice. Nice. That’s a good one. All right. Thanks so much, Fabio. Really loved having you on the show and asking about your question, asking about all these things to do with innovation at Kmart and obviously from your past experiences as well.

And it’s just pretty super interesting. I love the conversation that we’ve been able to have. So yeah, thank you again for coming onto the show.

[00:47:58] Fabio Oliveira: Thanks, Chris. It’s great to have a chat and yeah, thanks for having me.

[00:48:01] Chris Hudson: Not a problem. We’ll leave it there. Thanks so much, Fabio.

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