Technology innovation is driving change and transformation in retail. On this episode, CXOTalk host Michael Krigsman talks with Scott Emmons, founder and head of the Innovation Lab at major retailer Neiman Marcus. Top digital transformation analyst and expert, Brian Solis, is guest co-host on this show.

As founder and Head of the Neiman Marcus Innovation Lab (iLab), Scott Emmons is focused on innovation for the Neiman Marcus Group (NMG). He founded and built the innovation iLab in 2012. Since its inception, the iLab has grown to become the Neiman Marcus hub for innovation projects and has earned a world class reputation for retail innovation. Scott is responsible for leading NMG in evaluating, designing, testing and piloting cutting-edge technologies and applications for luxury retail.

Brian Solis is a digital analyst, business strategist, and futurist who creates new media strategies and frameworks that build bridges between companies and customers, and with employees and key stakeholders. As a Principal Analyst at Altimeter Group, he specializes in change management that empowers business leaders to introduce new media resources, systems and processes, as well as to deliver the infrastructure that enables organizations to “embrace and excel” in today’s era of the connected customer.

Transcript

Michael Krigsman: Did you ever wonder, when you go to a store like Neiman Marcus, how do they think about the future; how do they innovate? Well, today on Episode #280 of CxOTalk, that's what we are about. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk.

Before we begin, I just want to say thank you, as I always do, to Livestream for being a wonderful provider of our streaming infrastructure. If you go to Livestream.com/CxOTalk, in fact, they will give you a discount.

Now, please tell a friend right this minute to watch, and I want you to subscribe on YouTube and tell your friend to subscribe too.

With that, we have two amazing guests today. Our first guest is Scott Emmons, who is the head of the innovation lab at Neiman Marcus. Scott Emmons, it's your first time here, and I'm so thrilled that you're joining us.

Scott Emmons: Thank you so much for having me.

Michael Krigsman: Scott, please tell us. I think we all know who Neiman Marcus is, but tell us about the Innovation Lab, and tell us what you do there.

Scott Emmons: What the Innovation Lab is that I'm in charge of here at Neiman Marcus is about bringing new technology into play in our stores and in our digital experiences at Neiman Marcus. I've had this role for about five and a half years, which has been an amazing five and a half years, and I've actually been here at Neiman Marcus for about 15 years.

Michael Krigsman: Okay. We're going to definitely be exploring all this in great depth during the next 45 minutes. Our second guest is an old hand at CxOTalk. He is one of the top analysts looking at digital transformation and culture change in the world. I'm so happy to welcome back Brian Solis. Hey, Brian.  How are you?

Brian Solis: Hey, I am great. It's awesome to be here, Michael. I'm a big fan of the show. Also, Scott is a friend of mine as well, so I feel like this is a family reunion. Thanks for having me on.

Michael Krigsman: Well, we're big fans of you, and so tell us about the Comcast background that we see right behind you.

Brian Solis: Yeah, so if I look a little choppy, it's because I'm coming to you live from South by Southwest. We're here in the Comcast tech set lounge that I host. This is year 11 for doing this, and we have a live program. We have all the people from the main stage come through here to do their own programming, so it's like a South by Southwest within a South by Southwest.

Michael Krigsman: Oh, well, fantastic. We really appreciate you're going to all the trouble that it takes to set this up in a conference in a remote location.

Brian Solis: [Laughter] Quite literally just set it up.

[Laughter]

Michael Krigsman: Well, you are here. Okay, so let's dive in. Scott, let's begin with you to kick off this conversation. Why don't you share with us a little more detail about the innovation lab, how it came be, and what are you trying to do with it?

Scott Emmons: Sure. Like I said in the intro, it's about five and a half years old which, for retail innovation labs, by the way, I feel like that's pretty long in a tooth. I've watched a lot of retail innovation programs at competitors come and go over that five and a half years. We're pretty proud to be here and I expect to be here talking to you five years from now, to be honest.

What happened is, at that timeframe five years back, we had a brand new CIO join us. I think he recognized really early on, like within a couple of weeks of arriving, that there was a need to sort of raise awareness around Neiman Marcus about what was possible with technology. That was his initial goal with the Innovation Lab was to get the IT organization, which is where I report out of, at the table during the ideation process and not later when all the ideas have been decided and we were basically order-takers scrambling to try to fulfill these business initiatives and were unprepared in many cases because we weren't part of the ideation.

Michael Krigsman:

Michael Krigsman: Did you ever wonder, when you go to a store like Neiman Marcus, how do they think about the future; how do they innovate? Well, today on Episode #280 of CxOTalk, that's what we are about. I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk.

