If you’re a 160-year-old company, technology isn’t just a nice-to-have — it’s essential for your survival. At a Fortune Brainstorm Tech breakout session Tuesday, business leaders gathered to discuss how to transform their business in a landscape of relentless competition.
Jill Ramsey, the chief digital officer of Macy’s, said her company is grappling with the ever-changing ways that customers consume fashion.
“They are using subscription services, they’re buying used clothing, they’re renting apparel,” Ramsey said. “If we’re not deeply experimenting with how people are consuming fashion, we won’t be around to create the next 160 years of our story.”
Experimentation, however, needs to be encouraged from the top, the panelists said. The technological implementation itself is easy —it’s changing the culture that’s hard. Minsok Pak, Target’s chief strategy and innovation officer, said the challenge comes when management teams have to change employee mindsets, entrenched company processes, and daily routines.
But he had a word of caution for constant technological experimentation: “If we’re not careful, we can end up chasing every shiny technology that comes our way, “ he said. “You have to be thoughtful about the innovations that you want to test.”
Although CEOs like to use the cliché: “Every company is a technology company,” there is seismic disruption of traditional incumbents. There’s automation of old processes, the emergence of new business models, and the introduction of frontier tech that could uproot existing industries as we know them. To stay ahead of the game, mature companies need to keep their finger on the pulse of what's going on in Silicon Valley.
“Investing in these emerging tech companies used to be a daring thing to do,” said Vincent Letteri, managing director at KKR. “Today it’s an absolute need-to-do.”
And some of that investment is coming from the incumbents themselves. Target, for example, has doubled down on its investment in mattress startup Casper. In 2017, it acquired Shipt, a grocery delivery startup, for $550 million in cash. Last year, the retailer launched an incubator focused solely on supporting companies founded by people in the 18-to-24-year-old cohort.
“There are times we develop things internally, and there are times that we acquire a company that can help us accelerate,” Pak said. “We acquired Shipt for that reason. It would’ve taken us a lot longer to do that internally.”
Ramsey echoed his comments, adding that an acquisition can be a catalyst, but in the long run, it’s the internal culture shift that matters most: “An acquisition can give you a nice boost, but you’ve really got to focus on changing your culture for it to work.”
More must-read stories from Fortune Brainstorm Tech 2019:
—The real reason Walmart needs its stores in order to compete with Amazon
—Ancestry CEO talks genetic data privacy and the business of DNA testing
—Analyst: Expect more tech regulation despite declining user privacy concerns
—Catch up with Data Sheet, Fortune's daily digest on the business of tech.