S1E10 – The Retail Avengers & Building a Culture of Innovation

 

Welcome to Season 1, Episode 10 of The Retail Razor Show!

 

In this episode, we turn the dial up to eleven on our ongoing innovation discussion! We previously focused on digital transformation & innovation both from a “what” and “who” perspective, but how do you create an environment and culture that fosters innovation without breaking the business?

 

To answer that, we bring you a special guest, Andrew Laudato, Chief Operating Officer of The Vitamin Shoppe, fellow Advisory Council member of George Mason University’s Center for Retail Transformation, fellow RETHINK Retail Top Retail Influencer, and author of the new book, Fostering Innovation – How to Build an Amazing IT Team. Andy joins our Retail Avengers team to share his winning framework for building a strong foundation for innovation in IT teams, including his tried and tested approach to hiring, budgeting, and project management for innovation, plus more!

 

Have you heard! Our podcast is staying strong on the Feedspot Top 60 Retail podcasts list! We’re currently at #22, so please give us a 5-star review in Apple Podcasts if you like the show! With your help, we’ll be on our way to a Top 20 spot! https://blog.feedspot.com/retail_podcasts/

 

Meet your hosts:

I’m Ricardo Belmar, a RETHINK Retail Top Retail Influencer for 2022 & 2021, RIS News Top Movers and Shakers in Retail for 2021, a Top 12 ecommerce influencer, advisory council member at George Mason University’s Center for Retail Transformation, and lead partner marketing advisor for retail & consumer goods at Microsoft.

 

And I’m Casey Golden, CEO of Luxlock. Obsessed with the customer relationship between the brand and the consumer. I've spent my career on the fashion and supply chain technology side of the business. Now I slay franken-stacks!

 

Together, we’re your guides on the retail transformation journey. Whether you're thinking digital and online, mobile, or brick & mortar stores, we’ll help you cut through the clutter!

 

The Retail Razor Show

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Host → Ricardo Belmar,

Follow on Twitter - https://bit.ly/twRBelmar

Connect on LinkedIn - https://bit.ly/LIRBelmar

Read my comments on RetailWire - https://bit.ly/RWRBelmar

 

Co-host → Casey Golden,

Follow on Twitter - https://bit.ly/twCasey

Connect on LinkedIn - https://bit.ly/LICasey

Read my comments on RetailWire - https://bit.ly/RWCasey

 

TRANSCRIPT

S1E10 Building a Culture of Innovation

[00:00:20] Intro

[00:00:20] Ricardo Belmar: Hello. Good morning. Good afternoon. And good evening, whatever time of day you're listening. Welcome to the retail razor show. I'm your host, Ricardo Belmar a RETHINK Retail, top retail influencer and lead partner marketing advisor for retail and consumer goods at Microsoft.

[00:00:33] Casey Golden: I'm your cohost Casey Golden CEO of Luxlock. Obsessed with the relationship between a brand and consumer, the experiences, everything. I've spent my career on the fashion and supply chain technology side of the business. Now I'm slaying Franken stacks to power the future of commerce.

[00:00:48] Ricardo Belmar: So Casey, this episode is a real treat for listeners keeping with our recent themes on innovation and leadership. Our retail Avengers crew on clubhouse brought in none other than Andy Lodato currently the chief operating officer at The Vitamin Shoppe, a CNBC technology executive council member, a fellow advisory council member at George Mason University's Center for Retail Transformation, also a fellow RETHINK Retail top retail influencer, and most recently author of the book Fostering Innovation, How to Build an Amazing IT Team. Andy joined us for a deep dive on building the right environment for innovation.

[00:01:24] Casey Golden: It's a great clubhouse discussion. Andy brings a fresh perspective and has valuable experiences to share about creating that ideal environment to foster innovation.

[00:01:34] After our two part series on digital transformation and innovation, this one really dials it up. With best practices from a real world retail expert, making changes.

[00:01:45] Ricardo Belmar: Yeah. Andy has lived through a lot when it comes to innovation, he's got so many examples and he's, he's worked hard to figure out what the right way is to create that ideal environment for innovation. And he shares with us what worked and what didn't throughout the discussion.

[00:02:00] Casey Golden: Spoiler alert. You'd be surprised how concrete is a retail requirement. Stick around for his stories.

[00:02:07] Ricardo Belmar: It's definitely one of Andy's best stories that he shares in this session. But let's not give away all the best parts, Casey.

[00:02:13] Casey Golden: All right. All right. I'll let the dialogue unfold.

[00:02:17] Ricardo Belmar: Yes. Quite clever. Nice and smoothly done. I bet you've been waiting to say that haven't you.

[00:02:20] Casey Golden: I can neither confirm nor deny that. Totally never got to use that phrase before. I'm digging these one liners.

[00:02:32] Ricardo Belmar: you're getting a lot of those in.

[00:02:33] Casey Golden: So let's cut through the clutter and get to the clubhouse session. The retail avengers build a culture of innovation with special guest Andy Laudato. He'll be with us when we come back to ask him even more questions, so stick around!.

[00:02:47] Clubhouse Session

[00:02:47] Ricardo Belmar: Welcome everybody to the retail razor room. We've got a special treat this week. We're going to be talking about building a culture of innovation. We have a special guest that we'll introduce in just a moment, but in case anybody in our audience here is not one of our regular visitors.

[00:03:07] We'll do some quick introductions of the Retail Avengers team that's always here in the room. Casey, why don't you kick us off?

[00:03:14] Casey Golden: Hi, I'm Casey golden. I'm the founder of Luxlock retail tech platform. Focusing on customer experience. Been on the industry side of the fashion and enterprise tech. So kind of moved myself into the convergence of both.

[00:03:28] Ricardo Belmar: All right, great. And Trevor,

[00:03:30] Trevor Sumner: My name is Trevor Sumner. I'm the CEO at perch. We do interactive retail displays that use computer vision to detect which products people touch. So they wake up and immediately tell you about the right product at the right time. And so a exciting frontier of computer vision, IOT, and interactive retail display.

[00:03:48] Ricardo Belmar: Thanks Trevor, Jeff.

[00:03:49] Jeff Roster: Hi, Jeff Roster, a former Gartner

[00:03:51] and IHL retail sector analysts. Now co-host of this week in innovation and on a couple of advisory boards

[00:03:57] Ricardo Belmar: Great. Thank you. And Shish.

[00:03:59] Shish Shridhar: Good afternoon, I'm Shish and the global lead for retail, with Microsoft. I've been in retail for about 20 years focused on AI and currently from an innovation perspective, driving co innovation with startups, for retailers looking forward to the conversation with Andy today.

[00:04:16] Ricardo Belmar: Thanks Shish. And I'm Ricardo Belmar for those that don't know me, I'm the lead partner marketing advisor at Microsoft, and I've also been in the retail tech side of the industry for the last two decades trying to help retailers really get the best value from technology investments and super excited to have with us, our special guest today, Andy Laudato COO at The Vitamin Shoppe. And Andy, I'm gonna let you kick off about yourself and how you got to where you are today and what led you to write your book that was just published, Fostering I nnovation which is the topic of our room today.

[00:04:48] Andy Laudato: Great. Well, thank you, Ricardo. And hello everybody. Great to be here. I've been a longtime listener and a contributor to the retail avengers. I am the chief operating officer at the vitamin shop. The vitamin shop is a, just over a billion dollar health and wellness retailer. We're mostly in the U S we have over 700 stores in the us.