Before we begin, I just want to say thank you, as I always do, to Livestream for being a wonderful provider of our streaming infrastructure. If you go to Livestream.com/CxOTalk, in fact, they will give you a discount.

Now, please tell a friend right this minute to watch, and I want you to subscribe on YouTube and tell your friend to subscribe too.

With that, we have two amazing guests today. Our first guest is Scott Emmons, who is the head of the innovation lab at Neiman Marcus. Scott Emmons, it's your first time here, and I'm so thrilled that you're joining us.

Scott Emmons: Thank you so much for having me.

Michael Krigsman: Scott, please tell us. I think we all know who Neiman Marcus is, but tell us about the Innovation Lab, and tell us what you do there.

Scott Emmons: What the Innovation Lab is that I'm in charge of here at Neiman Marcus is about bringing new technology into play in our stores and in our digital experiences at Neiman Marcus. I've had this role for about five and a half years, which has been an amazing five and a half years, and I've actually been here at Neiman Marcus for about 15 years.

Michael Krigsman: Okay. We're going to definitely be exploring all this in great depth during the next 45 minutes. Our second guest is an old hand at CxOTalk. He is one of the top analysts looking at digital transformation and culture change in the world. I'm so happy to welcome back Brian Solis. Hey, Brian.  How are you?

Brian Solis: Hey, I am great. It's awesome to be here, Michael. I'm a big fan of the show. Also, Scott is a friend of mine as well, so I feel like this is a family reunion. Thanks for having me on.

Michael Krigsman: Well, we're big fans of you, and so tell us about the Comcast background that we see right behind you.

Brian Solis: Yeah, so if I look a little choppy, it's because I'm coming to you live from South by Southwest. We're here in the Comcast tech set lounge that I host. This is year 11 for doing this, and we have a live program. We have all the people from the main stage come through here to do their own programming, so it's like a South by Southwest within a South by Southwest.

Michael Krigsman: Oh, well, fantastic. We really appreciate you're going to all the trouble that it takes to set this up in a conference in a remote location.

Brian Solis: [Laughter] Quite literally just set it up.

[Laughter]

Michael Krigsman: Well, you are here. Okay, so let's dive in. Scott, let's begin with you to kick off this conversation. Why don't you share with us a little more detail about the innovation lab, how it came be, and what are you trying to do with it?

Scott Emmons: Sure. Like I said in the intro, it's about five and a half years old which, for retail innovation labs, by the way, I feel like that's pretty long in a tooth. I've watched a lot of retail innovation programs at competitors come and go over that five and a half years. We're pretty proud to be here and I expect to be here talking to you five years from now, to be honest.

What happened is, at that timeframe five years back, we had a brand new CIO join us. I think he recognized really early on, like within a couple of weeks of arriving, that there was a need to sort of raise awareness around Neiman Marcus about what was possible with technology. That was his initial goal with the Innovation Lab was to get the IT organization, which is where I report out of, at the table during the ideation process and not later when all the ideas have been decided and we were basically order-takers scrambling to try to fulfill these business initiatives and were unprepared in many cases because we weren't part of the ideation.

Michael Krigsman: That was the fundamental goal was to bring technology to the forefront and the thinking, the strategic planning at Neiman Marcus.

Scott Emmons: Absolutely. Neiman Marcus, over its 110-year-plus history now, technology, the importance of technology, is a relatively new thing over the life of the company. I think we started to see the train coming at us on the technology side around the same time that mobile was sort of taking over the world. It was clear to us that we needed to move faster when it came to bringing technology to bear in our business.

Brian Solis: If I could ask you a quick question,  because I love Scott's story, because he was in the organization well before this Innovation Lab came to be, and I think that your evolution is very interesting in that you're in an industry that is hyper affected by all of this technology disruption, not just in new tech, but also tech's effect on your shoppers and your employees. We're watching a lot of, we'll just say, your competitors' kind of struggle with the relationship between technology. You're reporting into the IT organization. I'd love for you to share how technology and how your work is also playing into consumerism and the consumer experience as well.

Scott Emmons: Well, it'd be fair to say that the early part of the lab's life--I'm going to call it the early part because I expect it to be here a while, once again--that really that's our focus. We've had an IT organization for a long time. We were doing plenty of technology back of house in terms of systems and tracking. I shouldn't say tracking but knowing all we could know about our customers, so we could deliver a more personalized experience. All those things that you have to do to be a good retailer. But, when you went out and looked in our stores, when I first started on this innovation trip, there was not really any technology there at all beyond a cash register. We really utilized that as a technology platform for our sales associates at that time.

