Creating a digital business and expanding it is not a simple task, it is necessary to invest time and money in technology, innovation, and leadership.

In this episode of web series Leaders of the Future, Patrícia Meirelles, ambassador of Alana AI, invited Luiza Trajano, Chairman of the board of directors of Magazine Luiza, and leader of Women of Brazil Group, which has more than 4000 participants operating in several segments of the economy.

Among the main points discussed is: innovation during a crisis and the need to use technology and humanization.

How to innovate during a crisis?

The word innovation is derived from the Latin ‘innovation’, which means renewal.

It does not necessarily mean creating something new, as it is also possible to improve something that already exists.

Luiza explained that, in her opinion, it is essential that there are always two parallel paths, one focused on day-to-day actions and the other in search of “the new”. Magazine Luiza, for example, maintains a culture of simplicity even for innovation.

But the major question is: What should I innovate and where do I start?

Types of innovation

A company generally is composed of many different areas, departments, or squads, depending on its own style; innovation can be carried out in many different levels, and in accordance with the need and market where the business is inserted in.

Business main fronts of innovation are:

•  Business Model
  It has become more and more common that traditional companies create new business-oriented models in order to deal with the market demands, customer’s expectations and younger customer’s profile. Some meaningful examples are food delivery apps and also traditional banks which are adjusting to the new trends created by the digital banks.
  
• Process update
  With the constant change in the way to make business and the emergence of new technologies, it has become crucial to evaluate regularly if the processes in progress meet the business current needs. A company that is willing to grow could not be afraid of creating new ways of carrying out activities or improve certain processes.
  
•  Organizational Structure
  This change should happen when the company identifies the need to alter the dynamics between areas or stakeholders. This can be a simple change, such as the creation of separate areas for marketing and sales, how managers relate to vice presidents and directors, for example. The purpose of this innovation is to facilitate and expand the participation of partners and other people, whoever can add value to the business.
  
• Marketing and Product
  Innovating in marketing is not only creating new campaigns that generate even more sales, it is also finding new ways to retain, teach and attract existing customers. Whether through discounts or differentiated plans. Marketing directly impacts other areas, such as product, sales and service. The marketing area can even assist in the product improvement strategies, through questionnaires and costumer surveys.

Podcast Recommendation: PloomesCast – Marketing, Sales and Product: the meeting of disciplines in the growth mindset.

5 myths about innovation

We have identified some main myths about innovation and the truth behind them.

1. Innovation is about creating something new: This was the first point addressed in this article, and we clarify that it is not only about “news”, once it is possible, and indicated to innovate in existing  products and services which had already been offered by the company.
2. It is not possible to teach innovation: In a way, people are already born creative and innovative, but they need encouragement. For this reason, managers must create environments that encourage thinking “outside the box” and a focus on solutions, not on problems.
3. Innovation must come from the owners or directors: Although some changes need the approval of high-level leaders, innovation must happen at any level of the company, starting with simple and everyday activities.
4. Not every company can innovate: This statement is completely wrong, since innovation can happen anywhere and in different ways, as mentioned in the paragraph on types of innovation. Another important point is that it is not essential to be a technology company to be able to innovate.
5.  It is essential to have a dedicated team to the subject: Many people think that companies with large innovation labs are the only ones capable of facing the challenge, but this is not true. It is possible to start with small actions, measures and improve these over time.

Digital transformation

The digital transformation can be characterized as the adhesion of digital technologies in areas of a business, what modifies the operation and the delivery of value to the customers. 

For small physical stores, turning sales into digital is the ideal way to deal with the current crisis. It is essential that entrepreneurs first understand that being digital is not just the act of having a platform for sales, it is a culture.

The company that decides to digitalize has to be aware of various aspects of online sales and be trained to ensure the management of the business. Digitization is a great benefit for dealing with strategic issues, and, combined with good management and leadership, it can be the lifeline of an organization.

How to start the digital transformation in your company

Each company must carry out an internal analysis to determine the best way to start this transformation, but it is possible to follow some practices already shared by large organizations.

Cognizant, for example, shared its work model carried out so that the company could become digital. They basically followed 4 work fronts and created actions for each of them:

1. Operations;
2. Products & Services;
3. Customer Experience;
4. Organization (employee).

Impact of the digital transformation

According to experts in the subject, the digital transformation impacts, and redefines some essential fronts in the business:

•  Customer Management: It is important to understand the online sales funnel, learn lead generation strategies, how to work with communication and customer service with these people through technological solutions. In addition, it is essential to develop strategies focused on the consumer experience.
• Data Management: The more digital, the more data the company will have at its disposal and, while it is beneficial to get to know customers and create ways of engagement, it is mandatory to create a clear data usage and storage policy, as provided in the General Data Protection Regulation (GDPR)
•  Innovation: The digital transformation in itself is already an act of innovation and impacts the possibilities and opportunities for a company. In addition to facilitating tests and analyzes on customers, products and internal processes.

Video Recommendation: Interview with João Appolinário, CEO of Polishop, about innovation and customer service during a crisis.

Case of Success

During the Covid-19 pandemic, Magazine Luiza launched a marketplace program called Parceiro Magalu, so that small stores can also sell online.

This was the way the company found to innovate, while collaborating with entrepreneurs affected by the reduction of in-store sales.

Regardless of the innovation project and to ensure success of the business, it is essential that the leaders have empathy and lightness to deal with the daily challenges of the hustle and bustle of an e-commerce business. After all, leading a sales and customer service team during a crisis can be something realyy challenging.

Technology and humanization

Magazine Luiza’s main concern and purpose is to ensure a ‘humane touch’, and this is reflected both in the company-employee relationship and in its customer service provided.

The company has 4 tech labs and more than 1,000 people dedicated to the evolution and maintenance of systems such as Lu chatbot, which is an excellent example of humanizing technology.

Another very interesting case was the development, during the Covid-19 pandemic, of an algorithm that reports details on the number of respirators in hospitals in the cities where the company has stores.

If the report shows a low number of available respirators, the recommendation is that the shop remains closed.

About Lu, of Magalu

Lu was born in 2003, at the time called Tia Luiza, and her goal was to make the shopping experience on the Magazine Luiza website humanized and generate more confidence to win over consumers who were still afraid of the digita worldl.

She evolved, gained more empathy and more responsibilities, since in 2009 the character took over social networks and gained a dedicated page for her contents.   This interaction with people started to generate value for the brand and Lu stopped being just a robot, and became a virtual influencer.

What was her main role? Simplifying technology and facilitating sales, that’s why Lu has become the focal point for Magazine Luiza’s rich content.

Innovating can be simpler than you think!

Innovation does not need to appear only in times of crisis, it is possible to maintain an environment conducive to creating new products and solutions, and technology, in addition to driving, can help.

Also watch the Customer Care = Humans + Technology web series, with Marcio Kuruiam, CEO of Netshoes and other guests, and check out how to combine humanized service with the machine.

And if you want to know how artificial intelligence is an ally in this journey of digital transformation, download the e-book Human & Artificial Brains