[00:05:06] And then of course we sell on vitamin shop.com. So in my role, as COO, I oversee the P and L for our e-commerce. I run the supply chain, technology, what we call enterprise portfolio management, which is something I think we'll hopefully talk more about today. As well as the quality and commercialization of our private brand or another way to describe it as I do everything at the vitamin shop that the CEO does not want to do.

[00:05:27] Ricardo Belmar: love that description,

[00:05:30] Andy Laudato: I'm assuming people are laughing at my jokes, but you know, I can't hear him, but I'll just assume that they're all laughing. Okay,

[00:05:35] perfect.

[00:05:40] So. I started my career way back in 1990 as a computer programmer at the limited fashion apparel, I was the first ever IT guy at a little startup called Bath and Body Works, and I really just fell in love with the business sides. I consider myself a business person who happens to love technology, not a technologist that works in business.

[00:06:01] And I'm 20 years as a CIO. And during that experience, I made a lot of mistakes, especially early on, and some of them costly. And it really inspired me to write a book about some of the mistakes I made, what lessons I learned and the goal was to help young people or people in their early in their career.

[00:06:18] Learning the easy way, right? Buy a book, read about it and do things better. I believe a rising tide raises all ships and especially in retail, we need to help each other out. So I'm hoping that this book will inspire and help everybody that reads it.

[00:06:30] Ricardo Belmar: Thank you, Andy. I'm sure everyone who does read your book in retail is going to greatly appreciate all the wonderful insights and stories that you've told in there, as well as all the great tips. Now, I know I certainly came away from reading the book with a number of them as well, and I'm not even a CIO.

[00:06:46] So I think everybody's going to have something to learn from that.

[00:06:49] Andy Laudato: My books for every man, woman, and child in the United States.

[00:06:52] Ricardo Belmar: There you go, there you go. That's the right way, right way to look at it. Now, not to mention the fact, I think we all agree that there's a good need for lots and lots of collaboration in the retail industry given all the current day and future challenges facing the industry,

[00:07:05] Laudato's Hierarchy of IT Needs

[00:07:05] Ricardo Belmar: So let's start in one particular area Andy, that you dive into right upfront in the book, and that's what you call Laudato's hierarchy of IT needs which as you might guess is based on Maslow's hierarchy of needs.

[00:07:18] And while Maslow postulated of course that in order to achieve things like love, belonging esteem, and self actualization, you've got to first satisfy a lot of physiological needs, things like I don't know, little things like eating, drinking, sleeping and then safety needs. So I think you drew a really great analogy, to that, to put together your hierarchy of IT needs and not to steal too much thunder from that.

[00:07:40] Why don't you walk us through , your version of the pyramid and how that relates to running your night?

[00:07:46] Andy Laudato: Yeah, absolutely. So, you know, I think a Maslow is saying, if you're being chased by a bear, you can't fall in love. Right? You got priorities. And so making sure you have air and food and water, and then you're safe, all these things have to happen.

[00:07:58] And we all want to innovate. We all talk about innovation and innovation is very important, but if the basic it needs are not met, it's just not going to happen. So at the very bottom of the Lodato hierarchy for IT is just, KTLO keep the lights on. And the emails have to email and the paychecks have to print in the registers, have to ring and the website has to perform and like it or not, if you're in it, leadership, this is your most important job.

[00:08:24] It can do a lot more harm than good. An amazing IT department's not going to make a company successful, but a failed IT department will, I don't care how nice your product is. If you can't sell it, you can't ship it. If you can't return it, then you're going to fail. This is the main job is keeping the lights on.

[00:08:41] It's not the exciting job, right? It's not the fun, sexy stuff we get to do like digital signs and things like that. The Trevor does, but it's at the foundation. So that's what you start with and you gotta figure it out and you have to have a well-oiled machine for nothing else matters. Every single CIO always talks about, they want a seat at the table.

[00:09:02] And a lot of times they'll tell you to demand a seat at the time. But it doesn't work. You have to earn your seat at the table and I'm talking about the exact table, the boardroom, and the reason you have to earn it is because in every company I've ever worked in the true org chart is the informal, not the formal.

[00:09:17] So let's assume that we get this figured out and you have the things running smoothly. The next level up then is what I call lean and efficient IT. So this is about first you get it right? And then you get it cheap. And lean and efficient. It means it's affordable. It's functioning well, because if you're a CIO and you start to go talk to other departments about programs and projects and systems, and your budgets are out of control, you just have no credibility.

[00:09:47] Now look, if you can't keep the lights on, you know, so you have a big problem, you're going to pay any amount of money possible. So you've got to get it right. Then you work on optimizing. And every dollar that you can save or avoid spending is a dollar that could be added to innovation. So if you really want to innovate, it's possible to self fund by finding other things, to make efficient.

[00:10:09] Ricardo Belmar: I want to turn to the Avengers panel members here and see what everybody thinks about those first two layers, keeping the lights on and creating that lean and efficient IT.

[00:10:18] Jeff Roster: Gosh. Well, the first question I want to ask is what's your, what's your overall it spend Andy, but, but I know you're not going to answer that. So keeping the lights on it used to be almost 60 to 70% of her, of an it budget was, was basically depending on how you define that, that case. I'm assuming that everyone's trying to drive that down.

[00:10:35] Is that part of the process that you're, you're going to.

[00:10:39] Andy Laudato: Yeah. So the first, the bottom of my pyramid is just keeping lights on any way you can. And then the lean and efficient it is about just that it's about optimizing your cost so that you can have a higher percentage that's going towards creating value and innovating.

[00:10:52] Casey Golden: Where do you think that we are right now in general for let's just say the predominant of retail. Do we feel like everybody has a core efficient we're beyond keeping the lights on and everybody's made those investments. Would you say it's like 60%, 80%? How close are we at? Like the core basic,

[00:11:12] Andy Laudato: you know, it's astonishing to me that it's 20 22 and in order to build a retail stack for omni-channel, you probably need to include at least 20 to 30 different companies. I mean, Everyone's got a different, and I know that a Microsoft's on their path to being able to , provide these as are others trying. But the leading e-commerce platforms are not the leading OMS platforms.

[00:11:34] I mean, I ask about subscriptions and then everyone tells you to use another platform. And then if you know, you look at the stack, people have on their websites, it's just layer after layer of these really niche. Functions and features. And so when you think about it, when I had a little short stint in healthcare and there were big enterprise tools and kind of ran the whole company.

[00:11:55] So I think we're there. Casey. I think that, most retailers have built these things, but it takes an awful lot of work, effort and coordination to keep them all working together. I mean, imagine if you wanted a new car and you had to buy your chassis from Ford and your steering wheel from Chevy and your engine from Honda,

[00:12:12] Casey Golden: that's a great analogy.

[00:12:14] Andy Laudato: And this is how we live

[00:12:16] in some of the parts don't exist. You've got to build those custom, right? And so this is what we're doing in retail. So where are we? We've come a long way, but it's still a giant mess.

[00:12:24] Casey Golden: I love that analogy. I want to see a diagram.

[00:12:29] Andy Laudato: I can go very fast.

