Fortune 500 company, actually. I started as a developer, writing code, and I still do, I still write code most days, at least every other day and I heard about this thing called Agile and it made a lot of sense, it made much more sense than what I was currently doing at IBM and I just dove into it, joined a company called ThoughtWorks, became a coach there, jumped around a little bit and today I am independent. About a year and a half ago I got a call from a friend of a friend who was starting an innovation lab at Nordstrom “I’d love for you to come on and help us out with process, this is a total new experiment, we are not sure where it’s going to go, I know they want to use Lean and Agile principles and go from there”. That’s how I found myself going with this Agile background, this execution background, in an R&D facility and we started just playing.
About a year and a half ago Nordstrom decided that they wanted to experiment and try an innovation lab. Their customers are changing really quickly, customers in retail are changing really quickly, what they expect, what they want, they want mobile today, they want different types of service, everything is changing, different competitors, it’s all kinds of stuff. Without all that as a backdrop they decided to experiment with the innovation labs, they went to JB, my friend and said “here’s a room, here’s some money, hire some people, play with some tech and give us some good ideas and we don’t know what that looks like, but we trust you to help us figure out what it looks like”. So, JB hired me as a consultant and then we started hiring some other people, some amazing people. Today we have, a year and a half later, we have a team of 14 people and they work as two studios and do some really cool stuff. We didn’t quite know where to go at first, and we started to look at what other people were doing and in all directions. We started with Agile because that’s stuff that we already knew and Lean principles, but quickly we discovered that Lean Startup was something that made a lot of sense, also something called design thinking makes a lot of sense, when you are searching for innovative ideas, when you are in a very uncertain space, those are very useful, so we have been doing a lot of playing with those.
Todd: Tell us a little bit about, because you mentioned Lean Startup and design thinking, maybe tell us a little bit about what each of those is.
In general what we do in the lab is we start with design thinking. Design thinking is really a human centered approach to design and what the lab does it’s all about discovery, it’s about looking for great ideas and proving that they are actually great ideas. So, design thinking helps us go in and figure out who our users are and then develop empathy for those users, go and actually observe them, see what they do, see what they say they do and see what they actually do. Sometimes we go to their homes and video tape them and their wardrobes, sometimes we go to the store and talk to them there, or watch them in the middle of a sale, or we might go into the store and actually go and play the role of the customer and get measured and fitted for pants or whatever. So, we are really trying to develop empathy and uncover the unmet needs that our customers have, sometimes there are unmet needs they don’t even realize that they have, so it’s about having a beginner’s mindset, looking for those opportunities that so far retail has not yet addressed.
There is a lot of complexity. We’ve been doing this for a year and a half, design thinking for about a year, and we also hire people who have done it before and we are learning all the time, so we definitely didn’t start there. What we do today is start with the problem, we start with the design challenge. So, somebody in the organization says “this is a big problem that Nordstrom has and cares about and I personally, if you can solve it or have a good solution, I will take it to the next level so, we have an idea of what the space looks like, which gives us an idea of who we care about, who are the customers”, and then we have different ways of going and finding those people and talking to them. When the customer is a sales person, for example, we are trying to make the sales person’s life better and easier, they just love us, if we can do anything to make their lives simpler and make it easier for them to serve the customer they just adore us and love to work with us. For customers, we try to do just best practices in the industry, so we’re “we’d love to talk to these types of people and we’ll give you $100 for your time, so talk to us for an hour and we will give you $100” or we stop people on the street sometimes or going in a coffee shop and “here’s a $5 Starbucks card and we just want to hear about you and your life and your problems” and generally people like to talk about their lives and their problems and that’s what we live off, that’s the stuff that leads us to good ideas. So, design thinking is all about that and then we go back to the lab and brainstorm, sometimes we co-make with other teams inside Nordstrom and then we start doing some prototyping. So we do some design thinking prototyping which tends to be really fast, five minutes, ten minutes, a day on the upside and then we start transitioning to Lean Startup. So, Lean Startup is about validated learning.
Once you have a good idea, or an idea, you go into this build- measure-learn loop and start testing it with real customers and you make sure you have enough rigor around the experiments that you are doing, so we talk about things in terms of experiments, so in one design challenge we might generate, we might spend a week, two weeks sometimes doing empathy work and talking to customers and observing and then we might generate 400 ideas, 500, 600 ideas, and then we might go into some really small one day, two day, half day prototypes for ten of those ideas maybe. And then we start doing some more detailed prototypes using a Lean Startup approach and often times we will go into deep prototypes where we will actually generate an iOS app or website or whatever and people actually touch it and sign up for it, or more often than that don’t, because we are trying really risky ideas and often we will go through a lot of them before we find the really big ones.
