Convenience Matters Intro:
[Music] You’re listening to Convenience Matters brought to you by NACS. Whether it’s for food, fuel, drinks or snacks, about half of the U.S. population shops at a convenience store every day. We’ll talk about what we see at stores and what the future may hold for our industry.

Jeff Lenard:
So one phrase you constantly hear in our industry is innovation. You have to innovate. Everybody needs to innovate. Everybody needs to change. The challenge is how do you take innovation from the C-suite to the C-store? That’s what we’re gonna talk about today.

Jeff Lenard:
Welcome to Convenience Matters. My name is Jeff Lenard with NACS.

Chris Blasinsky:
I’m Chris Blasinsky with NACS.

Jeff Lenard:
And Chris and I are going to talk about innovation today. Our department is Strategic Industry Initiatives. So, we’re going to put our strategy hats today, and we’re going to talk to Soren Kaplan, who is a globally recognized keynote speaker, author of multiple books, including Leapfrogging, and the one that he presented at our {NACS} Leadership For which is The Invisible Advantage: How to Create a Culture of Innovation. So welcome, Soren.

Soren Kaplan:
Thanks. Great to be here, Jeff. Thanks Chris.

Jeff Lenard:
So let’s just start out with a premise that innovation is essential and you know, there’s no leader out there that says we need less innovation. So let’s just talk about innovation. Why do we need it?

Soren Kaplan:
Well, I think it’s become a staple of business strategy. It used to…15, 20 years ago, you kind of debate is innovation on our agenda. These days we’ve seen the disruptions out there and we experienced major disruption last year with COVID plus you had social unrest, you had an emphasis on the environment and all the changes happening. It just…we had a confluence of disruptions happening. And so I think that not only do people now recognize across industries that innovation is important for growth and for kind of meeting customer needs and consumer needs. But also if you don’t innovate, you could get disrupted and you get disrupted right out of the game. So I think that there’s…it’s an offense and a defensive issue there.

Jeff Lenard:
And just thinking like the word disruption, maybe five years ago, it existed, but it was considered, well, if you disrupted something, you were an annoyance and today disruption is really a business term. You don’t think of it in other contexts. And when you look at it, you’ve described it as innovation is the only competitive advantage you have. So when you look at innovation what kind of things do you tell people to think about in terms of the idea? It’s never a technology solution by itself, it’s not technology you’re solving for something. So how do you describe innovation in how you roll it out in businesses?

Soren Kaplan:
You got it. So and I get the concept of disruption is kind of a buzz word, and now everybody’s sort of gets it. It was an annoyance when you were being disrupted or you were disrupting your own business, it wasn’t an annoyance to Netflix. It wasn’t an annoyance to Apple because they were doing the disruptions. Now I know not everybody’s Netflix and Apple. So let me just give you an example of how this kind of works and I’ll bring it to life in the last year. So one of the examples that I spoke about at your event recently was the fact that a buddy of mine, he happens to be here in the San Francisco Bay Area with me, Chief Operating Officer of Brinker International. May never heard of Brinker, but they own Chili’s and Maggiano’s. So the pandemic hits and restaurants close. So people aren’t going out you got, you got disruption happening to you across industries, but especially with foodservice. Okay. So they recognize they could try to sell pickup take out doesn’t exactly keep the sustainable model going. But what they looked at was the fact that a lot of people were staying home and e-commerce exploded during the pandemic. And that’s kind of a no brainer. Online grocery, Amazon exploded, Shopify exploded. So what they recognized is that they needed to figure out how do you meet people where they are. So emerging trends is the academic term, but you know, people’s behavior changed. So, and they’re looking for fast, convenient, easy ways to get food. So what what Chili’s did, is they recognized they had some liabilities, big footprint, a lot of stores, a lot of empty kitchens.

