Hello and welcome to Protocol Enterprise! Today: How Kohl overhauled its technology strategy to deal with shifts in shopping habits caused by the pandemic, a former Microsoft employee has accused the company of ignoring corruption schemes, and it’s marketing magic until ‘at the end.
Tech companies still can’t get enough data centers. Demand for data center space in “primary markets” increased by 50% in 2021 compared to the previous year, according to CBREcarried by cloud providers but also by social media companies that want to exploit their own technology.
The new way to shop
The past few years have been difficult for Kohl’s. Under pressure from e-commerce competitors like Amazon, department stores have struggled to move their businesses online and cater to customers with changing preferences, and Kohl’s has been slower to adapt than other retailers.
But Kohl’s chief technology and supply chain officer, Paul Gaffney, thinks technology could play a big role in the company’s plan to boost its e-commerce business, streamline its free collection -service and integrate with other brands. In a recent interview with Protocol, Gaffney spoke about the company’s efforts to improve customer experience and the impact of COVID-19 on the way it thinks about technology investments.
At the company’s recent Investor Day, Kohl’s talked about increasing personalization, fostering self-service in stores, and growing e-commerce business. How does the IT organization drive some of these initiatives?
#1, which we didn’t talk about at Investor Day but have talked about in the past, is revamping the technology organization to focus on end-customer populations. We have teams that focus on our end customer activities, such as research, product exploration, and recommendations.
The second step is a great customer experience. Nobody really does the press release, “So we made our app faster”, but actually, it’s something that’s really important – sometimes it’s more important than new features.
Third, a great store experience, and that’s a combination of better tools for our associates to help fulfill orders and help customers find things, and then a better experience for the customer themselves. It turns out that no customer wants to have to interact with people to pick up an order, and yet most people have either built their order pickup experience to depend on store associates or have spent huge amounts of money on those super complicated and expensive lockers.
How does your organization help with some of these larger pivots that aren’t necessarily purely tech-focused, but do have a tech element to them?
Some technologies are not easy to see, but they are extremely important. Below, we’re trying to do all of these merchandising pivots while improving our inventory productivity. Usually that’s a very difficult thing to do, and technology plays a hugely important role in making sure that as we move into new categories and exit old categories, we do so with more inventory investments further reduced.
Ten [or] 20 years ago, when there were more clothes vendors, you would come and buy an item of clothing, but you would leave with a whole outfit because the vendor made you feel really good with a whole collection of pieces. I think technology is going to have to unlock that. It doesn’t really seem to be gaining traction, even though people keep trying it, but I’m hopeful and optimistic that we’ll find another way to be a radically more efficient technology-driven business organization.
Some of these changes have obviously been accelerated by COVID-19, such as the importance of self-service pickup and returns. Will these shorter trends fade as COVID-19 fades, or are these changes long-lasting?
I don’t know if there is a definitive answer on this, as there are several patterns of consumer behavior. A pattern is, “I don’t even think about going into the store for any reason, whether it’s because I don’t have time or I don’t feel comfortable.” Before the pandemic, it was pretty much non-existent except in fast food drive-thru, but now it’s become commonplace, and I think there’s a segment of customers that will stick around.
What headwinds have you encountered working on these projects and what partners have you engaged to try to help you solve them?
There are a lot of people in big companies who want to build things for their own personal view of the problem. This is the “classic design for the head office team, then see if the customer likes it”. The pandemic was a great example of this: we had a long roadmap of features that we were pretty sure we needed for curbside pickup, but when the pandemic hit, it gave me a great opportunity to set aside our list because the customer needed it right away.
There is a similar headwind on the data. Our intuition is often tested by data. You might believe something, but I have to show you that there is not only something different, there is also X, Y and Z. Getting people to understand the fact that machines can find things that don’t match your intuition is also a headwind because it’s just hard for people. Humans don’t like it when the world doesn’t match their intuition.
In terms of partners, one of the first things I did 2.5 years ago was to make sure the technology team at Kohl was on track to be able to drive on our own big changes. It’s a playbook that I ran at Home Depot, at Dick’s, and now here at Kohl’s. You should not rely on third parties to be able to create software.
—Jonathan Douglas (E-mail | Twitter)
A MESSAGE FROM UPWORK
Seeking to triple its employee base, Whisk, an all-remote team, sought diverse talent from a wide variety of regions through Upwork, a job marketplace that connects companies with freelance professionals and agencies around the world.
embrace, extend, divert
A former Microsoft employee has accused the company of knowing about and condoning bribery and corruption schemes in the Middle East and Africa before firing him for asking too many questions about the practices.
Yasser Elabd spoke with Protocol about his attempts to get federal authorities to investigate Microsoft’s conduct before publish a detailed account of his experiences work for the company on Friday. According to Elabd’s account, the schemes involved partners paying full price for products that were supposed to be discounted and insiders pocketing the difference.
Federal law prohibits US companies from engaging in such practices, which are common ways of doing business in some parts of the world. In 2019, Microsoft paid the SEC $16 million to settle bribery and bribery charges in four countries.
“We believe we have already investigated and responded to these allegations, which date back several years. We have been cooperating with government agencies to resolve any issues,” Microsoft told Protocol.
—Tom Krazit (E-mail | Twitter)
Here come the entrepreneurs
A lot of money is being invested in enterprise content marketing, and HubSpot thinks it’s time to drag the whitepaper and webinar to 2022. According to Techcrunchthe company plans to hire creators to produce podcasts around “themes [that] In some way aligns with HubSpot’s mission as a sales and marketing platform, delivering content that HubSpot hopes will spark interest in its products and services.
In other words, we’re talking about aspiring marketers marketing marketing software to marketing professionals. TGIF.
—Tom Krazit (E-mail | Twitter)
Around the company
Don Johnson of Oracle is no longer at the helm enterprise cloud and AI initiatives, according to Business Insiderstepping down to advise Larry Ellison on “health care initiatives”.
Last year was a great year for chip companies, if not for chip buyers. TrendForce said sales were up 48% among the world’s top 10 chipmakers last year at $127.4 billion, a group that doesn’t include chipmakers like Intel and TSMC.
A MESSAGE FROM UPWORK
Whisk is not alone in opening up the global marketplace to find the right kinds of employees to support its business goals. According to a study by Upwork, more than three-quarters of U.S. companies have hired remote freelancers, and more than a quarter of companies plan to go fully remote in the next five years.
Thanks for reading – see you Monday!