7-Eleven guru's eight-step program for building an innovation team

Eighty-seven years ago, an employee at the Southland Ice Company had a stroke of genius: Why not sell eggs, bread and milk to customers along with the blocks of ice the company was known for? And with that, the nation's first convenience store (called Tote'm) was born. In 1946, the outlets were rechristened as 7-Eleven to reflect their extended hours (7 a.m. to 11 p.m., seven days a week), and Southland was on its way to developing the world's largest chain of convenience stores.

Innovation has dotted the 7-Eleven Inc. timeline through the years: coffee on the go; 24-hour-a-day service; self-serve soda fountains; the Slurpee, a frozen, carbonated drink and a pop culture icon. So, in 2011, when Rob Chumley, then vice president of merchandising for products shelved in the center of the store, found himself in a mind-numbing meeting debating the merits of extending the "two for $1" glazed donut deal, it pushed a button. The world's largest convenience store chain needed another jolt of innovation.

"I got up, walked out of the meeting, walked straight to the CEO's office and asked if he had some time," Chumley told attendees at the recent Chief Innovation Officer Summit in New York City. Today, 7-Eleven serves eight million global customers every day, but "the rest of the world hasn't stood still," he told audience members. "Since the end of the century, retail has been evolving at a breakneck pace, and we're just starting to enter the 'on-demand' economy." 

Rob Chumley

With CEO Joe DePinto's full support, Chumley is now leading 7-Eleven's innovation practice as the senior vice president of innovation. The team is focused on improving customer service, creating digital connections with customers, and finding and solving new customer-related problems. He has learned a thing or two along the way, which he shared for those just beginning to build their innovation teams. His advice included the following eight tips:

1. Have a sponsor. Chumley had the backing of DePinto, who not only gave his approval to build and outfit the team, but has also categorized its work "as an enterprise-level strategic initiative every year since 2012," Chumley said.

2. Provide the space for a dedicated effort. The innovation team's work is separate from the day-to-day operations of the business for a simple -- and strategic -- reason. "I believe that nothing truly transformative can or should come from the corner of anyone's desk," Chumley said. "If you're working on something this important from the corner of your desk, then your desk is too damn big."

3. Create a focus. Build a working definition for innovation and figure out what kind of innovation the team should go after. "We made it clear that we would only focus on disruptive innovation," he said. "We are focused on new problems, new solutions and new business models." Incremental innovation, such as the next great Slurpee flavor, would be left to other departments.

4. Be disciplined. Chumley and his team agreed to "resist at all costs getting caught up in innovating because we could." He pointed to the number of Diet Coke offerings on the market as an example, homing in on Diet Coke Plus. Although discontinued in 2011, the "plus" referred to vitamins and antioxidants mixed into the formula. "Does anyone really think there are Diet Coke drinkers out there who would drink more Diet Coke just because it had vitamins in it?" he said. "Or were there people out there saying, 'I don't really like diet sodas, but look at this one, it has vitamins in it.'" Just because you can, Chumley said, doesn't mean you should.

5. Find the right people. Chumley gave HR "a DNA string, if you will, of characteristics and how I want people to behave and think and what I want their values to be," he said. He was looking for intellectual curiosity, a balance between left- and right-brained skills -- and even a "disdain for the status quo," he said. He asked HR to cross-reference his characteristics with its data on current employees. A week later, Chumley's HR partner handed him a list of 25 names. "And I'm proud to say every one of the original internal hires came from that list," he said.

6. Answer the build or buy question. Taking a tip from Peter Thiel's book Zero to One, Chumley suggested weighing the build or buy question. The litmus test? Will customers notice and give the company credit? If not, strongly consider going the software as a service route or to an outside provider, he said. "Often there's too much bravado associated with not having a proprietary solution, the result of which is typically slower to market, more expensive and less impactful solutions," he said.

7. Set reasonable growth expectations. Startups and new ventures don't take off overnight. The same goes for innovation. "These new initiatives must be allowed to incubate, to grow and to resonate with the core customer," he said. When measuring growth, don't rely on legacy score cards. "Innovation will probably consume disproportionate resources initially, but you must continue to support them -- as the customer should be the only one to kill the initiative or the idea," he said.

8. Be aware of the unintended consequences. "The very existence of the team will anger some and it will scare others," Chumley said. Employees and colleagues may take it as a signal that leadership feels they're underperforming. Even the senior-most leaders will not be immune, Chumley said. "The leader of the innovation team must continue to walk a fine line between instilling pride and purpose, while not creating unintended envy from others," he said.

Let us know what you think of the story; email Nicole Laskowski, senior news writer, or find her on Twitter @TT_Nicole.