Soren Kaplan:
Well, how do you – what do you do – to take your assets that could be liabilities. Take the trends out there where people are just changing behavior on the fly and tap into that. So what they did is they approached DoorDash and they basically said, maybe there’s a partnership opportunity here. And they explored options. And they created this brand. That didn’t…it was a virtual brand pop-up brand. It’s Just Wings is basically what it’s called. They served wings and fries with ranch dressing, and it’s a heart attack on a plate, but that apparently was what people wanted during the pandemic. So overnight they created $150 million brand that was leveraging all these empty kitchens and Chili’s where you had people just basically making tons and tons of wings and fries and shipping them out to DoorDash drivers. And it not just save the company, but their stock went up seven fold after it had tanked during the pandemic. So it’s just…that’s a great example of just practical innovation. You see, you’ve got a pain point, you see the the trend out there, you recognize what your assets are or liabilities, and you kind of leverage into that through yeah. There was technology involved that. They didn’t have to do anything with the technology, they just leveraged into it. So I think that’s a wonderful example of kind of some of the principles involved here.

Chris Blasinsky:
It sounds like the ghost kitchen concept.

Soren Kaplan:
Yep. You got it.

Chris Blasinsky:
You know, in order to execute that and do it well, like it sounds like they did it, it has to stay simple. It has to be a very small menu. And definitely, I mean, fries and wings, it’s like, that sounds like heaven to me. So I certainly would be someone who would capitalize on that. But you know, you meant during the pandemic, there was a level of indulgence involved too. So I think bringing those foods front and center, and they’re easy to execute, you just need a fryer, you need a very small space and kudos for them for keeping that light on.

Soren Kaplan:
I think that the notion that – and this ties to convenience stores – we have footprints. There is a footprint. Now you had historically, Blockbuster had a footprint, but they didn’t figure out where the trends were and the needs. So if it just keep it simple and you recognize, here’s the people that we’re serving, here’s what their needs are. How do we tap into that footprint opportunity? And you know, the other {is} that another great example is this whole trend, one of the things that…you’re right, people were looking for kind of comfort food during the pandemic. But one of the other things that a lot of consumers are interested in is how do I do good for the environment and how do I take a part in just not throwing plastic everywhere and kind of being bad. Because you know, you want to contribute. I think there’s a desire for that. So one of some research that came out from Euromonitor basically looked at the number one thing that consumers felt like they could do to give back was to use less plastic. Which is interesting because you know, thinking about all the plastic that is used in every beverage…it’s everywhere. So other types of opportunities that we’re starting to see are things like there’s a company called MEWA that’s in Europe, there’s a company called Loop that’s in the United States and Loop is all about reusable packaging and you get it and you just drop it back off. And you’re starting to see Kroger and Walgreens have partnerships with Loop where the major brands – PepsiCo’s part of that – are starting to look at how do we give people easy packaging, but also allow for returns, which then creates a relationship with that retailer who’s taking the return and that’s about footprint. And so I think that there’s a lot of kind of quick partnerships and connection points with trends that isn’t rocket science. It’s just about testing stuff out. It’s about trying something out.

Jeff Lenard:
And Chris and I have both been to this place called The Goods Mart in New York City and Rachel Krupa. One store. The store is about the size of most people’s offices. It’s that tiny. Following the pandemic or during the height of the pandemic in New York city, she had about…she was down about 80% of sales, similar story to what you’re saying with Chili’s. And when we talked to her, she said she had three questions. What do I do? What do I do? What do I do? And what she came up with was, there were a lot of healthcare workers that just were doing extraordinary things and she wanted to recognize them. So she did these snack boxes and gave them out to healthcare, packed up these boxes, all packaged items, gave them to healthcare workers. And then a couple of people said, this is really awesome. How can my friend in San Francisco get one of these? And she’s like, oh, well maybe I can mail one, maybe there’s the business. And that reminded me so much of one of the things I saw in your book, where you talked about if you only swing for the fences, you may hit some home runs, but you need to hit some singles and doubles. And my point is, how do you…I want to talk a little bit…

Chris Blasinsky:
Just get on base!

Jeff Lenard:
…About the execution. So, how do you…you don’t necessarily have to say, I need the most complex idea and if this doesn’t happen, if this doesn’t happen, if this doesn’t happen, then I can’t do it. It’s like, whoa, there’s a bigger idea here. Let’s build it out. And that’s really the idea of taking, I think an idea to execution in that you keep it simple and then you build it out and that’s something I thought that was reinforced in your book.

