Innovation events such as hackathons are becoming more popular among retailers. Nick Hughes finds out how they can bring business benefits.

Many hackathons focus on a specific challenge such as creating an app

Opening up data to hackers and coders might seem like commercial suicide in the ruthlessly competitive world of retail.

Yet an increasing number of UK retailers are doing just that in the name of digital innovation. Tesco, John Lewis and Asos are three examples of retailers that have staged hackathons, or a variation on them, with the aim of generating the green shoots of digital ideas that will drive future revenue and profit growth.

The results have been impressive. Tesco’s first hackathon spawned an app that allows customers to buy ingredients for recipes featured in Tesco Real Food magazine; Asos has developed an app that enables shoppers to see saved searches or favourite categories in RSS readers; and the winner of John Lewis’ inaugural Great British Technology Innovation for Retail competition created a system for booking appointments in children’s shoe departments via smartphones.

So why the growing interest in staging hackathons and should all retailers seek to get in on the act?

Although they’re only just beginning to seep into UK retail, hackathons are not a new idea.

Unsurprisingly, it’s the blue-chip tech leaders such as Google and Facebook that have been their greatest advocates. They have staged regular events since the mid 2000s with the aim of developing new technologies and
generating fresh ideas and disruptive innovation. Tradition dictates that hackathons last for 24 hours and attendees are rewarded with free beer and pizza for their services.

Google is an advocate of the hackathon and was among the first to stage one

Google is an advocate of the hackathon and was among the first to stage one

Many hackathons focus on a specific challenge, such as creating a mobile app, while others concentrate on applications that make use of the API (application programming interface), which means services can be created that combine the retailer’s site with others, and enables the two sites to interact. Both Tesco and Asos have opened their APIs.

Retail has, understandably, been slower to embrace the hackathon than the technology sector but the signs are that big-name retailers are beginning to appreciate the benefits this kind of open, collaborative approach to technological innovation can bring.

In 2012, Tesco invited employees from across its business, including its companies Blinkbox and digital music service WE7, as well as from analytics company Dunnhumby and design agency Ribot, to compete to create a new app or service in 24 hours. The carrot was that the winning idea would be developed for millions of customers.

One of the aims was to give attendees relief from the everyday pressures of their individual jobs and allow them to free their imaginations. “We wanted to create space and time for people to get together and express their creativity without the pressure of work deadlines,” explains Tesco innovation manager Assunta Cucca.

The result is that the ‘Hack to the Future App’ - an app that can scan a product’s label or packaging then bring it to life by suggesting recipes or complementary ingredients - has since been rolled out to customers. It has been rebranded as the Tesco Discover app and tweaked to make the pages of Tesco Real Food magazine interactive - customers can click on the magazine’s recipes and buy the ingredients through Tesco.com.

The hackathon proved so successful that it is now an annual event in the UK. A Tesco hackathon has also been staged in India, and Cucca says the retail giant aims to extend the event globally with the eventual aim of holding one simultaneously in its offices around the world.

Opening up to the public

Tesco has so far restricted its hackathons to its own employees or those of associated companies.

James Taplin, principal sustainability adviser at Forum for the Future, which has hosted a series of hackathons as part of its Wired for Change campaign, concedes that fears about sharing potentially sensitive data with outsiders has historically made businesses circumspect about throwing their doors open to the public.

He says: “It is quite an unusual thing to do, to open up your information and data to a whole group of strangers. It’s totally alien to how business models work, which have traditionally been closed and secretive.”

Taplin, however, believes attitudes are changing and that more and more businesses, including retailers, are beginning to see compelling reasons for opening up their data and systems to the wider world. “Technology is not seen as a dark art any more, it’s just a part of our everyday life,” he says.

Consumers expect businesses to be a lot more open, he adds, and if not they will find information themselves about companies and post it where others can see it. “Businesses are thinking, if we’re going to be opened up by other people we may as well open ourselves up, and do it in the right way and control to a certain extent what people can play with,” says Taplin.

Staff are useful sources of innovative ideas, but it’s possible to go beyond that. In the US, where hackathons and interactive technology events are commonplace, the world’s largest convenience retailer 7-Eleven has turned over the future development of its smartphone app to the public as it looks to expand the tool’s features and capabilities.

People are encouraged to visit the retailer’s Idea Hub where they can share thoughts about how to build on the app’s basic platform and add services that would enhance its usefulness. “Right now, the app helps people find a store, solve a problem, get a deal and talk to us,” says 7-Eleven chief technology and digital officer Steve Holland.

“Future development of this app will be completely customer-driven, so this is their opportunity to tell us what they want, from mobile payments to rewards programmes, and let us know about their experience.”