[00:12:33] Trevor Sumner: I mean, that's certainly dovetails into my question, which is. You know, certainly the, the markets, the retail is changing faster than it ever has. And I think of IT almost like electricity, right? You don't think about electricity in your offices or in what you do on a day to day basis, but it powers everything that you do.

[00:12:50] Where the IT budget goes

[00:12:50] Trevor Sumner: Similarly, IT powers everything that you do. How do you think through like the different departments, whether it's marketing sales, supply chain in it. And how to think through budgets, innovation and managing that. Is it all, is all IT in the IT budget or like where is the line where it flirts into a department, even though it's powered by technology because these days technology is like electricity.

[00:13:20] Andy Laudato: Yeah. So I do agree, right? You walk in a room and flip the switch you want, you expect the light to come on. And a lot has to happen, there has to be a power plant and distribution and a lot had to happen, but it's there and it's figured out generally, except for in Texas, that stuff works. And so you pick up a telephone, at least an old fashioned telephone, and you expect the dial tone and it's the same thing with the internet, right?

[00:13:41] It's a commodity. And even past the internet, it's about the cloud having, you know, CPU, so processing and storage. So I absolutely do agree that it is a necessary, I mean, I was looking for a new place to live and I checked on what kind of internet is available and , we all remember used to have to research before we went to a hotel and how much was it going to charge? So I definitely agree with that.

[00:14:05] As far as where the budget should go. And I actually talk about this in the book. I'm a big fan of showback, not chargeback. So I do believe that the cost of technology should be an IT budget because if not, how can those costs be managed and how can you get to lean and efficient, which is the second step. Now showback is about actually letting everyone know how much of IT costs are being attributed to each of the different departments.

[00:14:30] But if you let the departments of a company pay for IT, then they're going to have a bigger say. So the head of marketing might be all in on the Amazon cloud. And the head of sales is all in on the Azure cloud and someone else wants to have their own computer. So, you know, the people writing the checks have a lot of power, so I'm not a proponent of individual departments paying for IT.

[00:14:51] Trevor Sumner: I guess, part of my question is. There's certainly, like you said, laptops, internet connectivity, but from a data perspective, let's say you have a customer data platform. Is that marketing budget is that IT budget? Is that being integrated into other systems for e-commerce or even supply chain?

[00:15:10] So then marketing heads into operations and everything needs to be talking to each other. And then there might be integration. Is it when you cross departments that it becomes IT. What is it versus a departmental technology spend in your world?

[00:15:27] Andy Laudato: Yeah, there just aren't that many siloed solutions. I mean, a customer data platform has this role in stores. It has role in the website ,it has a role in outbound marketing , it has a role in customer care. And so to have that and be in a single budget, to me, IT is the kind of the neutral party for that. So, yeah, I guess I'll repeat myself, but I'm a big proponent of anything that's technology , should be an IT budget because it's the glue that holds it together. I mean, there's a really good book called the corporate underpants by Tamra Adler. I think her name is, and it talks about how you could look at a company's website and kind of see the different departments. And I think when you start to silo your tech, then you're going to, it's going to show up to the customer.

[00:16:02] You're not going to be seamless to the customer if you're not seamless on the backend.

[00:16:06] Ricardo Belmar: So Andy, one thing that I'm going to ask you about there, on that specific point where, you just mentioned how that has an impact in giving the appearance and perception to the customer that it's all seamless. You make a point in the book about complacency and how that's the number one enemy of reliability.

[00:16:22] And when I saw that, that reminds me of a lot of conversations I've had with retailers in the past about consistency in execution at the store level, from store to store and how that also impacts that consumer perception of the whole retail brand. So when you mentioned it, in the context of, keeping the lights on,

[00:16:40] it's never really a solved thing, or you don't stop keeping the lights on ever. Right. It's always an ongoing thing. And that's why it's the foundation in your pyramid. Is that the right way to look at it?

[00:16:51] Andy Laudato: Yeah, absolutely. Ricardo we operate in a dynamic world. So whether it's bandwidth, you need more and more bandwidth, processing power, security measures.

[00:16:59] There's always new tools being added to the stack or existing tools being used differently. The bad guys are out there. They're, you know, they're continually coming up with new attack vectors. Like we're not having enough trouble, we're getting attacked by a bad actors. And so if you build it and it's great and you don't, nurture it, it's gonna fall apart.

[00:17:17] That's why it's a full time job. You know, they always have to just stay on top of KTLO and the more you do and the more routine and the more process that you can put in place and now even automation and AI, then the smoother it's going to go.

[00:17:28] Ricardo Belmar: And if you're doing that well, that should lead to, the lean and efficient IT part of the pyramid and make that easier. Right. If you're have that consistency and reliability.

[00:17:38] Andy Laudato: Right. I like to use the word institutionalized. If you can institutionalize a process, then it's bigger than just one person it's repeatable. I always start my day with a stand-up.

[00:17:47] We actually do a hundred person stand up every day at the vitamin shop with operations, our CEO's on there. And we just talk about what new systems or any changes, any problems. And so that becomes institutionalized that we're all talking about it and just gets really smooth. And as it gets smooth and automated and consistent, then it becomes cheaper, more affordable.

[00:18:04] Ricardo Belmar: Oh, that makes complete sense. Why don't you take us to the next layer of the pyramid?

[00:18:08] Creating Value

[00:18:08] Andy Laudato: Yeah, so the next one is called creating value and in a lot of cases, creating value is what many people think all that IT does, which is projects. So this is putting in maybe an accounting system or a new order management or all the different tools we talked about from a CDP.

[00:18:22] So you do a ROI and then you go to your FP and a group. You bicker over the benefits. She gets signed off, you hire an integrator and implement technology, and this is really important. But it's just not all IT does. Right. You only want to create value after you've got a nice firm foundation.

[00:18:37] You don't want to throw more tools or more software on a wobbly foundation. So probably the most common activity that apps group does. And I think the most important thing is to work on the right things. And this is why portfolio management is so important. So I do think that good project management practices do exist and agile has really brought a lot, especially on the software side.

[00:18:58] I actually created a class on project management on Udemy because I have kind of a passion for that. But portfolio management is important because even if you have a very well-run project, but you're not working on the right thing, then you're wasting your company's money or you just not optimizing the spend.

[00:19:14] So a couple of principles I'd like to share. The first one is stop starting and start finishing. People love to kick off projects because it feels like they're getting something done. It's like, oh, when are we going to get our new order management tool? Oh yeah. We had a meeting. We got some demos.

[00:19:28] Right? So starting a project doesn't deliver value. Working on a project does nothing but spend money. It's only when you deliver the features that you actually add value to your company. Another thing is a agile concept is called a WIP limit or work in process limit. And I contend I make the argument that everybody has too many concurrent projects going on.

[00:19:48] So my advice is to stop starting new things until you've finished at least 10 or 15% of what's in flight. If you have 20 projects in your company and you rank them one through 20 and you finish number one. Now you have 19 projects, what the company will typically do is they'll start a new project, right.

[00:20:04] Which will be your new number 20. Then you put people on it. What you're actually doing is you're putting people on, but you defined as the least important project in your whole company. So instead, what I recommend is that you take people that free up and then you add them to project the new number one.

[00:20:19] And this is an agile called swarming. Take your people and just continue to push really hard to complete the most important project as has been decided by your executive team and get it done and just, focus on completion and then that's creating value. And then finally we get to the top, it seems like a journey and it is, and that's when you get to innovate.