Nordstrom is about customer service, they want to serve every customer the way that customer wants to be served. If you ask anybody at Nordstrom, it’s always customer service, it’s always customer experience. So, the goal of the lab is to, in contrast to the rest of Nordstrom which is set up as an execution organization like every other company out there, the goal of the lab is to not do that, it’s explicitly to fail, we actually have a target to fail 80% of our experiments, which is awesome there are so many cultural forces you have to succeed and success is a good thing, but in discovery it's not, if you are trying to innovate and if you are trying risky ideas then most of them are going to fail, it’s just how it goes. So, as a protection for that we have that goal of failing 80% of the time. And that’s one of the ways that we are pretty different, and also one of the big things that we are tasked with is taking some of these new ideas that we're pulling from the rest of the industry and reintroducing them to Nordstrom and figure out where it’s appropriate, it’s not appropriate that another development team at Nordstrom fails 80% of the time, that’s not what should be happening, but maybe they should have a 20% or maybe a 10% failure rate, or maybe they should take some of the empathy work that we do and do at the beginning of a project and do a bit of ideation and stuff like that.
Todd: When you guys hit on some of that work that gets sent out to the execution part of the organization and they just kind of run it from there, you guys keep finding other stuff.
It’s hard, like with any other company I’ve ever worked with everybody has too much work to do, everybody always has too much to do, the backlog is always too long, the important thing is the idea, we have a good idea and then we throw it to IT and somebody in IT catches it, but it just doesn’t work that way. It’s an organization made up of people, we can’t ignore that. We’ve actually turned it around into a more of a pull system rather than a push system, because we realized that what we had was a push system and it was no good. So, what we do today, we don’t start with our ideas, we don’t make up ideas, we wait for someone to come to us with a problem and because of that, once we actually have something worth pursuing, we actually have someone to give it to and that person can keep pulling it through the organization, sometimes we already have a development team. One thing that we’ve done is the iPhone app for Nordstrom, there was a tab on it that they didn’t quite know what to put there and they wanted it to be something that had some flash, it was a little bit different, so they actually were already in production on the rest of the iPhone app and they came to us and we spent a week on it and got something that was kind of cool and people responded well to it and they just took that and built it out, so there was already a development team, already somebody to catch it. But we found that that last mile when you take the thing that we did and then you hand off, which is often a form of waste, but that’s really important, so the more that we can work with the team that is going to actually do it, or the more that team already exists and there’s just coming to us. Hopefully in the future the other team is doing all the work and we are just acting as coaching the better.
We basically had this idea to do, JB calls it a flash build, the original idea was that we all walk into the store and we converge on this one location, all of a sudden we’re building software, at the same time we could actually do it in the store, so build software in the store, in front of customers, and we tend to work so fast that we build a feature in 20 minutes, an hour, show it to a customer, get some feedback and go from there. So, that was really awesome, we don’t do that type of thing super often, but it’s a great experience for us to be that close, it was the ultimate customer feedback, because it’s right there, your build- measure- learn loop all the way to the customer is 45 minutes, an hour and a half, it was really cool. And because that particular project was pretty simple, we didn’t know if it was desirable and that’s what we were testing, we also didn’t know if it was viable, but we knew that it was feasible, we knew that whatever we built, we weren’t quite sure what it was, but it was roughly something about iPads and sunglasses. It was something we could build in four days, five days, so it was something that we wanted to do in public and see how that went over and we got an amazing response from people. That was actually how Eric Ries found out about us, and that ended up on Eric Ries’ blog, so the entire Agile world has seen it, which has been really cool for us just building awareness for the lab.