I think, as we saw our customers coming in the store and really outgunning the sales associate in terms of access to information because of the device she was holding in her hands, the smartphone revolution that was going on, that it became really clear to us that we were going to have to do a lot better job of delivering digital into the store at that time. And so, that's what I spent the early years of the lab doing is exactly that.

Michael Krigsman: I think Brian really hit on the key point, the extent to which it's the customers that are forcing even a retail giant like Neiman Marcus to adapt.

Brian Solis: Yeah, absolutely. I think the one thing that I find interesting about Scott's story is that five years is a long time, especially in retail, to be working on innovation. You're going to be working, Scott, for another five years and probably more. But, how have you seen the word "innovation" just sort of evolve in your work? That's a word that means a lot of different things to a lot of different people.

Scott Emmons: Yeah, well, that word gets used a lot more now than it did when I started. I think that it was not as common. Even Innovation Lab was not necessarily a super common term, which I think it is today. I think I've got, across lots of industries, folks trying to build innovation teams within the organization.

The charter, once again, was innovation with technology, but I want to be clear that it's not that I own innovation at Neiman Marcus. I just happen to be the cheerleader on the technology side of things and try to be part of the conversation whenever technology can be brought to bear to help solve a problem for our customers.

Michael Krigsman: It's really interesting. The role of technology became strong enough, and the potential of technology to change retail became strong enough, that Neiman Marcus felt it had to create this lab specifically to explore new technology and the impact on the future of retail.

Scott Emmons: Yeah. Look, I think that if you look at different areas of the business, whether it's a store operations team, the marketing team, supply chain, or whoever, that a lot of times they were immersed in that part of the business and didn't necessarily always have the time to come up for air and see what was going on outside our four walls and what was possible. I think one of the gives, one of the values of the lab is to be able to go out into the world, talk to lots and lots of people, like you and Brian, for instance, as just an example, and bring ideas back in for conversation and to see if there's someplace that that sort of idea or technology could make a difference here.

Brian Solis: When I think about the future of retail, I think about all these modern commerce startups that are sort of introducing what's possible. You have subscription models. You have millennials who are being blamed for the disruption of everything that's traditional. How have you seen just innovation on demand from your business associates when they bring you to the table, when they want to have discussions about pushing things forward? How does that look, and do you think that there's more for them to learn in order to think strategically about what retail really means in this era?

Scott Emmons: I think that's another great use case for the lab and, that is, we are a place where they can bring those ideas, that it's a friendly and nurturing place always for ideas like that. We get good ideas and bad ideas, right? Not all ideas are good ones.

Part of my job and the lab team's job is to go vet the idea, to talk about, to figure out if, first of all, it really works, but also is it scalable and could we afford to deploy it at scale, and all those sorts of things as well. I think, from the sales associate standing in front of a customer in the store all the way up to the C suite, the lab has become a place where those ideas can come and get a valid and thorough vetting.

Michael Krigsman: Brian, I have a question for you. You've done so much research on change inside organizations. When you hear the story of the lab and we wanted to incorporate technology into our business strategy, where does that fit into the pantheon, so to speak, of organizations wanting to change, adapt, even looking at their business models and so on?

Brian Solis: The timeliness of that question is fantastic. It's almost as if I asked you to ask me that. Scott was part of this future of retail research that I'm doing in how retailers are changing for the future. Scott's story is one of the more exciting stories in the report. There are a lot of companies that are not changing. I think they still see technology as the answer to all of this change when, in fact, what I've noticed with innovation labs going back--I don't know--five, six years now, it's that it means something different to every company. Some innovation labs are just simply an outpost to go meet with Facebook, Twitter, Tesla, and Uber as if there's something in the water in Silicon Valley that's going to help them think differently about the future.

I think the most successful labs are the ones that are connecting business units, cross-functional teams, and looking at ways that technology can help enable an experience that today's customer and tomorrow's customer wants to have. I think that's what makes this so exciting is that the innovation labs that succeed are actually more human with technology as enablers, whether it's the sales associates or the customers, in trying to deliver a physical and an online experience that's going to meet their needs.

I have to tell you that I think Neiman Marcus is one of those success stories. I think Sephora and Bridget Dolan's work is another success story. Westfield, the mall, has a fantastic lab in San Francisco. They're pushing forward in ways that culturally, the culture of the organization, allows them to test and learn. I think that's what's missing from a lot of companies.