[00:20:37] So you've got a really well-oiled machine every day, just like Trevor said, It's like electricity, it just works. And , all your systems are smooth and they work. And then it doesn't cost you a lot of money. And honestly, when it's affordable, it doesn't even matter what budget it's in because it's a one and a half or 2% of the company's spend.

[00:20:54] And now you've got projects going on and everyone knows what number one is and it's getting done. I mean, if you just do all those three things, you're going to be a star, right. But now, if you get there, now you can start to focus attention on innovation. Because innovation is spending time and talent and treasure on things that probably won't work.

[00:21:12] So you're literally telling your company, we're going to spend money. We're going to take, hopefully our very best people, and we're going to have them do something that probably won't work. How do you do that if the first three aren't met? So in my mind you get all three working and then boom. Now , you've earned the right. to innovate.

[00:21:26] Choosing Innovation

[00:21:26] Casey Golden: That's a great point. How do you pick the next innovation or project to bring in when you have 19 other projects that haven't completed yet and started impacting the business? Because ideally you'd want to layer the next projects on top of the, the ones that have completed, you know, and that are starting to work in and be rolled out through the organization.

[00:21:47] Andy Laudato: Exactly. And when people have already done the work to say that those projects will succeed and they have an ROI that people believe in now you're trying to do something innovative that doesn't have that. So, you know, what I like to do is box some kind of funds and say, this is our R and D funds and our R and D people.

[00:22:03] But yeah, exactly what you said, Casey. And so now if your projects aren't completing on time and they're going over budget. Then it becomes next to impossible to ask for funds to try something innovative.

[00:22:14] Trevor Sumner: How do you think through you know, at perch, we do the majority of our deals directly with brands who are spending their trade dollars towards innovation.

[00:22:23] And often, it's being presented as category captaincy to almost look at an innovation project for the retailers. How do you think through brands bringing new innovations as part of that kind of budget, because it's still your resource, it's still your treasure and talent, right?

[00:22:40] Just in terms of time and how do you balance, what brands are trying to accomplish with what you're trying to accomplish as a retailer? You know, if the spend is coming from them.

[00:22:49] Andy Laudato: Yeah. I mean, it helps, right. If someone else is funding it. And so now all of a sudden it has the much lower burden to get approved. So I think that still has to fit into the priority or it has to be, somebody has to sponsor it as an innovation, but absolutely of course, if someone else's coming forward with, with funding it's an easier burden of the risk.

[00:23:09] Casey Golden: Andy, when you're thinking about, moving those budgets out of departments and into IT, I don't know if you're, if you're selling into a department, IT might be the last conversation that you have before contract signed. How do you see that having those business owners Working with IT.

[00:23:25] I know a lot of times they're not necessarily even in the same buildings. So being able to just even foster that type of a culture where you, you create that culture of being able to cross collaborate so that the business pain and the problems that our department's having is, is actually being presented and heard by IT.

[00:23:45] Andy Laudato: Right. Imagine a place where the CIO and the, the directors and managers and VPs, and IT understand the business and they understand the business goals and they're there to help something get done. Right. And they can become champions because almost all tools have to be integrated. They have to be the security.

[00:24:01] I mean, how many companies, you have a different user ID and password in your own company for every different system, right? That's, that's ridiculous, but that's normal. So, if IT is a partner, they build a single sign on tool or implement a single sign on tool that works across every, every single app. So the store person logs on once and it gets to all their different tools.

[00:24:20] And even though it's different tools, at least it feels more seamless if it's on a single pane of glass with a single password. So, I mean, it just starts with embracing IT, but I say all the time that IT has to meet the business, that 95% where they are, it's not about IT. It's about whatever the business is, right?

[00:24:37] Whatever we're selling and whoever our customers are. But yeah, IT in a different building is a nightmare. IT in a different floor with a different culture in different working conditions and different hours and just not part of a company culture and they have their own culture, then they're just a roadblock instead of a partner.

[00:24:52] So it's all gotta be fixed, but it starts with leadership.

[00:24:55] Casey Golden: If you could give one piece of advice to the companies that are looking to implement software this year that do have department budgets or manage it at the IT level. If you could give one piece of feedback on how to pull everyone together to make those decisions together, what do you think the first step is?

[00:25:12] Andy Laudato: This is not a direct answer, but I think the most important thing is to get those IT people working in the store, shopping on the website, really living, take a call from the customer care. Right? I mean, if you're a database analyst and it takes two minutes for the registered or run, that's like an interesting problem that you might ponder.

[00:25:31] If you're a store associate standing at a store and the line starts to form, cause register's not performing that two minutes is like an eternity. I mean, I've been there, you know, sweat comes dripping off and so getting that empathy by actually getting the people out of their, whatever they're working now, remote, you know, their home basements into stores is the most important thing I think to start with.

[00:25:51] Casey Golden: That's great.

[00:25:52] Shish Shridhar: Andy curious about your opinion about where innovation should sit in a company. I know a couple of years ago there was this big wave of innovation labs happening in retail. And many of them didn't quite survive very long and there was various reasons quoted for failure. Including that they were created for the wrong reasons.

[00:26:15] They were innovation theater. And they were disconnected from the business. All of those things, kind of curious about what your thoughts are on innovation labs and separate innovation teams within an organization versus integrated.

[00:26:30] Andy Laudato: That's a great question Shish it's kind of like when that e-comm started happening and the 1990 nines, then everybody said, oh, we gotta be in California. So they all built separate organizations. And look, we spent 10 years using the word digital, and now we're using the word innovation. I put up my book, we got to define what we mean by innovation. And so for me, it's coming up with solving an unmet need for a customer, right?

[00:26:53] I think about Uber having text taxis and the idea of paying someone to drive you somewhere, probably is as old as cars, you know, probably over a hundred years old, but Uber came up with a new way to deliver that. So that's innovation, even though it's just getting in someone's car and getting a ride and paying him for it, I think defining innovation is important.

[00:27:10] And for me, then it's got to be your best and brightest and boy, that's an easy thing to say. A hard thing to do because you know, and Casey alluded to it with projects, right? You got to take your best developers or project managers or business analyst or product owners, scrum masters off number one project and stick them on innovation.

[00:27:27] But yeah, I'm not a fan of separating people. Now look, we're all remote and I think we're all going to be remote. So that whole proximity thing is almost like a moot point in a sense. Yeah, I think it's gotta be part of it. I think an innovation project should be in the same list as everything else.

[00:27:42] I'm a huge fan of, and I call it a one list of having a single list force ranked one through X and not having a separate here's my department's projects or my department's money because you're just creating conflict internally. Now. Look, I've mostly worked at the biggest company I've worked at. You know, I worked at a $4 billion company.

[00:27:58] So if you're a really, really big company, probably different, but to me, one list of projects, one team, one partnership, all focused around the three or four business objectives is how the "must" gets done and how everyone can come together.

[00:28:10] Shish Shridhar: And you kind of mentioned something interesting, which is the unmet customer need and keeping focused on the customer. One of those aspects that was interesting for me was JC Penny's attempt at innovation and also maybe Virgin America's attempted innovation where the customer needs were not quite in focus when they did that.

[00:28:30] So that's interesting too.