We’ve done more of that stuff since that, but that was probably the first time we were actually demoing stuff in the store to customers, I remember, we do a lot of paper prototypes often, but if you are in the store and you show somebody pieces of paper and ask them to do something, they think you are asking them to sign a petition or something, you get an automatic filter. So we found that paper prototyping, something we still do pretty often, in that particular context doesn’t work so well. So, what we actually did was we took pictures of the paper prototypes and so now we have an iPad with pictures of paper, but it’s an iPad and that’s different and the customers are “oh, what’s that?” and they are a little more willing to talk to you. The biggest thing is the feedback cycle is everything, so as short as you can make it. And that’s what Lean Startup is about, it’s about learning and you learn at the speed of your feedback cycle, the speed of your build-measure-learn loop, so the shorter you can make it the better. It’s a good experience, will do probably do it more, I imagine.
When we left, we left with an experiment running, throughout the week we were doing lots and lots of little micro experiments but we left with a big question which was we know people like it, customers like it, sales people like it, but is it actually going to be a viable thing, is the cost of actually building it out, outside of the lab and maintaining it and of rolling it out going to make business sense to do? So, we had a measure in place and when we came back three weeks later we looked at the measure, actually maybe a couple of months later, and we looked at the measure and it was nowhere where we thought it needed to be.
8. Were you measuring just how much people were using it or?
We thought a lot about that. So the experiment was, the assumption, the hypothesis was that it would make at least two sales a day, I think that was the bar that we had to hit, two extra sales a day, it’s hard to measure that and we were worried that if you’d asked the sales person it made the sale or not that they won’t necessary be accurate and then we made the assumption that a sales person will only use it if it actually leads to a sale, so we figured that if we just measured usage by sales people, not by users, but by sales people, not by customers, by sales people, that would be close enough so that is what we were actually measuring. We were measuring it had to be so many times a day and it just wasn’t anywhere what we were looking for. And then we did some investigation, talked to people, we had to go to the store because when we talk to people it’s like “I don’t understand what is happening” and then we went to the store and watched them actually use it and have them show us what they were doing and we were “our training was just not what it needed to be, we didn’t give the sales people the support they needed”, but we had to go in the store to actually understand that. But we did that and we changed stuff around, did a few more build- measure- learn loops and I think maybe three months ago it actually went into production, so it’s actually available at all stores and probably most of the stores at this point actually have it and they are using it, so it’s a success story, but it did take some more experimentation.
Todd: It’s interesting that you still didn’t really grasp it until you went out there again, which is a neat take away because after you went “we’ll talk to some customers for now and once we launch it that’s it”, so it’s nice to see that when you go back you learn some more.
And it’s not by going back and talking, it’s by going back and watching, that’s one of the big things we’ve learned, you have to observe, there’s no substitute for that, if you can observe in the actual place that it’s used it’s.
So, Nordstrom as a whole, we are at an Agile conference, is in the middle of an Agile adoption, so they are trying to become more Agile, become more nimble, more able to respond to change and to move faster. We also believe that there’s a lot of stuff that the lab does that it’s not strictly speaking Agile, but it’s design thinking, it’s discovery of stuff, things that will help us come up with better ideas, things that will help us better serve our customers and when I say Nordstrom as a whole, I really mean Nordstrom IT, I should qualify that because that’s my world, it’s Nordstrom IT, which is large, it’s 1,600 people I think.
Todd: That’s pretty large.
It’s upwards of that. It comes again to customer experience which is what everything in Nordstrom comes to. So, we think that doing things like talking to customers, actually getting out there, having not just the product owner, but having the whole team go out and talk to customers, do interviews. There are teams out there that do five users every Friday, where they have five people come in and actually play with software, different people on the team can actually watch, observe, and it’s a regular thing, once a week. Things like that, we’re excited to figure out which of those make the most sense, so the rest of the company can start getting some direct benefit from the practices that we do.
Yes, ideally in the future there would be no need for Nordstrom to have an innovation lab, we are this tiny team and Nordstrom IT is this big organization, so probably in the intermediate future our goal is to be always a little bit ahead of the curve and to make the big mistakes. Our trial is to fail so that Nordstrom doesn’t have to, so we are going to try all the crazy ideas so that Nordstrom doesn’t have to spend all the money to ramp up on them, we are going to try all the crazy process changes so that Nordstrom can just ignore all the ones that are just complete failures and try the ones that seem to work at least in the lab. But definitely we don’t want to be the place where innovation comes from because that definitely doesn’t work, we want the teams to be the place where innovation comes from.
11. How do you make that transition, or at least how are you going to attempt to make that transition?
I’m not sure, that’s the next thing. JB, who was managing the lab, at least part of what he is working on, actually helping the rest of the company get to a really innovative place.