Soren Kaplan:
Yeah. You picked up on it. the problem with the word innovation these days is everybody thinks it’s like this big disruptor, you have to be the next Apple or Netflix or whatever. And it’s not that the majority of innovations that… whether they’re they’re big or just to help you compete every day are small things. And they’re things that are about meeting consumers needs and pain points. And that’s really all it’s about. So that’s where you need to start forget about the definitions and forget about technology. The best starting point is to figure out what are the problems that exist that you can solve for real people. I mean, it’s really as simple as that. And so there’s a lot of room in that definition to kind of figure out – well, here’s how I define what I care about and here’s what I sell and here’s who’s coming into my store and different demographics and here there are different problems. But at the end of the day, it’s who am I serving? If it’s healthcare workers, what are their needs and pain points right now, given what’s going on and how do I make their lives easier and better? It’s really as simple as that.

Chris Blasinsky:
And Rachel has expanded the snack boxes into this entire…I mean, they’re themed. I mean, she’s just really taken something like Jeff said that was…she filled a need and now it is part of her business model. And she has one store in New York city that just is doing an incredible thing.

Soren Kaplan:
Also a great example, what Rachel’s doing around doing something and innovation. You can have a lot of ideas, but an innovation is only an innovation when you actually are doing something that adds value to somebody else. So you have to take a little bit of a leap and I say, leap, it doesn’t have to be big. You know, you have to take a little time. Usually innovation takes a little time. So if you have a little time and you have a little, it doesn’t even necessarily mean money. It just means that you’re doing stuff that is going to contribute. And maybe if there’s a little investment involved, but maybe not. There’s a lot of great innovations that didn’t require investments.

Chris Blasinsky:
I think you touch on it. I think what she’s doing has purpose, right? Some of the boxes are themed around…There’s female founder’s companies that are female run or female-founded. There are snack boxes where it’s black- owned companies. You know, she really tapped into the…it’s with a purpose. And I think that’s really important too.

Soren Kaplan:
It is, as Jeff said my book – my latest book – The Invisible Advantage, the subtitle is “How to Create a Culture of Innovation.” Every industry, every business in my view will eventually be disrupted it. And the sustainable advantage and competitive advantage is creating a culture where not just the founder, not just the executive team, but everyone is looking for those problems. Everyone can surface “hey, there’s a disconnect or there’s some friction over here in the purchasing process or in the aisle or whatever” it is so that people have a mindset of “here’s a problem, let’s fix it.” And the let’s fix it doesn’t have to be just fixing it. It can be, let’s fix it and make it a pretty cool experience for those we’re serving so that it turns into an innovation. So that’s really, I think that’s a good mindset and a good point to make there.

Jeff Lenard:
I loved one part of the phrase that you said a bit ago, talking about solving problems. You use the the end part of that was for real people. And one thing that came to mind -Chris, and I know this retailer and I’ll vague it up – but thought that it was a good idea to sell seltzer in the store. And this was a couple of years ago and it was a market that really didn’t support it because when they went and they looked at the data, they found that the only sales were from the family when they came in the store. They didn’t sell it at all. And it’s one of those ideas that made sense for the person that had the idea, but it has to connect to real people. And it has to be not what I think is interesting, but what, what others think interesting. And that almost leads me where – I guess it does lead me to – another quote that I saw in your book that one thing that most businesses say is we have plenty of ideas, but we just can’t get the traction for any of them. Is it because the idea is poor or is it because it doesn’t relate to real people? Or is it because people give these projects to people whose plates are already full? What, what are those elements that people can cut through? Because you never hear people say, I need more on my plate.

