Hello and welcome to Protocol Enterprise! Today: How Kohl’s overhauled its tech strategy to deal with shifts in shopping habits caused by the pandemic, a former Microsoft employee accused the company of overlooking bribery schemes, and it’s marketing magic all the way down.
Spin up
Tech companies still can’t get enough data centers. Demand for data center space in “primary markets” rose 50% in 2021 compared to the previous year, according to CBRE, driven by cloud providers but also by social media companies that want to operate their own tech.
The new way to shop
It’s been a tough few years for Kohl’s. Amid pressure from ecommerce competitors like Amazon, department stores have struggled to shift business 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 an important role in the company’s plan to boost its ecommerce business, streamline its self-service pickup and integrate with other brands. In a recent interview with Protocol, Gaffney spoke about the company’s push to improve customer experiences and how COVID-19 has impacted its ways of thinking about technology investments.
At the company’s recent investor day, Kohl’s spoke about increasing personalization, driving self-service in stores and growing the ecommerce business. How is the IT organization driving some of those initiatives?
No. 1, which we didn't talk about at investor day but we've talked about in the past, is reorganizing the technology organization to be focused on end-customer populations. We have teams that are focused on things that our end customers do, like search, product exploration and recommendations.
Step two is a great customer experience. No one really does the press release, “So we made our app faster,” but in fact, that's something that's really important — sometimes that's more important than new features.
Third is a great experience in the stores, 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 built their order pickup experience to depend on store associates or spent an awful lot of money on these super complicated and expensive lockers.
How is your organization helping with some of those broader pivots that aren't necessarily purely technology-focused, but have some tech element?
Some of the tech is not easy to see, but it's incredibly important. Underneath, we are trying to make all of these merchandising pivots while improving our inventory productivity. Usually, that's a very difficult thing to do, and technology has an incredibly important role in making sure that as we are entering new categories and exiting old categories, we’re doing it with increasingly leaner inventory investment.
Ten [or] 20 years ago when there were more apparel salespeople, you came in to buy one garment, but you left with a whole outfit because the salesperson made you feel really good about a whole collection of pieces. I think technology is going to have to unlock that. It doesn't actually seem to be gaining traction, even though people keep trying it, but I am hopeful and optimistic that we're going to find another way to be a radically more effective technology-driven sales organization.
Some of these changes were obviously accelerated by COVID-19, like the importance of self-service pickup and returns. Are these shorter trends that will fade as COVID-19 fades, or are these changes lasting?
I don't know that there's a definitive answer on that, because there are a couple of different consumer behavior patterns. One pattern is: “I am not even thinking about going into the store for whatever reason, whether because I don’t have time or I don’t feel comfortable.” Pre-pandemic, that was virtually nonexistent other than at fast-food drive-thrus, but now that’s become commonplace, and I think there’s a segment of customers who will stay in that mode.
What headwinds have you run into while working on these projects, and what partners have you engaged to try to help you solve them?
There are a lot of folks in big companies who want to build things for their own personal view of the problem. This is the classic “design for the team at headquarters, and then see if the customer likes it.” The pandemic was a great example of that: We had a long roadmap of features that we were pretty sure we needed for curbside pickup, but when the pandemic came in, it gave me a great opportunity to set aside our list, because the customer needed it right now.
There's a similar headwind on data. Our intuition is often challenged by the data. You might believe something, but I have to show you that there's actually not only something different, there's also X, Y and Z. Getting people to come to grips with the fact that machines can find things that don't match your intuition is also a headwind because that's just challenging for people. Humans don't like when the world doesn't match their intuition.
In terms of partners, one of the first things that I did 2.5 years ago was make sure that the Kohl's technology team was on a path to being capable on our own to drive big changes. This is a playbook that I ran at Home Depot, at Dick’s and now here at Kohl's. You shouldn't rely on third parties to be able to build software.
— Jonathan Douglas (email | twitter)A MESSAGE FROM UPWORK
Seeking to triple its employee base, Whisk, a fully remote team, sought diverse talent from a wide variety of regions through Upwork, a work marketplace that connects businesses with independent professionals and agencies around the globe.
Embrace, extend, embezzle
A former Microsoft employee accused the company of knowing about, and tolerating, kickback and bribery 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 publishing a detailed account of his experiences working for the company on Friday. The schemes involved partners paying full price for products that were supposed to be discounted and insiders pocketing the difference, according to Elabd’s account.
U.S. companies are forbidden under federal law from engaging in such practices, which are common ways of doing business in certain parts of the world. In 2019 Microsoft paid the SEC $16 million to settle charges it had engaged in bribes and kickbacks in four countries.
“We believe we’ve previously investigated these allegations, which are many years old, and addressed them. We cooperated with government agencies to resolve any concerns," Microsoft told Protocol.
— Tom Krazit (email | twitter)
Here come the enterprise creators
An awful lot of money goes into enterprise content marketing, and HubSpot thinks it's time to drag the whitepaper and webinar into 2022. According to Techcrunch, the company plans to hire creators to produce podcasts around “themes [that] relate in some way to HubSpot’s mission as a sales and marketing platform, offering content that HubSpot hopes will drive interest in its products and services.”
In other words, we’re talking about aspiring marketers marketing marketing software to marketing professionals. TGIF.
— Tom Krazit (email | twitter)
Around the enterprise
Oracle’s Don Johnson is no longer the head of the company’s cloud and AI initiatives, according to Business Insider, stepping aside to advise Larry Ellison on “healthcare initiatives.”
Last year was a great year for chip companies, if not chip buyers. TrendForce said sales rose 48% at the world’s top 10 chip designers last year to $127.4 billion, a group that doesn’t include companies like Intel and TSMC that manufacture chips.
A MESSAGE FROM UPWORK
Whisk isn’t alone in unlocking the global marketplace to find the right types of employees to support its business goals. More than three-quarters of U.S. companies have used remote freelancers, according to research from Upwork, and more than a quarter of businesses plan to go fully remote in the next five years.
Thanks for reading — see you Monday!