12. Any thoughts on you might try or experiments you might run?
Well, definitely the things the lab is good at are Lean Startup and design thinking, I’ve been an Agile coach for a long time so I’ve done lots of organizational change with regards to Agile. But I haven’t done a lot of Lean Startup and design thinking before Nordstrom, so I haven’t actually tried using those in organizational change before, so I am excited to do that, I am excited to actually get out there and run experiments, before you run experiments say what is our hypothesis, is it testable, is it falsifiable, how is that going to work, how are we going to make it visible, how do we do design thinking type stuff, can we go and interview a team and observe what they are doing and then actually look for the unmet needs that they have and then see how we might meet those with innovative or even Agile practices and how do we do that in partnership with the people inside of Nordstrom that are helping spread Agile?
Right. So, the way I heard Eric Ries talk about it, or at least the way I think about it, Agile is this great machine. On one end you give it requirements on the other end it spits out working software. It’s this loop that works in sprints, it’s really good at building whatever you tell it to build, and the more mature the team is, the longer they’ve worked together, the farther through their Agile maturity the better they are at building what you tell them to build. But the problem is that if the requirements you give the team are wrong then the software that they build is wrong and in my experience that’s always where Agile fails, that’s the failure point of Agile, because in just the world of Agile, and a lot of other teams are doing other stuff to address this, but in the world of Agile there’s no way to know that these requirements are actually right. So, Eric says that where Agile tells you how to build software right, Lean Startup tells you how to build the right software. So, that’s the more interesting problem for me, but you can’t do one without the other because if you know the right thing to build you still have to know how to build it. So that’s really where they come together. So, in the build- learn- measure loop, the measure and the learn are super important, but the build is just as important, and that’s all Agile.
The thing that took us forever to figure out, so we started doing Lean Startup and six months later we were still struggling with actually measuring. We’re thinking, we’re doing experiments, what are we going to test, what are we going to test, actually think about all the assumptions you could test, pick one of them, actually write it down and say “this is the assumption that we are testing, this is the expected outcome, this is what we actually expect to happen, it has to be testable, it has to be falsifiable”. And so, I would say if you are doing Scrum or Kanban, if you are doing Kanban you probably already have end-to-end maps, if you are doing Scrum try something a little bit bigger than stories, features, I’m not sure what you call them, but big chunks that users will actually use, actually have hypothesis that go with it, so that you can tell once you release it did people actually use it, because if you did all this work and put it out there and people are not using it, you’re now paying to maintain this piece of software that no one is using. It’s costing you money and it’s not giving you any value, you’d be best off to just rip it out. So thinking about the world in terms of experiments as opposed to tasks to do, that’s been probably the single biggest difference in how I think about everything at this point.
Lean Startup is easy, there’s a book called Lean Startup, it’s amazing, it’s a great book, go read it, there’s also tons of events, there’s lots and lots written about it, there’s a great blog, there’s a mailing list, and a lot of big cities at least in the States have Lean Startup circles, you can pick whichever of those works best for you. Design thinking is a little bit harder, there’s a lot written about it, but there is less written about how to do it. The big sources that we have found for design thinking are IDEO and the Stanford d.school, design school. And IDEO tends to write a lot about what they’ve done and there’s a lot of really good stories and they talk a bit about what the overall process is, but they won’t tell you about how they actually do it, at least not very often.
Stanford d.school is a little bit better, there’s a free pdf called The Stanford Bootcamp Bootleg that you can just google and find and that will give you 50 processes, or not processes, 50 tools, and a tool might be a brainstorm or energy stoke or it might be project rooms or covering the room with pictures of people that you talk to, really tactical tools that you can start using today, so I highly advise anybody to go download that. An inspiration for our video was actually IDEO’s video of the shopping cart, I think late or early ‘90s maybe, they redesigned the shopping cart and did it on Nightline, so you can just youtube the shopping cart video and look at IDEO doing that, you’ll get an idea of what design thinking actually looks and feels like as a whole process. The one thing, from an Agile point of view, design thinking feels like, you’ll see this arc and it looks very linear, you start here and then go here and go here, feels a little bit like big design upfront. I don’t think it has to be that way and I think that people that have been doing design thinking for a while, they can do this and this and here, jump around a little bit more. If you have an Agile background, don’t be disheartened by the seeming linearity of it.
Todd: Cool. Thank you very much for doing this!
Thanks a lot!