Why Walmart’s CIO Believes in Failing Fast

Clay Johnson, executive vice president and CIO, Walmart, isn't afraid to fail. This was a key revelation gleaned from a discussion he had with Debbie Hauss, editor-in-chief, Retail TouchPoints, at the Retail Innovation Conference in New York City this week.

“I’m one of those people who uses a fail fast model,” Johnson said. “The pace of change happens so fast. So as leaders or peers in an organization, you have to be able to feel comfortable that people are going to fail. If you do 10 things and nine work and one fails, it's OK.

“You don’t want to close the books on the wrong things, but letting people go out and curate and fail is important for innovation,” Johnson noted. However, he conceded that a fail fast model is difficult for many companies to adopt. “It’s a complete culture change."

And while this type of culture change can be very difficult for companies as large and established as Walmart, Johnson said the fact that his company has acquired a lot of digital-native startups over the past few years means the idea of failing fast is "starting to be infused in the company’s ecosystem.”

Johnson also said the digital-native startups that Walmart has acquired have changed and influenced Walmart’s culture in other ways, especially around the concept of speed to innovation.

“We bought all different sizes of startups, but they all operate around the same concept [of] speed and how quick to market they can get to, but also how [to] operate within guidelines to get that innovation out there," Johnson said.

Furthermore, Johnson also believes some of Walmart’s recent innovations — e.g., grocery delivery and a test that involved delivering merchandise into customers' homes — wouldn't have happened if not for the culture change post-acquisitions.

“I don’t think we would have tried these things out if we did not buy the startups,” he said.

Walmart’s innovation team is integrated with its business team, an important organizational change, according to Johnson. “The innovation team should not stand alone. It will come up with new technologies to test, but it doesn't always solve problems."

Johnson also said the innovation and business teams were in Israel recently looking at 30 different tech startups in a few days. All of the startups were focused on technologies such as artificial intelligence, email, mobile augmented reality/virtual reality, and computer vision. He was excited about the experience because these are the technologies that everyone is talking about here, but few have implemented effectively.

"Everything you see on paper was actually there; you could feel it,” Johnson said. “So many companies there [Israel] are focused on [these types of technologies]. Some were great and some were not. But in general, there's actually phenomenal software coming out of Israel."

So, how does Walmart decide which types of new technologies to test? Johnson said the group narrowed it down to six, but will probably end up working with three.

“All 30 look good when you first see them, but what you have to think about is if you have the bandwidth to try them all," said Johnson. He added that the team also holds these types of meetings in Silicon Valley and Austin, Texas.

Lastly, Johnson mentioned a key hiring best practice: "The leaders I look for are outside of retail, “ he said. “It’s important to find people who think out-of-the-box. If you live in the environment, you may not see the forest from the trees.”