[00:28:31] Scaling Innovation

[00:28:31] Andy Laudato: The thing I think is crazy about JC, like in retail and when we talk about stores, we can try something in one store and then do it in 12 and then do it in a hundred and then do it at a thousand. Right. And if we're talking about online, we can AB test. We AB test every feature.

[00:28:45] So we give it to 5% of the customers. So the fact that Penney's actually went to hundreds of hundreds of stores at the same time. It's astonishing. Right? Why would you, why would you do that? Make it, make sure get it right in the morning before you do it in 10.

[00:28:58] Casey Golden: Yeah. I'm a big advocate for doing those rollouts in your bottom doors.

[00:29:03] I'm like anything, almost anything will work in a flagship. . It produces great KPIs, but can you do it at and afford it on a bottom door?

[00:29:13] Andy Laudato: Yeah, that's a great point. And if you can't then of course you can't scale it, yeah.

[00:29:17] Casey Golden: Scale those up because if it doesn't work at a bottom door, then come on. We've only got, five top doors typically.

[00:29:24] Ricardo Belmar: Yeah. That's, that's like my favorite thing that I've had to say to a number of retailers over the years is, almost every time your proof of concept will work when you do it at your, stores that you've tagged as the test stores, because they're always ready right there, anticipate, and they're there, know what to expect and they're having higher tolerance.

[00:29:41] If something doesn't work out in a proof of concept, then to your point, right, they pick your bottom doors where they can't tolerate anything not working. And you put something new in there and if you can make it work, then you've probably figured out how to make it work everywhere else.

[00:29:53] Casey Golden: Yeah, exactly. It's easy to scale it up. I've seen a lot of projects be rolled out with large budgets at a top door, and then it's, you know, one 25th of the budget to do it at a bottom door and it doesn't work and it's like, it's terrible experience.

[00:30:10] Trevor Sumner: Yeah, I guess, we see that too. I think overall, there's this trend to kind of personalize stores by geography, different product selection, different offerings.

[00:30:20] And I'd love your thoughts on how do you balance the importance of consistency and consistency and measurement consistency and standard operating procedures, consistency and systems with the desire to both innovate and regionalize and personalize

[00:30:38] Andy Laudato: yeah, you asking me Trevor or Casey.

[00:30:40] Trevor Sumner: I'm asking everybody, but you're the, you're the star this week, so

[00:30:44] Andy Laudato: Sure. That's a great question. I mean, we just rolled out our first franchise store. So this is really top of mind for us because you know, one of the benefits that we're looking for from franchisees is their creativity and bringing ideas back.

[00:30:56] Everyone knows like a franchisee came up with the big Mac and the $5 footlong, you know, But we want to make sure when you walk into the store, the customer shouldn't even know that that vitamin shop is not owned by the corporation. So I think it's all about guardrails and say, here's where you do not have leeway to change on branding on product.

[00:31:15] And here's where you do. So you kind of loosen the reins on local stores and whether it's assortment or culture or process or fixture design, but all within guardrails of the brand.

[00:31:27] Casey Golden: That's interesting that you guys opened up your first franchise. How are you dealing with, e-commerce and some of the tech stacks with the franchisees?

[00:31:36] Andy Laudato: We didn't really open up, how do we even think we sold the store, but we sold the territory. So think of it as a five mile circle. And so any e-commerce sale that happens.

[00:31:46] And that circle belongs to that. So we share a royalty on e-commerce sales. We have a reverse royalty if they sell something and I'm getting extra, but every single thing we're doing is being there's a participation from the franchisee. So even if there's a subscription they sell and then we fulfill it, we're going to give them a royalty on that.

[00:32:04] It's, it's a really neat model and we worked through it in detail. We just didn't want to compete against them. And a lot of people that were franchised in retail before, e-commerce, they're kind of struggling now with some of these, these things.

[00:32:14] Casey Golden: Yeah. It's been a definite struggle for a lot of fashion brands specifically in that franchise model in different countries, because they don't have access to the e-commerce store or a lot of the digital technology on the backend. So interesting.

[00:32:28] Ricardo Belmar: So Andy, I want to ask you a slightly different point. So in, in all of the areas that you've talked about on what you've learned are the best ways to do this. I'm curious, what kind of resistance have you come across from different organizations when you've tried to follow this approach, as you've outlined it in the book, as you're creating value and you're doing that to lead to innovation. And for example, you referenced concrete a lot in some of your examples . So I'm curious, where does that come from and is that anything to do with, you know, the kind of challenges and resistance you ran into through different organizations?

[00:33:01] Andy Laudato: Yeah. When I worked at a peer one, we built this new headquarters and we built this parking garage and everybody was so excited about the parking garage, right? It's you're going to park close LER, co it was covered. And I was just getting jealous of the parking garage because it was like this solid thing that you could see every day and you could see the progress and you could see the benefit like, oh yeah, I get to park my car in the sun and the shade.

[00:33:22] Meanwhile, I'm working on a million dollar new HR system and no one really can see what they're going to get and why we're doing it. So I just, to me, I talk about the parking garage is my project that I try. If we can make IT projects is visible as building a garage. I mean, because ultimately it's more important to pier one, to have a new HR system.

[00:33:41] Then they have really good parking for the employees, but no one really felt that way so we know where Pier one ended up . And then just in the hierarchy, it's about a firm foundation and really with two feet. So as you move up the pyramid, you got to have a firm foundation. So yeah, those are kind of some of the reasons I think about that.

[00:33:56] Just a little jealousy of a project that parking garage.

[00:33:59] Ricardo Belmar: I bet everyone has their own version of the parking garage story.

[00:34:03] Andy Laudato: So much of IT is nebulous and not tangible. Right. And so it's, it's our jobs to make it more, more tangible.

[00:34:09] Ricardo Belmar: Yeah. I would expect that even when you're in the creating value project, how you state the value has to be pretty, pretty important part of the process to that point, because as you just said, if the, overall project is one of these I'll use the phrase kind of behind the scenes, projects where the outcome of the technology is something that employees are going to take for granted of, okay. It's just working and not think through why it's so critical for the business.

[00:34:33] How do you sell the value of those kinds of projects?

[00:34:35] Andy Laudato: Well, you got to start in, in the beginning, right. And be clear about what you're getting while you're getting it while you're doing it. I mean Shish mentioned AI. AI is really difficult in my mind to prove value because a lot of times you stick in data and then out comes the answer.

[00:34:47] And is it really the best answer and what was it based on? And, so if I can translate, a sentence from one language to another, that's pretty tangible. But if it's just send this offer to this customer, because she's more likely to buy this blue sweater instead of this pink one that that's a little trickier.

[00:35:02] Managing your team

[00:35:02] Ricardo Belmar: So, let me jump to another set of constants in the, in the book we've had in this room. And I think you've been in the audience for some of those. Andy's a lot of discussions around people and how you should treat the team. That work in your organization. And you have quite a bit to say about this in your book, on what the CIO's job is in terms of building the IT team, and actually how that team interacts, not just with, within their own teams, but also with other groups in the business. Can you tell us a little bit more about, what some of your views are and what are your suggestions are there and how, both from an organizational structure point of view, but just general ideas on how you should be managing the team to help foster innovation.

[00:35:41] Andy Laudato: Yeah, for sure. I mean, I don't know when I had this moment, but this was an aha moment in my career that really leading an IT department is not about technology. It's a people job. I can't configure a router or open up space on a cloud or program in AI.

