Predicting the Future - Interviewing Retalon's Mark Krupnik

Retalon develops and markets inventory management and forecasting tools that helps Gillette, InterTAN (Circuit City), Danier Leather and other retailers and distributors accurately predict demand. The net result is improved overall profit margins and performance. This is achieved by optimizing the price, quantity and discount levels over time.

We interviewed Retalon's co-founder and president Mark Krupnik who has earned a PhD in applied mathematics from Technion - Israel Institute of Technology. He has worked as a forecast scientist and project manager at Stirling Douglas Group, and later at NCR (Teradata) after it acquired Stirling. Retalon was founded in 2002. We managed to catch up with Mark in Toronto to find out what he had to say about innovation and how he and his technology-based company approaches the subject.

What are some of the ways you quantify success in innovation at Retalon?

We have three different indicators that would tell us about success in innovation. All three indicators need to work together.

1. We should like it ourselves. Our people need to feel like they are involved in something big and interesting. We should be excited about it. This is less quantifiable than our second indicator.

2. We have a proof of value exercise that mathematically gives higher gross margins for a retailer. Our business is in helping retailers optimize their ordering processes to manage price, quantities and discounts to their benefit. We use before and after comparisons to determine success for our customers. We do this by taking a piece of data for the past few months and comparing it to the next period. This is highly quantifiable.

3. We track the number of converts. When you bring new technology, the more people who buy in, the more people like it, the better. This is not as quantifiable.

What type of internal systems or strategies does Retalon use to foster innovation?

Our company has very strong ties with universities and consultants. We work with Ryerson, University of Toronto and the University of Waterloo. Also consultants from Lakewest, IBM, CGI, etc.

Our approach is that we try to go to a customer and seek to understand what they need. Sometimes they cannot express it clearly enough because they only understand the existing technology. Then we go through the university and consultant group, gather the research and match it with the customer needs.

We have two independent streams: the customers and the university & consultants. By staying on top of the research, we know what technical possibilities there are that can be applied to the customer needs. Likewise, we can use customer needs to give more direction to our research efforts.

Who does Retalon look to as being leaders in successful innovation?

I don't want to offend any particular company, but we divide innovation into two groups:

1. Strategic - something that is completely new and that others don't see. Examples include Apple, Google and RIM (Blackberry).

2. Tactical - technological development. They innovate methods and are kind of predictable. Examples include Adobe and Agile.

Do you have an example or two of best practices Retalon has learned from other companies?

For best practices, we like Microsoft and Google. The user interfaces give small numbers of options or features. Exactly the right stuff at the right time. We imagine the same interface as to what will be next. If you are our customer, you will find the next thing in your dynamic needs. The options and features change proactively but they represent what you would need at each stage of your work.

We have good things to say about IBM. There is something from IBM that I have on my wall that describes the five stages of innovation.

Five stages of adopting of an innovation:

1. People deny that the innovation is required.

2. People deny that the innovation is effective.

3. People deny that the innovation is important.

4. People deny that the innovation will justify the effort required to adopt it.

5. People accept and adopt the innovation, enjoy its benefits, attribute it to people other than the innovators, and deny the existence of stages 1 to 4.

(Editor's note: sometime after the interview, Mark emailed the above 5 stages quote to us.)

It is sad but reality.

What areas would Retalon like to improve?

We would like to put more structure into the innovation process. It does not need to be a contradiction. Innovation is creative, yet we need to set boundary conditions. We don't want to kill the creative process but, simultaneously, we want to put some structure into it. It is a delicate balance.

The marketing is one of the important factors to dictate where we should draw the line.

We would like to again thank Mark for taking time to share his views and Retalon's approaches to innovation.