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In a recent conversation with a Canadian retailer about the need for innovation, I was surprised to hear that they too had in fact started their own innovation lab. I guess the part that surprised me the most was that they were a relatively small retailer and were in fact experimenting with how to incorporate an innovation lab into their current structure/environment.

On the one hand,  this revelation seemed to further reinforce the point from my recent post, Surviving the Onslaught of Innovation in Big Retail, that innovation in customer engaging technology is becoming more and more critical to how retailers differentiate and create compelling in-store experiences. The other dimension to this, however, is how to infuse this drive for innovation into the organization while dealing with the daily realities of the legacy systems and technical debt that most retailers are burdened with.

As a well-known retailer from Brazil put it to me several months ago: "We have to change the engine while still flying the plane."

So how do retailers do this? How do you balance the priorities of innovation with the operational needs of running the business?

For most retailers there are very real constraints around bandwidth and the organizations ability to fold in the “new ideas.” Is it reasonable to think that most retailers can find this balance and succeed in creating an entirely new business within their organization? If not, what is the alternative? Share your thought in the comments section.