[00:35:54] I can't do any of these things. And even if I could, I wouldn't have time to do it. So it's just about people and it's having to work with different constituents. I mean, I think we kind of got a feel for it today, right? Trevor has a, maybe a different opinion than Casey and I love that. .

[00:36:06] It's all about understanding everything. So it's, all about people, but yet the people we put in these jobs have a background like me. I went to technical school and learn how to program in COBOL. That's my education. So I had to learn these things, you know, through just my own education over the years.

[00:36:21] We think about people. It's about engagement and engagement to me is about, are we actually getting people's discretionary time? So for me, I do all my thinking. When I go out and long bicycle rides, I go out and think about how I'm going to solve the world's problems. So I spend a lot of my time riding my bike, doing laps at central park and thinking about how I'm gonna make things better at the vitamin shoppe.

[00:36:42] Now if instead I was spending my time thinking about how I was going to find a new job or horrible, my boss is, that's not engagement. To me, engagement is, am I getting peoples brain power, their creativity, their passion. So there's kind of this old joke that people quit and don't leave.

[00:36:57] They don't tell you, they quit. Nowadays, people are leaving, they're quitting and they're leaving. And so, understanding what each person is motivated by is a big, big deal for me. For a lot of tech people. And again, I won't stereotype for a lot. It's about getting to work on cool things. And so in some cases, innovation does become a motivator.

[00:37:14] I mean, if IT is just need is electricity, then it's not that exciting of a career. And people have choices. So as much as you can make, keep the lights on smooth and automated and free up your time and resources to work on the fun things, creating value and innovating, then that's a better chance that people are engaged.

[00:37:31] So you know, I do have a long list of ideas to take care of people. But one that I'd like to share is I think leaders need to focus on spending their most time with their best people. And I do believe that I've been coached by my HR partners to do the exact opposite.

[00:37:46] So you have a poor performer. You're supposed to be coaching them, writing them up, you know, giving them warnings And a lot of people think you take your best people and you leave them alone because they're great. And then there'll be happy. But my advice is do the exact opposite. I'd rather take a, A player to an, A plus than a F student to a D.

[00:38:02] So that's some advice that I've had to learn is and I learned it because, and it's in my book because I had an A player. Quit. And he said in his exit interview that he just felt kind of ignored and our philosophy was, oh, he's so valued. And he's so productive. We're going to leave him alone. And it just backfired.

[00:38:19] So that's when one of my 10 ideas I'd like to share

[00:38:22] Ricardo Belmar: Yeah, that was one of my favorites as well. In fact, one of the things I find in that particular approach is that when you spend time with those a players with those best team members, it, it tends to rub off on, let's call it that the next layer of team members.

[00:38:39] In the sense that when you're making that A player really happy in what they're doing. A lot of that happiness, I believe rubs off on other team members and helps elevate them as well. And it just kind of propagates that way and maybe you've found the same thing, but that's kind of the way I see that approach really working favorably in any organization.

[00:38:57] Andy Laudato: Yeah. I agree with that. And I have another concept that says be kind enough to let someone go. So the bad apple spoils the bunch is an absolute truth. And if someone's negative complaining a lot, they're going to go to lunch with the team. Or a virtual launch and that's going to drag the whole thing down.

[00:39:13] So people that are just not a fit in, and I believe that everybody's good at something. And so the reason I say, be kind enough to let someone go, if someone's not succeeding as a leader, as their manager, you are, it's your job to let them go so they can go find where they'll do well. I've had someone work for me, went off and became a successful stockbroker.

[00:39:30] Or maybe different, you know, people always land on their feet and they always seem to do better. You know, that we're succeeding after they leave the company. So, what you said, Ricardo, where the A-players and having that positive, and then you combine it with not having any people dragging the team down.

[00:39:45] Then all of a sudden the team becomes very high performant.

[00:39:47] Ricardo Belmar: And if you then couple that with one of the comments you made earlier about when the team that's working on that priority one project, when they finish and then you have them move down to the second most priority project, rather than having them start the next fresh project at the bottom of the list, I think that has that same kind of energy, right?

[00:40:06] Where that, that team now they're coming off having finished, you have to expect that they're quite happy and pleased and appropriately so, right, that they finished that project. And now they take that same kind of energy to the next project. And hopefully if that group that was working on the second priority, they were just as pleased to be working on that one.

[00:40:25] Now they've got these new people coming in with even more energy. You would hope that that helps drive that project to conclusion that much faster and so on down the line. So you get through all of them done.

[00:40:34] Andy Laudato: Yeah. You know, next time you talk to a CIO, everyone can do this, right. Say to them, you know, buy him a beer and say, do you think it makes sense to put your very best people on your most important project?

[00:40:43] Do you think every single person will say, of course we should put our very best people and our most important projects. Then I then say, "do you?",

[00:40:51] And the answer is no, it's always no, it's like, well, we put the next person up, right? The next person, the next project manager available next product. So everyone in common sense, sometimes we forget that course. You should put your very best people on your most important project. And because that's what gives it the most, the highest chance to succeed.

[00:41:09] But no one ever does that. They just don't, it's just resource modeling and people are not fungible. So you got to realize that.

[00:41:16] Ricardo Belmar: That's a good point.

[00:41:17] And while I wait to see if there are any questions Andy, one of your other concrete examples that stood out to me, you had a great quote where you said that sticking a group of people in a room and just telling them to innovate is no better than putting a seed on a concrete floor and telling it to grow.

[00:41:32] I think that's actually a very appropriate statement.

[00:41:36] Jeff Roster: That's a good one.

[00:41:37] Andy Laudato: This is where we talking about psychological safety, right? We're we're talking about risk taking and you just order someone to innovate. They're not, they don't feel safe to there's kind of an old joke. Maybe it's not a little, but fail fast, but not always.

[00:41:48] And so are you really willing to have a failure in retail? Are you willing to lose money? I think, risk-taking when you make where something doesn't work. Has to go with the education we all spent so much, you know, I borrowed money to go to college. You know, we all spend money on our children, lot of money, a lot of it borrowed.

[00:42:06] And because we all know how important education is. And so a very expensive innovation project that doesn't work. If you kind of pretend like it never happened, you wasted every dime. But if you talk out loud about why it didn't work, what you learned, what you learned about your customers yourself.

[00:42:21] It's just money well spent. So building a nurturing environment where people can feel safe and allowed to fail without getting fired is the key. And that's what I'm talking about there.

[00:42:31] And then I'll just end by saying it all goes back to the customer. Who's the customer, what am I doing this for. If your job is website developer, you're so far removed from the end customer sometimes. So just making sure that the people doing the work know who they're doing it for. They're not doing it for the scrum master.

[00:42:47] They're not doing it for the product owner. They're not doing it for the head of digital, you know, they're working on a feature for a customer. So to me, that should energize you because all of us, ultimately are customers. So we can, we can relate to that.

[00:42:58] Ricardo Belmar: All right. Well, any final thoughts that you want to leave the audience with on your journey to innovation?

[00:43:04] Andy Laudato: Thanks

[00:43:04] for

[00:43:04] coming . I love this stuff and I, I believe just strongly that we'll all go up together. And so I really appreciate the time and the opportunity.