Michael Krigsman: We have quite an interesting question from Twitter. Arsalan Khan, on this topic of the culture, asks, "How did the cultural transformation at Neiman Marcus happen to think about technology as a strategic advantage, and also who are the permanent members of the Innovation Lab?" I think it's a really topical question.

Scott Emmons: Great question. Look; I think that, from the technology standpoint, we had to go out and have a few wins, some successes to get the confidence of the business that this technology side of things was important. I think, going back to Brian's comments just a few moments ago, we've never advertised the Innovation Lab as providing some kind of silver bullet that saves retail. What the ILab delivers is a piece of the puzzle.

We still have to be great at all the things that all retailers have to be great at. Technology is a contributing factor to that bigger picture, in my opinion. I think that, with some successes, with proof, kind of a proof in the pudding approach, we are now invited in to these meetings with other parts of the business, can almost act as an internal consulting organization, help guide the conversation when technology is part of that conversation, and either help suggest what technologies might do the trick for whatever it is they're trying to accomplish, to maybe we don't know; maybe nobody knows, and it's our job to go out, research, and bring the answers back for the business.

When you talk about the permanent team, one of the reasons I think I'm around after five and a half years is that I'm not a very big team. If I don't have a lot of big projects going on, then the team is just me. At times, it's me. Then, as things ramp up and as we're about to launch projects, I have to bring in either my colleagues here in IT or folks from other parts of the business to help deliver that project. I also rely heavily on my solution providers out there to sort of come in and co-invest in the effort, especially when it's something that's never been done before. I get a lot of help there.

Currently, I actually have more people than I normally have working in the lab. I have some folks on loan from other teams that are helping me with a big project that's coming up. I've got some consultants that we've hired to come in and help gather some financial information we need for projects. It grows when needed. When it's not needed, we shrink it back down. That makes me pretty friendly to the folks that think EBITDA and those sorts of financial things are important. We cost what we need to cost to get it done.

Michael Krigsman: I want to remind everybody that you are watching Episode #280 of the CxOTalk. Our guests today are Scott Emmons, who heads the Innovation Lab at Neiman Marcus, and Brian Solis, who is one of the great digital transformation researchers of our day. There is a tweet chat going on right now on Twitter using the hashtag #CxOTalk, so please jump on Twitter and you can ask questions of these two extraordinary people.

Brian, Scott was describing the kind of warm, fuzzy effect--relationship is a better term--that he's trying to create and the kind of adaptable fluid nature of the innovation inside the Innovation Lab. Is that similar to what you've seen in other organizations that are doing this well?

Brian Solis: That are doing it well, the fact that you added that. Apologies about the applause.

Michael Krigsman: Hey, Brian. You carry applause wherever you go, so it's--

[Laughter]

Michael Krigsman: I wish that happened to me. But anyway, go on. I'm sorry for interrupting.

Brian Solis: The fact that you added it at the end, "Doing it well," because it would be a different answer if you didn't add that part to the question, relationships are the part that I think people miss. We all are in this together. I think the challenge that I see quite often is that people have this intent or the solution that they're trying to solve for, but it creates this balance that I talk about between iteration and innovation.

A lot of times we're using technology to make things better, to scale, or to make things more efficient. We bring in the people that are necessary in order to solve that, but innovation is doing things that create new value or doing new things that unlock new value. That takes a lot of learning. That takes bringing people together that might not have the expertise or know the right questions to ask. This is why I thought that Twitter question that came in earlier about culture was so important.

I'll give you an example. I was speaking to a 100-year-old brand just a couple days ago. They asked me, "Who can we come and meet within Silicon Valley to help us understand what it takes to be more innovative?" I said, "Well, I'll introduce you to 100 people, but you're not going to walk away with anything other than how they are innovative," I think, at the end of the day, if your company does not value innovation as an investment, sees it as a cost center, and tries to put innovation within the rigid construct that exists today in business.

As Scott tells you, he's got a team. It's a dynamic team. It was created five and a half years ago. This is what's necessary. We need new models, we need new expertise, and we need the ability to take risks and even incentivize people to take risks. That is uncommon.

Michael Krigsman: Scott, you are obviously doing these things, and so how do you incentivize people to take risks, especially inside a retail environment, and especially inside a large organization that's been around for over 100 years? It's an old organization.

Scott Emmons: Well, I think a couple of things are important. First of all, we needed support from the top down for what the lab was doing. We got buy-in from our CEO, who was Karen Katz at the time when we started the lab, to help go out and champion the lab's mission to the business. I think that goes a long way towards getting folks onboard.

