CIO of Virgin Entertainment Group, Robert Fort, is responsible for the switch from analog CD listening stations to digital kiosks in Virgin Megastores where listeners can now browse the entire store inventory online. In this CIO Vision Series interview, he says that risk-taking and innovation are at the heart of the company's culture. Here is an excerpt from the interview.
Q: How do you define innovation?
Fort: Well it's interesting at Virgin, I've contemplated this. It's not something that we just openly talk about. I mean obviously we're under the Richard Branson umbrella, and he sort of set the tone for all of our businesses.
How does one man set the tone for the entire company?
Fort: First off, my attraction to Virgin was Richard Branson, and obviously to that sort of forward thinking that he has -- he has a unique way of thinking about things, and that sort of permeates through our business. You know, at no time do we really talk about being innovative, we just sort of think differently. We think a little outside of the box -- my favourite phrase there is -what box?" We just sort of keep looking at new ways of doing things.
Do you have an example of how you've innovated?
Fort: Well, back to your question about the Internet: the Internet obviously is having an impact on our business, so how do we keep the store experience exciting for our customer? Why would they want to go into our store when they obviously can buy a fair amount of products still online. So we have to do something to add to that experience. Our digital listening stations that we've implemented in Times Square and our Hollywood location -- 150 listening stations and kiosks in one location -- is a substantially different experience than most people see.
How is that listening experience different than, let's say, what you would get at a Borders store, or even through the Internet itself?
Fort: Well it used to be, in the Virgin store, that we had the analog listening stations. They were essentially a CD player behind the scenes, and of course a CD player has one to five CDs in it. That's all the customer is capable of hearing. And if you walked in and listened to our Top 20 wall for example, and let's say that Madonna was the title that you wanted to listen to, but somebody else was already there, you were unable to listen to it. We've now made it so that the entire catalogue, our entire inventory of the store is available at one location.
Was the implementation of those listening stations an innovation, or was it just that the technology was mature enough that you could pull this off?
Fort: What I like about what we did is that we didn't actually go and create any of the new technologies, and didn't even get too -bleeding-edge" with anything. What we did was successfully integrate a number of things. We took an IBM -mini-place" kiosk, which is a fully self-contained unit. When you consider we have 10,000 to 15,000 people a day going through our Times Square location, you have to make sure that this stuff is retail-hardened. It had built-in scanners.
We used the Microsoft re-pause operating system, which would keep down our administrative costs, and since we are a Microsoft-centric shop it was very easy for us to add that into our environment. We then use a Cisco ACNS solution -- it's their content caching solution -- which helps make the experience faster for the customer. I think where our innovation came from was just pulling all those parts together.
When I hear about innovation, I also think about entrepreneurship, and how you build entrepreneurship from within. Are there new businesses that have been started, or new products that have germinated out of your group?
Fort: We've started to stretch our product lines. We're now into consumer electronics and fashion. And if you look at our fashion area for example, the folks who have been brought in there have been given a lot of autonomy. There are some basic guidelines, but they're given the freedom to go off and try things. Some don't work, and sometimes we retreat out of that, but we keep pushing forward. Obviously we're a commercial business, we have to produce revenue from this, and that revenue has to be higher than our cost. But still we try things, and that's important.
What are some of the other technology areas where you've invested and you've had decent payback ... where you've taken some risk?
Fort: Converged voice and data network, and Voice over IP. About a year ago, ironically, I was here in San Francisco, and I was attending an event where I was listening to a lot of the analysts speak about Voice over IP. We were already contemplating it, but I was concerned about whether it was still bleeding-edge or leading-edge. And it seemed obvious to me that the way we should focus is: (1) did we have a business case and (2) were we setting ourselves up for the future. We clearly had a business case -- we're saving about US$700,000 a year in telecommunications cost immediately, and also we're improving the cost of our stores by as much as 60 percent in some cases
Do you have any recommendations for people who may not be as innovative, or who may not be so risk-taking?
Fort: You have to sort of release yourself a little bit. I think you have to tell yourself it's okay to make a mistake. Again, make it as a cautious and calculated mistake, but it's okay to make mistakes. You've got to take risks. Just keep your eyes and ears open. It's always fun to look at other places. For example, we look at the consumer electronics world and ask ourselves, what of those electronics can we actually put in our store to help out with our store environment? Obviously big screens are a big factor and we have many of them -- we have over 60 of them in our Time Square store. But it's having your eyes and ears open, and then being willing to take some risks.