Soren Kaplan:
So the answer is yes, yes, yes, yes, and yes. But let me bring that to life. So what you initially described with the seltzer example is what’s called product market fit, and I’m using the word product very broadly. So the notion there is you might have a passion for seltzer, but the people coming in your store really want Red Bull. And so they don’t care about the seltzer. They want to get amped up and they want the caffeine, and they want the brand and the experience associated with that. So there’s a gap, obviously between the product and then the market, or the real people with what they were selling. So that is a big issue that can happen the way around it is to test out the idea before you buy a ton of seltzer and stock your shelves by buying a little bit of seltzer, or trying to give away seltzer and seeing what people say, and like really interacting with real people to see, do they really want seltzer? So that’s the product market fit issue. The other piece of it is the time, I don’t know how many times I hear people basically say, well, we just don’t have…we’re running a business, we don’t have time to innovate. And that’s just code for saying, we don’t have time for thinking about our future. Okay. So if you don’t have time to innovate, it means you’re not going to be testing out what the next thing is that you can sell or what the next thing is that will give someone an experience in your store that will differentiate you and allow you to grow. So the real trick there is to figure out what is the smallest experiment I can make to test my biggest assumption around whatever this thing is.

Soren Kaplan:
So take the seltzer, stick it on the counter in a little refrigerator, and see if it’ll sell two cases of it or a case of it. That’s it. That would be an example of testing product market fit, and testing out an assumption that your customers want seltzer, and then do what’s called an A/B test, which basically allows you to forget the seltzer, take the seltzer out there, put little bottles of vodka, or put little something else and just test a whole bunch of things and see and measure how many do you sell in a week? And then look at the data. And if you can run those little experiments and look at the data, that’ll help you decipher what’s the product market fit. And how do I test these things at a very low cost without much effort to give me the answer. So those are just little principles in there that you can use.

Chris Blasinsky:
Yeah. So going back to that a little bit, does some of that also rely on the culture of the organization, right? It’s okay to fail as long as you’ve learned something, or if you’re in a culture where failure could mean we’re going to find someone else for your job, you know what I mean? Like, there’s, there’s gotta be a level of some flexibility within that culture to be able to experiment and know that things may not work out, but we’re going to keep testing and learning.

Soren Kaplan:
Culture is an interesting concept. I write a lot about it. I teach executive education about how leaders create culture. But you know, what culture is, is you kind of throw this term out there. It’s really the norms and values that shape people’s behavior. So what does that really mean? It means if somebody tests something out and try something in a store and it fails, and you fire them, that creates a recognition that there’s some norms and values that you don’t test stuff out anymore, because if it doesn’t work, you’re gone. Now it’s leadership’s job to demonstrate certain norms and values that reinforce behavior that gives you innovation and then doesn’t stifle the behavior that you really want. So the notion of failure…leadership’s job is to basically eliminate that concept. There is no failure. It’s about learning and it’s about calculated risk taking. So leadership has an opportunity to basically reframe how it talks. You know, how we talk, the language we use, if it’s not failure. What’s the experiment we’re going to use to learn something. Oh, it didn’t work, what did we learn? Okay, let’s apply that to the next thing. So those are the kinds of attitudes and languaging that leadership can use on a very practical day-to-day basis that helps people realize they can take that quote-unquote risk. And if you’re taking that risk and it’s not risky, then it’s not risk taking, anyway. It’s about just trying stuff out and learning.

Chris Blasinsky:
Yeah. And I liked that you mentioned A/B testing because inherently with an A/B test, you’re really only changing one variable. It’s not complicated. It can be a different headline. It can be a different image. You could have an image in your ad could have a person versus no person and just testing one certain element to see what works. It doesn’t have to be overly complicated.

Soren Kaplan:
I think people get caught up a little bit when they hear the word innovation, because people talked about, oh, what’s your business model. What’s the different feature. Like, it just…you really just want to go back to what Jeff said – how do you make someone’s life a little bit better? Like, what can we do on a practical level? And then how do you test that one thing and just make it simple? So whenever I work with leadership teams or get in there and roll up my sleeves and kind of figure out what some of the innovations are or create dashboards, it’s always about just simplicity. What’s that one or two things we know we need to measure. What’s that one or two things we can sell. What’s that one or two things we can do in the next two months to test something out, and then we either scale that or move on and just simple, simple, simple. I think an important mantra, Chris, I think you’re absolutely right.

