Host Intro (Gene Kim)

Another one of my favorite organizations that I've been able to study since 2014 is Target, one of the largest retailers in the United States. So in my introductory remarks, I mentioned how special a place Target has in the DevOps Enterprise community. Ross Clanton and Heather Mickman spoke at our first conference, both in 2014 and 2015, describing their journey rebuilding an engineering culture of excellence in an organization that had outsourced most of their technology functions, and their quest to unleash the creativity and problem-solving potential of thousands of technologists.

So much of The Unicorn Project was actually inspired by those stories. So in 2018, a team from Target talked about the continuation of that journey, talking about how they're rethinking the role of architecture and governance, again to unleash the creativity and productivity of developers. And one of those people who spoke then was Luke Rettig, who was then a principal product owner, and now he is senior director of product management in merchandising capabilities, one of the most critical functions in a retailer.

Last year, he spoke with his boss Brett Craig, who was formerly SVP of Digital and is now the CIO of Target. Luke talked about the incredible way that they were able to help their Fresh Foods division, who were in danger of potentially exiting the market, to becoming a bright point within the company. And he and Brett also talked about how they were able to help Target navigate the pandemic response in 2020, where keeping store shelves stocked and team members and Target guests safe was a seemingly daily battle.

So I am so happy that Luke is presenting again, this time to talk about a whole new set of problems that is happening across the entire economy, all around the world. Here's Luke.

Luke Rettig

All right, before I start, everyone look. Got to have a selfie.

All right. I'm going to set this up here, get my clicker.

Thanks, Gene, for that great introduction. I'm here to talk to you today about, really, it's a continuation of the story and how DevOps is really shaping our culture and how we work.

So I'm going to jump right in. I'm going to give you a little bit of a blast from the past and talk through some of the things Gene just mentioned, and then I'm going to spend the majority of this time really talking about a new challenge that we have in inventory health. And then lastly I'm going to close it out with, here is just what I would tell myself back in 2014 if I only would have known now what I knew then, or the opposite. You get what I'm trying to say.

So first, about Target, about me. Target's a big company. You see this slide every time we talk. It changes a little bit. You can see from all of the different talks kind of how this slide has evolved. So one of the things to know, and one of the things I'm really proud of, which also helps drive some of our problems, is how fast we've grown, which is a good problem to have. We grew from about a 70 billion dollar retailer to a 106 billion dollar retailer over the course of the last few years, with a lot of that growth spiking in the last two years.

A little bit more about me. I sit in the merch capabilities organization. So I lead the product teams there. The merch capabilities organization really supports our buying, our planning, our strategy, our insights, how we price and promote, how we allocate space, how we manage our vendors and negotiate terms. So I'm accountable for the buying, planning space and insights components, and then our shared services that we drive.

I grew up in tech. So my previous talk was as a technical product manager. I was an engineering manager before that. And then on the personal side, I'm married to my wife Michaela. I have twin six-year-olds, George and Zuri. They're in kindergarten right now, so that's been a big change for us. And I support bad sports teams, and I say I put on a runner on here. I just like pizza and beer, so I run to have pizza and beer.

So I'm going to jump into our history. A lot of you guys have been at many of these summits or these Enterprise Summits, and you've seen Target before, but I wanted to just talk you through, and I tried to pull out a little bit of insights from some of these talks.

So in '14, '15, and '16, '14 started with Ross and Heather, Ross Clanton and Heather Mickman, talking about, really, I categorized it like the foundations of DevOps at Target. They talked a lot about breaking down silos between Ops teams and certain Dev teams. They talked about the start of our API gateway, and it really was around, and this is a quote at the bottom from Heather. She was so insightful on this, to talk about this is tech and really see how this grows beyond, but really the entire piece is a cultural piece. It's about breaking down silos. They're inevitable with org structures. They're boundaries to communication. And that's really what we're here for, was break down those silos and getting people working together.

In 2018, Dan Condiff, Levi Geiner, who's here, say hi to him if you haven't seen him, we talked a lot about developer enablement and our process to how we think about governance, which really isn't governance at all. It was more of a guidance model. But Levi had a really interesting quote. I rewatched all these videos prepping for this, that was really kind of futuristic a bit for this. So one of the things he talked about was, we knew we had great tech capabilities, we talked about architecture a lot in this, but really we needed to break down some of the boundaries and really get our users, our customers, whether they're internal users or external users, at the table to generate value and really create where we wanted to go together.

Which kind of led into last year's talk, where Brett Craig and I, we really talked about our new ways of working and in fresh food, where originally we were going to go after a big, like 60, 70-person team to stand up a project to do food reinvention. Instead, we had a small lean team that worked directly with the buyers and planners and people that allocate space, and we were able to jump in and work really differently.

And the results of that were tremendous. Just with data, with insights, with capabilities, with collaboration, we were able to increase our profit in our fresh businesses, so think produce, think dairy, think bakery, think meat and seafood, by about 32%, and reduce the space that we allocated in our stores for that. So just straight to the bottom line profit on that standpoint, and how that really set the tone for a new way of working.

