John Lewis has invested, M&S has taken steps in the same direction, as have Argos and Tesco - it seems that retailers with an eye on the future have woken up to the potential of internal tech hubs and R&D labs as income generators and business differentiators.

Make no mistake – there will always be a need for the existence of companies specifically devoted to the development and advancement of technology. The skills, knowledge and cash required to evolve the next generation of mobile devices, for example, can’t adequately be provided by a business whose main focus is fashion retail or fast moving consumer goods.

However, for a lot of businesses with significant demands on their time and resources, it can be difficult to build a business case for investment in technology that may not necessarily have a precedent within their industry.

Having an in-house tech hub allows the business to set aside a budget specifically for technical research and development, where they can track successes and failures and rationalise the risks taken in the name of innovation.

It’s also good for the business to have this kind of specialist knowledge in-house – on one hand it means that they don’t have to outsource every exciting new development. On the other, where using a partner is preferable, having a homegrown team of technically-aware people makes the external relationship with technical third parties much more strategic, and efficient. In addition, it ensures that when the technology becomes crucial to the business, knowledge and support is not tied to an external organisation.

Setting up a tech hub also shows a commitment to staff development. Not only does it help businesses attract the best talent, it allows them to rotate interested and skilled staff onto the team from across the business. By giving them the opportunity to work on exciting projects at the leading edge of their industry, businesses may also see a boost in motivation and job satisfaction.

Ditching departmental politics and business baggage to build the best team

Of course, there’s an argument that everybody should try to be innovative as part of their job, but the advantage of having an in-house lab is that it provides the business with a focal point – a place where people can take their ideas and actually see them being developed.

Ideally, the technical hub should draw its talent from all departments and report to either the CEO, Chief Experience Officer (CXO) or the Chief Commercial/Customer Officer. To get the best from the team, it should not carry any baggage from existing business silos – the IT department, for example, is likely to be too restricted by existing systems and thought processes.

The hub should be free to focus on improving customer experience with a cross-channel remit, and should comprise developers, tech leads, UX experts and product strategists, rather than business analysts, marketers or sales people.

Above all, the hub should be made up of skilled, passionate people who are evangelists about technology and are prepared to spread the word to internal teams, external partners and the industry as a whole. It is also important that they are given the internal clout to ensure that innovation will not be stifled by departmental politics or systems overhead, and as their focus is strategic and not operational this is typically achieved by giving them the ‘ear of the board’.

Innovative, disruptive, outside BAU

Ultimately, the tech hub should help the business to deliver a better customer experience. It’s their job to be innovative, disruptive and to run projects which stand outside ‘Business As Usual’, taking calculated risks to deliver improved cross-departmental results.
Businesses shouldn’t underestimate the PR and recruitment value of having their own tech hub, too.

It’s currently a relatively new venture for retailers, so those who make the commitment to nurturing in-house tech talent will undoubtedly stand out from the crowd. And, because of this, retailers should be modelling themselves on the best tech companies rather than their direct competitors – Apple, Microsoft, Facebook and Google are all excellent examples of using in-house tech teams taking calculated risks to make experiences better for their customers/users.