A couple of weeks ago I had the chance to talk about three things I care about: Innovation, Gilt and Ireland. The occasion was the Dublin Chamber of Commerce Smart Series Event on Innovation (that was the day after Dundrum Shopping Center and half of Dublin got flooded). The objective was to share a couple of thoughts on what innovation is (or is not), what Gilt is doing to foster innovation and what Ireland has to offer to companies like Gilt.

To start ... Innovation is probably on all our minds. If you get it right as an individual or as a company or as a country, you create a differentiator for yourself. Everybody wants to be innovative. The main point of the talk was to point out the similarities between innovation and evolution.

There are lots of definitions available, but one way to think about innovation is in terms of the hard and the brain. The hard tells us that innovation is this wonderful thing that happens in the shower or in my case on the bike on the way up to Sally Gap, when you have this moment of brilliance for the next best, bigger business idea that will actually change the world. And then we look at individuals like Steve Jobs, who are obviously either showering a lot or who know the way up to Sally Gap like the back of their hands, because it seems they innovate everyday and we start to wonder what is wrong with us.

The short answer is actually: nothing. Nothing, because in my opinion it does not work this way. Even in the case of the iPod you could argue that the real innovation was the Sony Walkman and the iPod was a refinement on the original idea.

The more rational definition behind innovation is that innovation is not a thing or an event that "happens". It is the result of a process. I am personally a big fan of evolution and Darwinism. There is only so much you can plan and/or foresee. For the rest you have to try (a lot) and see what works.

That sounds easy, but it isn't, because it is counterintuitive. You have to embrace mutation and selection. You first have to create a "creative" environment that produces a lot of (hopefully) good, new ideas and then you have to filter them and needs to happen early, because being innovative does not mean to be just creative. It means to be successful and that means it is not about creating a lot of good, new ideas, it is also about finding the ones that make a difference for your business and for your customers and if your are lucky for your industry.

Not to a small extend it is this “bi-polar” nature of innovation that makes it difficult for us to implement innovation. Just think about it: On one hand you ask people to mutate (means to come up with a lot of good, new ideas) and to be passionate about these ideas and then you need to have strong selection in place to kill most of them. If you do it wrong it will frustrate people, because they might get the impression that nobody is listening and innovation will just stop to happen.

In a lot cases we fail to get good innovation because we either mutate too much and do not select enough or the other way around. Good innovative environments show both characteristics: A lot of mutation and strong selection. Innovation is the evolution of ideas. It is Darwinism of ideas. It is the survival of the fittest idea.

To create such an environment and to maybe avoid the frustration mentioned above, you should reward people equally for coming up with an idea and also for giving up on an idea. Failure must become an option and maybe even something that you should or could celebrate.

Let's talk about Gilt. Gilt is innovative. Let me talk about two examples that will illustrate how innovation based on strong selective pressure (means a well-defined niche that you need to adapt to) and/or strong mutation (means a good idea) can look like.

The first example I want to talk about is inventory management. Normal retail business models allow you to do inventory management based on thresholds, means as soon as your inventory goes beyond a certain threshold you reorder. When you reorder has something to do with your lead times and also with the quality of your inventory management, means you actually do not care, if there is a little bit more or little bit less in stock, as long as you never run out of stock.

The Gilt business model requires a totally different approach. Because in most cases we are selling excess stock, 80% of all products we have ever sold we have sold only once, means we never really can reorder and that means we are in the business of selling down to the very last unit. Always!!! And we need to do that while we maintain highest possible availability and scalability. To deliver on these business requirements we had to question conventional wisdom and build a very innovative inventory management runtime platform, based on highly available and highly scalable NoSQL databases that actually relax some of the transactional ACID properties, but still allows us to sell down to the very last unit. And we succeeded. That’s an example for innovation out of necessity to adapt to a niche.

The second example for an innovation at Gilt is the 360 degree "look-around" Jetsetter iPad app. The application allows you to take a 360 degree view of a room and explore literally every ankle of it. This is an example for a strong mutation.

Gilt is still a very young company, means we are still learning how to institutionalize innovation in the company, but so far I believe that the 3 pillars of innovation in Gilt are people, process and culture. You need people that are creative and intelligent. You need a process that is open and transparent. And you need a culture that equally celebrates success and failure.

In that context we are experimenting with "Unstructured Time" where we bring people together without an agenda. We also believe that a lot of good ideas will not come from us, but from outside the company and in that context we are currently building a public API that we will expose to partners and other interested parties, so that they can innovate independently from us. Earlier this year we did a hackathon and had the entire SW development organization on the hunt for the next better idea and also prove it (within 24 hours). Our color search feature (which allows you to take a picture of a color and search for similar products) and the public API were actually incubated in the hackthon. We are also doing a lot of A/B testing to measure the "goodness" of our ideas. This allows us to rationalize the conversation about the value of certain ideas.

But there is always more to do. Right now, we are thinking about a "follow-the-sun" hackathon were global teams will implement something over a period of three days, because we are suspicious that some good ideas, will get conceived, when people from different cultural backgrounds work together, means it is not only about creativity and intelligence, but also about heterogeneity.

Let me wrap up, by exploring that thought more. It is my believe that culturally diverse, culturally heterogeneous environments are more likely to be innovative than homogeneous environments. If you also believe in the value of heterogeneity than there is good news, because the Irish software engineering population is among the most heterogeneous and diverse in Europe, maybe even in the world, means Ireland allows you to build teams that will look at problems and possible solutions in different/unique ways. They all went to different schools and had different experiences before they came to Ireland. This creates an environment for innovation to happen.

Ireland is the only English speaking country in the Eurozone. This makes it easy for talent to relocate to Ireland and to work here. Building an innovation hub will probably to a certain extend rely on our ability to take advantage of the talent in the rest of Europe and to use the heterogeneity and diversity that comes with it as a driver to build creative, innovative teams here in Ireland.

Gilt is very excited to be in Ireland. We are looking to use our presence here to build a stronger, more scalable, even more innovative Gilt Technologie Organisation.