Policy Innovation Blog

HMV, Wimpy Bars and innovation

Stian Westlake - 18.01.2013

It's been National Schumpeter Week on the British High Street. Gales of creative destruction have swept away three well-known chains of stores whose business models had been made obsolete by the last decade of technological progress*.

I'm not going to replay the argument about whether this is a good thing or not. The nation's journalists have ruminated on it endlessly all week. (My sympathies are with the likes of Allister Heath and the FT, who say that although it's terrible for staff who find themselves out of a job, this kind of change is great for consumers and without it, societies don't get richer.)

But it did get me thinking about other odd throwbacks of the British High Street, and what they tell us about innovation.

Consider Wimpy Bars. I'm always amazed when I see a Wimpy still open. If HMV and Blockbusters are the dodos and mastodons of our town centres, these businesses are its dinosaurs - adapted for some distant era and hilariously out of place in the modern world.

But for all its outdated image, Wimpy has a proud history of innovation.

Wimpy is the descendant of the once massive Lyons Corner House chain, which used to operate tea shops and restaurants across the UK. A sort of combination Pizza Express-cum-Starbucks for the Keep Calm and Carry On generation**.  Now J Lyons & Co, which owned the chain, did two very clever things in the heady days of postwar Britain.

1. Computing

Firstly, the pioneered business computing. Running a national tea-shop empire in the 1940s meant paying an army of workers each week, and calculating their pay required an army of clerks. Lyons thought there must be a better way. Two senior managers, who had been on a fact-finding trip to the US where they visited the military computer ENIAC, decided that maybe a computer could do the job. Being 1947, they couldn't just pop into PC World, so they hired two Cambridge academics to build them one from scratch.

LEO1 (short for Lyons Electronic Office) went into service in 1951, and was the world's first computer used for business purposes. They used it for ordering, payroll, scheduling and management reporting, and as the 50s went on, took on external customers, including Ford UK and the Met Office.

In 1964 Lyons' computer division was taken over by English Electric, which became ICL, which was bought by Fujitsu - but in the short term it's an inspiring story of the role that big businesses can play in developing and implementing new innovation.

2. Burgers

If Lyons' ability to deploy computers shows the upside of big company innovation, the story of Wimpy bars shows the downside.

It begins the same way. Lyons managers looked across the Atlantic and saw an interesting innovation - in this case the burger bar and, specifically a small chain of burger restaurants named after Popeye's impecunious burger-munching pal. They licensed the name and began rolling out the Wimpy brand across their vast restaurant estate.

The Wimpy business ought to have swept all before it. Lyons had a huge installed base of restaurants. They had the supply chains. They knew the restaurant business inside out and the British customer base too. And indeed, by the end of the 1960s, they were running 1000 restaurants.

But there was always something of the Lyons Corner House in Wimpy restaurants. The chain took a long time to abandon some the trappings of J Lyons older restaurants, such as table service, and even after Wimpy was sold by Lyons in the 1977, the image of the place as "burgers you eat with a knife and fork" lived on.

As McDonald's expanded in Britain in the 70s and 80s, the brand seemed to be more and more of a liability, and McDonalds, Burger King, and other more pure burger brands came to dominate the market.

There are still plenty of Wimpy's in the UK, but the story of Wimpy and McDonald's is emblematic of the difficulty that incumbent businesses have when it comes to innovation. As Clayton Christensen observed, even with great execution (and Lyons were nothing if not great doers), the dead hand of history weighs heavily on big existing businesses, and makes it hard to shake off what worked in the past.

 

* Jessops sold cameras that did not come with phones, a concept that my small children think is utterly remarkable. The other two sold music and videos to people who preferred not to download or order it online. Perhaps they like the exercise?

I'm not convinced by the argument that HMV was great because it makes it easier to serendipitously discover new music than on the Internet. The huge potential of the Internet for serendipitous discovery of cool stuff is the main reason I'm not a lot more productive.

The tax protestors UK Uncut tweeted an amusing photo suggesting that Jessop's woes were the result of competition from Amazon, who pay little UK Corporation Tax. The fact the photo seems to have been taken with a mobile phone before being uploaded to Twitter perhaps says more about Jessops' problems.

** Lyons waitresses were known as "Nippies". When reading "Eloise" to my children I was always puzzled by the line "In Piccadilly the nippy's up - Oh what a laverly morning". A nippy is a café waitress.