As I had said in my earlier answer, some successes help to get people excited about the possibility of being able to go out and try something new. That leads to the third thing I would think of. I would say the culture here is probably the same as at lots of businesses, and that is, failure is bad. We are on the team to win.

In innovation, you get lots and lots of fails. You've got to kiss a lot of frogs to get to that sort of magic moment with innovation and technology, for sure. The mindset has had to change that failure is really about learning and that you're taking those learnings to the next project.

I think we still have some work to do on that, but we've come a long way.

Brian Solis: Can I ask you a quick question, Michael? You've done 280 episodes of this, you've talked to some of the most innovative people in the world, and you also do a lot of research. What have you seen are the common mistakes that people make, even without realizing that they're making mistakes, when they're looking towards the future?

Michael Krigsman: It's an interesting question. I think that you and Scott kind of hit the nail on the head that innovation fundamentally is relationship. There can be no innovation if other people do not accept, embrace and, ultimately, desire, right? Otherwise, it means you're talking to yourself. I'm just echoing the things that you just said, but that seems to me that the great innovators are the ones who not only have good ideas, but they know how to execute. Execution always means fitting into the strategy and relationship. That's what I think.

Scott Emmons: Yeah. Yeah.

Michael Krigsman: Does it make sense to you, Brian?

Brian Solis: It does, absolutely. Scott, you don't have to answer this question, but I'll ask. Along the way, I'm sure that you've had some folks who might have been skeptical or maybe even borderline saboteurs. I've seen a lot of that, people who don't want to change; they want to protect what they know or believe that their ideas for the future are the best ideas even when they might not be. The question is, how do you navigate those human dynamics, to use the word "relationship" again, but really bringing people to the table to actually collaborate without threatening folks or making it destructive?

Scott Emmons: Yeah, well, I don't think threatening has ever been a strategy, for sure--

Michael Krigsman: [Laughter]

Scott Emmons: --with that. I don't feel like I've ever had to deal with a saboteur, per se. But, there is a tendency, I think, for people to want to fall back to the old way, the comfortable way, the way we've always done it because that's easy. We know how to do that with our eyes closed.

I think one of the things that's important for the projects that I try and lead is, you can't put them out in the world and then just walk away. It requires that you revisit, that you cheerlead, that you learn what's working and what isn't, and that you act quickly to fix the things that aren't working so that you don't lose the confidence of the folks that have to interact with it.

Michael Krigsman: Yeah. To me, I guess the question is, okay, so now we've got this platform for innovation. You've built that. And so, where does this all fit now inside Neiman Marcus in terms of what Neiman Marcus is actually doing with those innovations? And, at the same time, can you give us a glimpse into where retail is going? What will we ultimately see, because you're the vanguard of that?

Scott Emmons: Well, I'm not letting the cat out of the bag in terms of future projects, for sure.

Michael Krigsman: [Laughter]

Scott Emmons: But, you know what I can say is that we see the continual convergence of our digital business and our brick and mortar business. Notice how I cleverly managed to not say "omni" in that. I'd say that, as the lab started up, we had all these digital capabilities. We had a mature online business with digital capabilities that I could tap into to bring experiences into the store. I was lucky to be at a company where I had those resources that I could easily just say, "Is there an API for this?" and the answer was almost always, "Yes." It was easy, in some cases, for me to tap into those capabilities.

Now, I see the tide going the other way as we try and look at ways that we can bring the high touch, luxury, white glove, Neiman Marcus experience that we spent 110 years perfecting. How does that translate into a digital-only customers world? How do I make a Neiman Marcus digital customer feel special just like our sales associates do for customers that walk in the doors?

Michael Krigsman: I always like to prioritize questions from Twitter, and we have a question, an interesting question, from Dana Randall, who you both know.

Scott Emmons: Hi, Dana.

Michael Krigsman: [Laughter] Scott and Brian are both waving and saying, "Hi," to Dana Randall who is responsible for innovation at Coach. Dana asks, "What are your thoughts on expectations around the ROI of innovation explorations and how have you been able to shift the mindset away from traditional ROI demands?"

Scott Emmons: That's a great question, and I know Dana came up with that question because she lives in that world as well where, if you bring a project to bear and it's going to cost some amount of capital to deploy it, the business is going to ask you, "What's our return if we go out and do this project?" Every now and then, you get an innovation project where it's easy to prove a hard ROI, deploying this, whatever it is, this technology. But often, especially when it's never been done before and, in the innovation game, that's often the case, it is not necessarily easy to prove a hard ROI upfront. You can talk about the soft ROI things like customer experience and those sorts of things.