[00:43:12] Ricardo Belmar: And I want to thank you, Andy again for agreeing to join us today. I think this has been a fantastic session. I think we all learned a lot.

[00:43:19] I, very much enjoyed reading your book. I know it's not a retail specific per se, but it definitely is worth the reads for everybody here listening, who hasn't already picked up a copy.

[00:43:29] And with that, I'm going to wish everyone a great rest of your day, wherever time zone you're in. And thanks for joining us. This has been another session in the retail razor room, and we will be back with a new topic, and we hope to see you then. Thanks everybody for joining us,

[00:43:43] Thanks,

[00:43:44] Casey Golden: Ricardo.

[00:43:44] Thanks Andrew.

[00:43:45]

[00:43:45] Interview with Andy

[00:43:45] Casey Golden: Welcome back everyone.

[00:43:51] Ricardo Belmar: I hope our listeners enjoyed that discussion as much as we did. And the best part is we've got Andy here with us now. Welcome to the show Andy

[00:43:59] Andy Laudato: Yeah. Hello, Ricardo and Casey. Great to see you again.

[00:44:02] Casey Golden: Great to see you actually see you.

[00:44:04] Ricardo Belmar: Exactly. Yeah. It's so great to see you. Although I guess our listeners can't see you, but that's okay. We can see you that that's what counts here. And in this case it was a real treat. Having you join our clubhouse room, Andy, and as usually happens with these sessions, right. There is just so much to talk about.

[00:44:19] It seems like we never have enough time to get through all the questions we want to ask and talk about. So in that spirit, we've got a few more questions for you

[00:44:27] Casey Golden: Talking a bit about career development. This is an important part of your book. And I've heard, you mentioned 70, 20, 10 rule. I love it. Can you fill in our listeners on what this means?

[00:44:40] Andy Laudato: Yeah, absolutely. So a lot of people, when they think about career development, they're looking for formal training. This could be going to a class or even out of college. You know, continuing education, but in the 1980s, it's something called the center for creative leadership. They did research and said, actually to develop in your career, formal training only will give you about 10% of what you need.

[00:45:01] So although it's important, it's not sufficient. And what they learned was that 20% comes from interaction with others. This could be what you learned for directly from your boss or mentors. So formal training and feedback directly from others, get you to the 30%, but the bulk of what you get to be successful in the move up in your career comes from actual experiences.

[00:45:24] So the 70 20 10 rule says that 70% comes from actual experiences, 20% from others and 10% from formal education. So that means if you're working with someone that works for you or you're looking to grow your career, you really need to look for opportunities to immerse people in the job. So this could be job shadowing.

[00:45:42] This could be a stretch assignment on another team. You know, this could be a hanging out on a special project. So it's just really important to think about. Don't just be pounding, the fist demanding formal education, although important. It's not, the whole picture.

[00:45:56] Ricardo Belmar: I really like that approach. It makes a lot of sense. So Andy understanding that rule now, what else can you tell us about your hiring preferences and practices?

[00:46:05] What, what do you look for in a candidate?

[00:46:07] Andy Laudato: Yeah. So I look for things that I can't teach somebody. I always say these are things you learned from your mother, or you got genetically, or you learned them in kindergarten, but by the time you get to me, it's too late. Right? So. I start with integrity. Someone needs to be honest and always do the right thing and, you know, without integrity, nothing else matters.

[00:46:25] And again, I don't feel like I can teach someone or coach someone to have integrity by the time they get to us. That's already been kind of ingrained in who they are as a person. The second one is intelligence, I can't make someone smarter. So that's my second one. The third one is ambition. Again, these are the things that people kind of come with inherently. What's your learning style? What are you doing to learn? Do you have drive or are you proactive? Do you push? And then finally temperament, you know, look in retail business there's ups and downs. And so, how do you handle yourself when something goes awry? So, yeah, all four of those integrity, intelligence, ambition and temperament are things that I specifically interview for because I feel like whatever the skill is that you need, whether it's, programming or creative, these are the things that people and should be able to learn.

[00:47:16] And especially in technology where things change so rapidly anyway, right? If you're an expert on this tech in two years, we're going to be using that tech. And so if you have the ambition and the intelligence and the interest of learning the new, you're going to be a more successful.

[00:47:30] Ricardo Belmar: Yeah, that really makes up for whether you have the existing skill or not, it's something that you can learn, but it's the things that you can't learn that harder ones to seek out.

[00:47:39] Andy Laudato: Exactly.

[00:47:40] Casey Golden: you mentioned in your book. You talk about the true org chart is the informal one. What do you mean by that?

[00:47:47] Andy Laudato: Let me explain it, Casey, with an example. So you'll hear every person, who's a CIO say, I need a seat at the table. I have to have a seat at the table. There's a book called a seat at the table and you can demand it. You can insist on it. You know, you can do that, but so much, so much decision making at a company doesn't happen in the formal meetings.

[00:48:06] So to me, the informal org chart is when the CEO's looking to brainstorm on ideas, who's he going to invite to have a coffee or who she can invite to have a coffee, go to lunch. Just, you know, I want to run an idea by you. So to me, the informal org chart is where some decisions and debate, discussion, and brainstorming happen in a company that may or may not be how it's listed on the formal HR organizational charts.

[00:48:30] So to me, more important than a seat at the table is kind of a seat at the coffee shop. That you become the go-to person.

[00:48:38] Ricardo Belmar: you want to be the person that somebody, everybody calls.

[00:48:41] Casey Golden: Yeah, I got most of my budgets approved in the hallway.

[00:48:48] Ricardo Belmar: Isn't that true. Yeah. That's how it works. That's how it works. It's so true.

[00:48:51] Andy Laudato: Yeah. Another really important person on the informal org chart is always the executive assistants,

[00:48:57] Ricardo Belmar: Yeah.

[00:48:58] Andy Laudato: Cause they got to decide

[00:48:59] Ricardo Belmar: But right. Yeah. Like the kind of the ultimate gatekeeper. Right. And who gets time.

[00:49:03] yeah.

[00:49:03] Yeah. That's right. That's so true.

[00:49:06] Andy Laudato: leaders in a company.

[00:49:09] Ricardo Belmar: Yeah,

[00:49:10] absolutely.

[00:49:10] Andy Laudato: I remember that. Yeah,

[00:49:12] Ricardo Belmar: I'll walk and talk. Yeah. So true

[00:49:14] Andy Laudato: I have, when I was early in my career, my boss was a smoker and we used to have this smoking room and that's how old this story is from the nineties. And if I wanted to meet with them, I had to go suffer it out, you know, in

[00:49:24] Ricardo Belmar: in the smoking room.

[00:49:26] Andy Laudato: Yeah, I think I probably took five years

[00:49:28] off my life getting face time with my boss.

[00:49:33] Ricardo Belmar: You go, sometimes you have to do what you have to do, right. To get the time.

[00:49:36] Andy Laudato: Exactly.

[00:49:38] Ricardo Belmar: So one of my favorite concepts you bring up in the book, Andy, and something, I don't think we got to in the clubhouse sessions, which you call be a diode. Can you talk us through that?

[00:49:46] Andy Laudato: Yeah. So a diode is an electronic component. That's actually found inside computers, phones, and even everyone's actually heard of diodes because it's the D and light emitting diode or LEDs.

[00:49:57] Ricardo Belmar: right.