Speedy innovation

In the UK, it’s little surprise to see Asos at the forefront of the open innovation trend. Last year, the etailer opened up its API to external web developers, allowing them to access Asos’ full product database and build services using the etailer’s ‘add to basket’ functionality. Opening the API gives developers the power to create apps that lead back into Asos and offer a brand experience outside of the main site.

The retailer has also held an internal hackathon in which the winning idea - an RSS integration that enables customers to discover, save and consume any part of their Asos experience through readers such as Feedly and Flipboard - has since been fully developed and launched.

The service means shoppers can keep track of everything they’ve saved or ordered in one place.

Retailers such as Asos recognise that the ubiquity of consumer technology is increasing the need for agility in day-to-day operations. John Monks, head of digital and social business design at marketing and technology agency LBi, says businesses whose marketers are more comfortable with focus groups and in-store surveys might find this new model challenging, but he also notes that hackathons may help create a more fast-paced culture.

“In a world that demands responsiveness, hackathons allow retailers to innovate at pace,” he says.

Seeking new talent

They also allow retailers to harness the talents of people outside their own organisation - people who Taplin believes are becoming an invaluable source of inspiration to businesses.

“You can either rely on your own small, in-house team that will want to do things their way, or you just throw your doors open to the creativity of the crowd and get back not only a greater wealth of ideas because of the wider net that you’re throwing, but also a greater variety of ideas because people are approaching your challenges with different eyes and perspectives.”

John Lewis is seeking to develop what IT director Paul Coby describes as “an ecosystem of technology innovators” to support its business objectives.

Firms pitched technical solutions to business problems at John Lewis’ innovation event last year

Firms pitched technical solutions to business problems at John Lewis’ innovation event last year

Last year, the retailer held the John Lewis Great British Technology Innovation for Retail competition - an innovation event along the same principles as a hackathon where small firms were invited to pitch technical solutions to real business challenges posed by the retailer. The firms were faced with three retail scenarios: to improve the customer and staff experience of customer collection in stores; to create efficiencies in stock management and customer service in John Lewis’ children’s shoe department; and to replicate and communicate John Lewis’ market-leading knowledge and service in its online channels.

The winning submission, which has since been developed and will be rolled out imminently, came from UK tech company Black Marble in the shape of a ‘Help Us-Help You’ system for advance bookings in the children’s shoe department. The service uses smartphones to book appointments and aims to enhance customer interaction in store and ensure customers are served quickly and efficiently.

John Lewis’ Paul Coby (right) presents Black Marble’s Richard Fennell with the JLP Great British Innovation in Retail Award 2012

John Lewis’ Paul Coby (right) presents Black Marble’s Richard Fennell with the JLP Great British Innovation in Retail Award 2012

“Black Marble brought the idea to life in the presentations and it was clear from the start how keen they were to work with us,” says Coby. “The solution has the potential to be used across a number of channels, not just smartphones, so there is certainly scope for extending this idea in the future.” The innovation event will now be staged every year and Coby says John Lewis intends to maintain a relationship with each of the finalists, not just the winner.

Maximising a hackathon

Any retailer can stage a hackathon. Essentially, all that is needed is a room, a group of willing participants and a steady supply of food and drink. But hackathons are not for everyone and staging one for the sake of doing so can be counterproductive. “We will do those [innovation] events, but you need to be specific in what you intend to accomplish,” John Walden, managing director of Argos, said last month. “If they are too broad they can get out of control and lose focus. Smart leaders will use them to accomplish specific things in specific areas.”

Taplin agrees and says there are some golden rules to follow to maximise the effectiveness of a hackathon.

“You want to have the right people in the room, but you also want to have some really strong, clear challenges that people can work with and something that is specific enough that people have a chance of taking a good chunk out of it in the time available.”

Another golden rule is to learn from previous hackathons and use feedback to improve the next event. Tesco hackers now have more time to present their project at the final judging, and this year the retailer has encouraged everyone with ideas, regardless of whether they have coding skills, to join in and team up with the coders. “This helped different teams work together and created a great environment for learning -some people built their first website at the hackathon,” says Cucca.

Even if hackathons are a step too far into the unknown for some retailers, the idea behind them has broad relevance in the increasingly technology-driven world of retail. “The principles, agility, and ways of working can be used to disrupt stale internal processes and thinking,” says Matt Oxley, head of creative technology at digital agency Tribal DDB. “Retailers could benefit from applying it to a range of areas, from digital services to experimental service design.”

Whether it’s a true hackathon or simply an open exchange of ideas between tech-savvy employees, innovation-based events are likely to play an increasingly important role in retail.

Just don’t forget the pizza.