I think that, early on, if you couldn't prove a hard ROI on your project it was hard to get approval. I think, once again, with some successes, that they're willing to go out and try some things, see where it leads, and see if we can come up with a hard ROI. I think that often in that testing and investigating the technology, sometimes you find ROI in odd places. You find the ROI in places you weren't looking. I can think of technologies that I've deployed for customer experience, but it turned out what paid the bills was loss prevention. I got my great customer experience technology in place, but there was an LP play there that saved enough money that it paid for the technology, as an example.

The same, I've got technology that I've put in place that it gave us a discount on our shipping and mail with the U.S. Postal Service. That's not why I did the technology [laughter], but those savings that it allowed us actually paid the bill. I think you have to look beyond, "Does it lift sales?" which is the first thing you're thinking about as a retailer, and kind of look under the hood sometimes for ROI in other spots.

Michael Krigsman: Brian, is this issue of looking beyond the short-term, measurable ROI a fundamental factor or challenge in the companies that you see as you research innovation?

Brian Solis: All the time. I always talk about ROI. What if the I stood for ignorance? What's the return of not doing something?

[Laughter]

Brian Solis: I sometimes think when people ask the ROI question that it's a psychological example of people just trying to find an excuse not to do something because it puts someone on the defensive instantly instead of having a productive conversation about, well, let's explore other ways to measure this. I think, in the best companies that I've seen, they're looking at new ways to create metrics that drive growth. For example, if you look at the Walmart Bonobos deal. I would have to read between the lines to say this is an organization that we need to acquire to bring in expertise and skillsets, but also a new market that we're not reaching today. I'm sure a lot of mathematicians and analysts looked at what that potential ROI was going to be, but it's tied to growth.

This is an exciting part. It's almost like where innovation labs have to start acting like startups in a way because startups are purely measuring growth. They're not looking at quarter-to-quarter performance. They're not having to report to shareholders in the same way that large organizations are.

More importantly, they're not challenged by people. I think Dana could appreciate this because she probably sees it too. Scott, I'm sure you do. People have this idea of what technology is supposed to do, but they don't live and breathe the technology the way that modern customers do. They can't actually grasp what this is, and the exploration for ROI is just sort of their way of making it more tangible.

Scott Emmons: I think that I'd jump in and add to that. That's part of the Innovation Lab's role is to live and breathe that stuff and then be able to carry that message back to the business so that you can describe the technology, and you can describe what an implementation would look like to the business in a way that is understandable to them and where they can see the value from a retailer's point of view in doing the technology.

Michael Krigsman: Again, I always interrupt for questions from Twitter. Boy, we get some good ones. I'll ask you both this one, and you'll need to put your thinking cap on. I'll maybe start with you, Scott. This is from Dr. Alexander Bockelmann, who has been on CxOTalk twice. He is now the chief digital officer at UNIQA Insurance, which is a very, very large insurance company in Europe. He's also a board member. He started out as the group CIO, so he's seen it all.

He's focused on innovation, and so he asks this question. It's another one of these really insider kinds of questions. He says, "Incentivizing and having their back if something fails is one dimension. Providing the time, resources, and freedom of thinking is the prerequisite. But, how do you do that in day-to-day operations?" How do you take this theory and put it into practice amid all the other pressures that you feel?

Scott Emmons: The way the question is posed, you can tell that it's a lot easier to say than it is to do, and I would agree with that. I would also say that we're not necessarily past the finish line on that. I think that the lab has acted as kind of a forerunner of how we would like to see all organizations across the business be able to operate; giving them a place to come and bring those ideas is a start in that direction.

Part of it is inspiration, and part of it has to come from the C suite on down that this is part of our culture. Putting aside some time for innovative projects and innovative thinking is just part of normal doing business. Like I said, we're pointed in the right direction, and I'm confident that we'll reach nirvana.

Michael Krigsman: [Laughter] I'm kind of speechless at that one because I've been trying to figure out how to reach nirvana for a long time.

Brian Solis: [Laughter]

Michael Krigsman: It hasn't happened yet. Brian, in the broader scheme, as you look at multiple organizations in your research, how do they implement this kind of new type of thinking amidst the day-to-day pressures, as Scott was just describing?