[00:49:59] Andy Laudato: And so the very simple thing that a diode does is it allows electricity to flow unimpeded in one direction. So the electricity goes into the diode and comes right out, but it completely blocks the flow of the electricity in the other direction.

[00:50:12] And so it's really important for computers because it's how we make gates to say yes, no on-off which ends up being binary. So the analogy that I like to use in business is that if you become a diode as a leader, anytime there's any kind of complaints, anger, problems, you as the leader block those. So just like the diode blocks of electricity, the current flowing in one direction you take all of the crap and stop it with you and don't let that ever get to your team. Now in the other direction is when there's praise compliments, you know, good jobs, those should flow right through the leader, not take the glory, but let that flow to your team. So if you're a leader that stands in front of the problems and protects your team, but doesn't stand and take the praise.

[00:50:58] You give that to your team. That's my analogy for being a diode as a leader. And I feel like the very best ones are the ones that exhibit these behaviors.

[00:51:05] Casey Golden: Absolutely.

[00:51:06] Ricardo Belmar: I love that one. I love that concept.

[00:51:08] Casey Golden: Yeah. I've never heard it like that before, but we we've all experienced that I feel in our careers. That's great. One last question for you, Andy. And this one is probably something you get all the time. What's the most important takeaway or lesson from your book?.

[00:51:21] Andy Laudato: Yeah. . When you think about innovation, what innovation is, is spending your companies, treasures it's money, it's talent, it's people. And it's time on something that probably won't work, right? Whatever data you look at, one in 10, things work one in 20 weeks. You know, you talk about having a career. We have all had

[00:51:38] Ricardo Belmar: Yeah,

[00:51:39] Andy Laudato: wonderful ideas.

[00:51:40] We spent time and energy

[00:51:41] Ricardo Belmar: right. That's right.

[00:51:42] Andy Laudato: they don't work. And so in order to successfully innovate, you need to earn. And you earn the right by a building, a really well-run organized, trusted, you know, machine, And so that's why my is called fostering innovation. It's not called innovation. My book's really not about innovation.

[00:51:59] It's just creating this environment where have a firm foundation. People have psychological safety, you're in the right financial place that you're able to take time and money away from the day-to-day activities of running the business so you can stretch on innovation.

[00:52:14] Ricardo Belmar: Well, I love that, that makes so much sense, like so many other things, even in the retail business, , when you don't have that foundation, It's really hard to build anything successful on top of it. It's so critical to get those details, all those core elements right.

[00:52:28] And when I run through the book , you really bring that message home that it's not about the innovation necessarily as much as it is having that environment where innovation can happen and setting yourself up the right way so that you can create innovation because I think you're absolutely right. The whole premise is that, one out of 20, whatever it is is the one that's going to work and the other 10, 15, 19 aren't. that's okay. As long as your foundation let's you keep going.

[00:52:56] Andy Laudato: Yeah. Now that we're having in-person conferences again, I was just at a conference and I think then all the years when I go to conferences, there's always those few people that spend the entire three days in the hallway on their cell phones, talking back to the office. Cause they've got an implementation gone wrong or network down issue.

[00:53:11] Right. And so this to me, visualizes, the example of the person who's not in the presentation, learning about new things, innovating, interacting. Even though they spent money, they've ended up having to deal with putting out the fire, back home. And so it's just one real life example that, and you'll notice it now, but there's every conference, there'll be somebody

[00:53:32] Ricardo Belmar: right.

[00:53:33] Andy Laudato: unfortunate, somebody that's in a hallway on, you know, on the phone, dealing with that.

[00:53:37] They don't have a firm foundation.

[00:53:39] Casey Golden: That's And I think there's, there's so much value right now. So you kind of have these conversations. So many brands and retailers have inherited their tech stacks, or haven't really gone back to the foundation and really looking at it for can we implement new technology? What do we have?

[00:54:02] What's what is already in the works? And I thought you had a really great perspective something that I've really taken away. Is insights on project management for new technology initiatives on how to actually complete them? And I thought it was great, but I think every brand really should be looking at kind of doing house check, you know and kind of going back to that foundation and saying, well, just because we've been doing it for the last 25 years or 30 years. You know, most of the team is inherited what's existing and you're always working on what's oncoming on your plate and you have, there's no shortage of fire drills. We all know that. There isn't a lot of time dedicated to going back and looking at the foundation and saying , how are we set if we start stacking on top of this?

[00:54:49] Andy Laudato: Yeah, . Some people think it's boring or, you know, it's not value add, but I kind of make the joke that. Well, if you look at a pyramid, you always look at the top and go, wow, look how tall that pyramid is. Right? No one looks at the bottom rows. Isn't that amazing, but

[00:55:01] Ricardo Belmar: Yeah.

[00:55:02] Andy Laudato: I bet there was some pyramids built with a really bad bottom row that just don't exist

[00:55:05] anymore.

[00:55:06] You know, only the ones left

[00:55:08] Ricardo Belmar: yeah. Yeah. Cause they're

[00:55:09] the ones that didn't have that, that bottom foundation. Yeah.

[00:55:11] Casey Golden: no, it's great.

[00:55:13] Ricardo Belmar: Very true. Well, Andy, I have to say it's been a pleasure having you on the show and I really hope that we can get you back on soon. And of course, to have one final recommendation to everyone to rush out and buy a copy of Andy's book, Fostering Innovation.

[00:55:26] You'll be well rewarded for your efforts for giving it a good strong read.

[00:55:29] Casey Golden: I agree,

[00:55:30] Andy Laudato: Thanks for having me. It's been fun.

[00:55:32] Casey Golden: Yeah, Andy, if listeners want to learn more about you and follow your work, what's the best way for them to connect with you or stay in contact with some of your content,

[00:55:41] Andy Laudato: Yeah, for me, it's all about LinkedIn. In fact, in my book, I talk about how I use social media and LinkedIn is my one and only business platform. And so I think it's pretty easy to find me. The only trick is I go by Andrew on LinkedIn. That's my name on my birth certificate, but I go by Andy to my friends.

[00:55:57] But as long as you know, Andrew, then you'll find me easily.

[00:56:00] Casey Golden: Perfect.

[00:56:01] Ricardo Belmar: there you go. Well, Andy, thanks again for joining us.

[00:56:03] Andy Laudato: Yep. Thank you both.

[00:56:04] Casey Golden: Well, it's time to call this one a wrap Ricardo.

[00:56:07] Show Close

[00:56:07] Casey Golden: if you enjoy our show, please consider giving us that special five star rating and review on apple podcasts. Smash that subscribe button in your favorite podcast player so you don't miss a minute. Want to know more about what we talked about today? Take a look at the show notes for handy links and more deets.

[00:56:26] I'm your cohost Casey Golden.

[00:56:27] Ricardo Belmar: And if you'd like to learn more about us, follow us on Twitter at casey c golden and ricardo underscore belmar, or find us on LinkedIn. Be sure and follow the show on LinkedIn and on Twitter at retail razor, and on our YouTube channel for videos of each episode and some bonus content. I'm your host, Ricardo Belmar.

[00:56:43] Casey Golden: Thanks for joining us.

[00:56:44] Ricardo Belmar: And remember there's never been a better time to be in retail. If you cut through the clutter.

[00:56:51] Until next time, this is the retail razor show.