Jeff Lenard:
And I would imagine that your focus group should not be fellow CEOs because they will have…the world would have a lot more monocles and capes and walking sticks and things like that if, I guess, we were cartoonish CEOs. But you need to check with real people. And one final thing I want to mention, at least I picked up from your book, the idea of disrupting the disruption by using words that just basically stifle creativity, that there are certain buzz words or there’s code when you’re in an innovation meeting and somebody shuts it down by talking about past failures. That, I think, is one of the bigger impediments to how you go forward is the discussion of how you failed in the past.

Soren Kaplan:
There’s two impediments that I see that are predominant. One is we’ve done that before and it didn’t work. Well, okay, fine. But maybe things have changed since we tried it. People’s needs have changed. There’s been a pandemic. I mean, whatever it is. So to me, that’s an excuse, but what that also does, when you say that if you’re a leader, it creates your culture around that concept. So that’s the big one that I hear, you’re right. There’s another one is that we can’t do anything until we have more data, so that’s another one that is designed to basically paralyze the organization, because if you’re doing something around innovation, you will never have perfect data. You will always be working with something uncertain. Otherwise everyone will have already done it and it wouldn’t be an innovation. So the question, the reframe on that, is really what can we do with the data that we have, and a lot of this – I hate the word mindset because it’s just, that’s a little fluffy – but a lot of it is a reframe on how do we take action and move fast and do something practical that adds value and get over all of the fear of failure, the fear that something won’t work, the other stuff that gets in the way of just moving practically forward and helping somebody achieve something through getting a better product or having a better experience or whatever it may be you’re working on.

Jeff Lenard:
Okay, you have me sold! It’s, it’s really looking at the ‘what if,’ instead of the, ‘what about’ or the ‘well, what about’ that feels defeatist as soon as you come out of the gates and I think that just opens up more opportunities. We talk…we’re in a more creative department, our job is to come up with ideas and things like that. That’s what communications is. And you just find that when you have the permission to think creatively and to say, “why not?” You find your ideas, mowing the lawn or commuting to work or fixing dinner or things like that, because you’re just attuned differently. And I agree, it is the mindset. When your mindset is, please don’t mess up today, please don’t mess up today, please don’t mess up today, all you’re going to do is tasks and innovation comes with the test and learn, and the permission to just grow.

Soren Kaplan:
I think if you can…what you’re talking about too is purpose. And so it…and Chris, you talked about purpose and meaning in terms of what you’re doing. I think that as leaders and as culture shapers in our own organizations, we have an opportunity to basically talk about, well, what business are we really in? And is it just selling stuff or is it trying to make the world better in some respect and giving everyone we work with and for us an opportunity to contribute to that. So are we in making life convenient? Are we in making/creating jobs and opportunities? You can be in whatever business you want to be in, if we define it strategically, but then allowing anyone to recognize I have a role to contribute to this bigger purpose and let me see the problems that exist so that I can solve them so that we can jointly contribute to that purpose. I know that’s kind of a airy fairy way to talk about it, but it’s really about motivation and giving people a sense of why am I working here? I’m getting up in the morning and I actually care about this job because I can make a difference in whatever this little space that I’m in. And that’s really what it’s about.

Chris Blasinsky:
No, I think that’s absolutely fair is to say to yourself, can I make someone’s life a little bit better just by walking in this store and experiencing what I have to offer? That’s absolutely a fair statement.

Jeff Lenard:
So, people are thinking, now I can innovate. I can change the mindset. I can do all this stuff. Where can they find out more about some of your ideas?

Soren Kaplan:
A couple options. One, Leapfrogging.com is where my books and stuff are, but also I have a software company that drives best practices and strategy and innovation for small businesses to big companies called Praxie.com – P-R-A-X-I-E.com. All of what we’ve talked about is available digitally because that’s the way to scale ideas. And so leapfrogging.com or praxie.com.

Jeff Lenard:
[Music] Well, thank you for coming on today’s show, Soren. Thank you all for listening to Convenience Matters.

Convenience Matters Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.