Brian Solis: Yeah. I wrote a report last month called The Change Agent's Manifesto, and it was written for people like Dana or people who ask questions like this in that, when you talk about innovation, you don't have the freedom to think and act the way that you need to in order to pursue everything that you need to learn and also unlearn. I found time and time again that people were quitting their innovation labs because they couldn't get what they needed in order to excel. I think that's really important because a lot of great businesses are about to lose amazing talent for not giving them this freedom.

In the cases where I've seen it succeed is: the teams are small; they're tasked with very specific things so that they can have, as Scott was talking about earlier, successes that they can point to. But, as you have those, you start to create a buzz. You create a working environment. You get the muscle. You start to essentially show what it looks like to do these things and then it becomes contagious because I think a lot of the times the enemy is success. Success is a bad teacher about the future. It's also a cost center most often.

I think the best companies are turning these things into little projects, like for example how do you solve for the mobile consumer. Let's think about smartphones. Let's think about apps. Let's look at Google micro-moments and then treat these things as individual pilots that bring the right people together. Then you just start to work.

The best companies create P&Ls, and they start to grow these things into separate business units that can demonstrate their value over time. There's a lot of gray areas in between all of that.

Michael Krigsman: Scott, how do you solve for mobile? Brian raised that question.

Scott Emmons: I didn't hear the question. I apologize.

Michael Krigsman: The question is, how do you solve for mobile? How do you solve the mobile consumer problem?

[Laughter]

Scott Emmons: Yeah. Wow. I don't know if I have the answer for you on, how do we solve for mobile? I think I need more context.

Michael Krigsman: Well, I guess what I have in mind is, mobile is this large, future problem. What I'm really trying to do is to kind of get you to reveal, which I know you're not going to probably do, reveal where you see mobile going and, specifically, what Neiman Marcus will do. [Laughter] I'm laughing because -- [Laughter]

Scott Emmons: Yeah, you're right. I'm probably not at liberty to discuss internal strategies at that level. I think that it's clear. I'm actually not sure how we even got to that question, but it's clear that mobile is not going away. The Internet wasn't a fad either.

We build; we continue to build capabilities that play well on mobile because, if you look at our next generation of customers, that's the only device when they're dealing with us digitally that they're going to be using. The fact that I'm sitting in here in front of a laptop to do this podcast with you, this broadcast, that's not even going to be available to the next generation of customers. We're not going to have this device.

Michael Krigsman: Basically, the issue is, mobile is going to become pervasive.

Scott Emmons: You don't think it already is? It already is.

[Laughter]

Michael Krigsman: I'm generally behind the times, and so--

[Laughter]

Brian Solis: Michael, I saw a funny cartoon of a group, basically a board of directors meeting, where somebody looked at the board and said, "I think, gentlemen and ladies, we have to start thinking as if the Internet is not going away."

[Laughter]

Michael Krigsman: Okay.

Scott Emmons: Exactly.

Michael Krigsman: With that, we have about just five minutes left. This has been such a very fast conversation. What I always like to do is ask our CxOTalk guests to share advice. Maybe, Brian, I'll ask you first. As you, again, look across this landscape based on your research, what advice do you have for organizations who recognize the need or at least the seed that innovation is not just about efficiency, but it's about growth? They want to get on that train, but it's tough. They're having trouble. What advice do you have?

Brian Solis: Well, I think that you have to find the Scott's and the Dana's of your organization. You have to look at listening to the renegades, listening to the people with ideas that aren't necessarily those who are culturally compliant with doing things the way that things are and not being content with that. It's hard because it's a cultural thing as well, but you've got great people in your organization who are already talking about this, who are already exploring ideas, who probably presented things that got shot down. From the executive side of things, find them, and find ways to empower them.

Then, on the other side, the people who are the innovators, you're working in a dynamic that wants to hold you back just simply by the very design of the company.  Most cultures and most organizational models were invented in the 1960s, so we've got some work to do. Don't quit. Don't give up, but realize that I think our kryptonite in change is that we're not change management experts. We're innovators. We want to go do things, so we have to at least try to learn the art of bringing people together to listen to your ideas in ways that bolster everyone together. Hopefully, that's helpful.

Michael Krigsman: Yeah. Brian, to follow up, what is the difference between an innovator or the difference between a change agent in innovation and traditional change management? I had that question the other day. What do you see as the difference?

Brian Solis: Well, hopefully, my Internet doesn't cut out here, but I talk about change agents as the people who are trying to literally bring change within the organization, to help design these new models, to help support the innovators within the organization. I talk also about intrapreneurs who are basically those people in the company that think differently, act differently, as if they want to create a startup within the organization. Then change management, that's the management side of things that have to build a support network for them and allow them to grow and allow them to thrive.  Give them a playpen like Scott has been able to build and allow it to just grow and experiment over time.

The one thing I will say is that everybody along the way has to understand that this needs justification. We're breaking new ground and, in order to do that, the best thing to do is understand how your work as an innovator, as a change agent, or as an intrapreneur, how you're going to justify that to people who don't understand what you're trying to do. That, I think, is where I've seen even my own personal success as I've been pushing this rock up the hill my entire career. But I think, when you really focus on your work and tie it to business objectives or business growth, it helps.

It also makes you better. You're not just an innovator; now you're a savvy entrepreneur working within the organization. You're thinking about building a business within the business.

Michael Krigsman: Scott, you're a practitioner. You've lived this every day, and so I'll ask you the same question for your advice for people inside other organizations who want to bring forth innovation and growth and not just be satisfied with making our same old, same old, same old processes more efficient. What advice do you have for those folks?

Scott Emmons: Thank you, Brian, for calling me a renegade. I appreciate that. I think he had a great point, though, and that is, you have to look at folks that are willing to question everything, question why you're doing things the way you're doing it and try to think of it in a different way. The opposite of innovation is just to keep doing the things the way you've always done it, right? In the end, innovation is about change.

I think that my early success was that I didn't grow up as a retailer. My career before I came to Neiman Marcus was lots of other things. Neiman Marcus was my first retail job, so maybe I brought, in my case, some different ideas with me because I'd been in different places. I think those are the folks that you're looking to at least get some input from on your innovation process.

My other advice would be that you don't avoid things just because they're hard. Change is hard. Just about everything we think about on the innovation side for it to scale, for it really change our customers' interactions and make that interaction a better thing for them, it's going to be hard to do.

The last thing I would say is that you're going to get a lot of nos in the innovation game, a lot of nos, so you better be tenacious, and you better be willing. I should say, you should not be willing to take no for an answer. I'm not saying be defiant and do it anyway, but what I'm saying is you keep going back. If you get no the first time, you modify the idea a little bit and you try again. I think you just have to keep going at it until you get the yes and you can go out and prove that this is a thing that we should be doing.

Michael Krigsman: Brian, we're really out of time, but I just have to make one observation and ask for your comments. As Scott is talking, I'm struck that he has this combination of tenacity and intensity of focus but, at the same time, he's nice and he's trying to magnetize people in.

Brian Solis: [Laughter]

Michael Krigsman: Are those characteristics that an innovator change agent needs?

Brian Solis: Yeah. It's sort of this unspoken art of, just, how do you bring people together? I think, again, you used the word "relationship" earlier. Really, at the end of the day, we're just trying to have human beings work with other human beings to do things that neither one of us have done in the past. That is scary.

We're operating and, I always say that innovation begins--

See, I have my own applause for my statements. That's how I roll.

Innovation begins when you step outside of your comfort zone. When you step outside of your comfort zone, now you're talking about things like character. You're talking about traits that are very human of which come out in the hardest of times. That is one of the reasons I'm a fan of Scott is that you don't just have the ideas, but you have this ability to work with people in ways that help them want to work with you. It's something that I can't emphasize enough if a lot of innovators, intrapreneurs, and change agents that I work with are super frustrated that people don't get them. But, they're never going to get them. You have to help them understand what you're trying to do by you also understanding who you're working with.

Michael Krigsman: Okay. On that note, I'm afraid we are out of time. Wow, oh, wow, what a fast 45 minutes this has been. I would so much like to thank Scott Emmons, who is the head of the Innovation Lab at Neiman Marcus. Scott, thank you so much. I hope you will come back and do this again with us.

Scott Emmons: Yeah, it was really fun. I really appreciate you having me.

Michael Krigsman: Of course, I also want to thank Brian Solis. He's written great reports. He does great research, and he's in the trenches talking with the practitioners on digital transformation and change agents. Brian, actually, you're coming back in a few weeks, come to think of it, with Dana Randall from Coach.

Brian Solis: [Laughter] Yes. Yes, indeed. Thanks for having me. I really appreciate it. These conversations are great, and they're helpful to even drive me. On the research side, I'm out there, but also guys like Scott and people like Dana being on the frontlines. Those are really the stories we have to pay attention to.

Michael Krigsman: All right. Everybody, thank you so much for watching. Keep tuning in. Don't forget to tell a friend, and don't forget to subscribe on YouTube. We would very much be grateful for that. Have a great day, everybody, and we'll see you soon.