So Brett had a higher-level position. He was the SVP of merch capabilities, this critical org at the time, and really what he was able to do was influence his colleagues to trust in a new way of working. There was a lot of skepticism at the time. We did it in fresh food. We started doing it in our COVID response. We started working collectively, having feedback loops, and really getting things going.

One of the things I'm really, really proud about is all those people that talked are really playing critical roles here in our industry. I'm not going to go through all of this, but it's just really a testament to the culture that we've been able to do, the values that we put around leadership, and you see kind of where some of these people are making the impact and influence that they are in their companies today.

So I'm going to jump into our current, where we're at right now: inventory health. I'll paint the picture here. The retail environment is pretty crazy. I mean, all of our environments are crazy, but it's really a combination of a few things. Inflation rising has our consumers really shifting away from discretionary categories like home or apparel and clamping down some of their budgets, but it's really driving our frequency categories like essentials or food and beverage just through the roof on sales.

Mix that with our supply chain issues that still go on today. And really the bottom right is our sales. So I talked earlier about how 2014 to 2020, and really the last few years, we've seen this kind of incremental size and sales. Well, we haven't added really any network capacity into our broader ecosystem. So what we were doing with our distribution and stores networks supporting 80 billion dollars of business two years ago, we're taking that same space, that same supply chain network, and operating 106 billion dollars in business this year.

So really what that's leading to is we are bursting at the seams. We have certain categories in discretionary that we've way overbought, like furniture, and we're trying to reduce, we call it cube reduction, so big bulky items. How do we get those going through so we can free up the space in our network to get more of those frequency items in there?

And honestly, the way that we've operated historically as a business is siloed. We have our own P&Ls around apparel, around food and beverage, around home, around hardlines. And so the behaviors, the processes, the tools, the way we collaborate and work together, we didn't do it very well. It was good within the pyramid, but across, when we started to think about things like, hey, we allocate our annual budget, and historically we spend to that budget, and yeah, you can make tweaks within your category. Maybe seafood is selling faster than dry groceries, so let's give a little bit more budget to seafood to buy more inventory or a little bit less over here to do this. But we had never really done it across. And so that really started this pretty big challenge. And it's not just Target that's facing this, but it's really, really been a challenging ecosystem for us.

Brett and I talked about this slide. We introduced it last year, and this is really what our cultural framework is. It's grounded in three different things: inclusivity, connection, and drive. Inclusivity, really, how do we get multiple points of view, multiple people at the table, different skill sets at the table, to really value those different approaches. Connection: how do you build relationships, and how do you value that collaboration across business functions. And drive, my favorite one on this, is how do you continually choose progress over perfection and continually learn.

These sound a lot like what Ross and Heather talked about in 2014 to 2016 in our tech transformation, really how we bring our development and operations organizations together. This is our entire enterprise. This is our business values and culture. And so Brett had a quote last year that really set up this inventory health problem really well, where it's like, this framework, although we didn't create it, actually tells the story. We're going to go through highs and lows and challenges, and things are going to happen on our global team and in our environment, but if we embrace these cultural values, we are going to shine and get through it.

So what do we do? One of the things we did with this inventory health crisis, I mentioned this not being able to adjust spend across categories. Our senior vice president of planning, Dexter Newman, is this fantastic leader. And he's a super introverted, soft-spoken, but he's just a great leader. And I'd say he really set the tone. He came in, not Brett, not someone from tech, and said, look, there's a different way we can approach this. We can really understand what is a best-in-class way of working, what is the best-in-class planning organization, how do other industry experts and leaders handle spend and inventory.

But really it came into how we were working. How do we have regular, frequent, candid communication? So we stood up what we call steam teams. It's not anything groundbreaking to Target, but it's basically, how do you set up small pods of cross-functional teams from business, from tech, from process, and how do you work together towards common goals and problems? And then when you have multiple pods of teams that are collaborating across, how do you come together and debate and discuss what the total issues are?

So it really was this framework and this way of working that had small empowered teams and cross-discipline teams really working on what are the most critical things for our company, not for their division or not for their hierarchical spot in the organization. And it really led into the other side of this slide. These were things that my product team and my collective product team wrote down as values, and these are things that are being embraced now across our entire merchandising capabilities strategy organization.

I put another forward-looking quote from Ross from the 2014 talk here. Really what started as the small bottoms-up movements are really getting a lot of support top-down. I think he actually said fertilized from the top down, which I think Gene was like, that kind of sounds like leadership's pooing on you guys, but we adjusted that quote a little bit.

But it is this: what started in tech led into how are we starting to enable this tech capability into the way we operate as a business, into these small fresh food initiatives where you have different ways of working, into how we responded as an organization to COVID, into how now we're driving really a different way of working across our entire enterprise.

So the results. I wish I had specific outcomes. It's still going. This is still very much a work in progress. So it's kind of a hint for maybe a future talk. But really here's what I'm super confident in, and I love this. My peers, my leaders, my team, all really thinking about these things at the bottom. We don't separate out people, process, and tech. We don't have separate roadmaps, or intention maps like we like to call them, because a roadmap is very declarative for a lot of folks, and intention map says, here's where we intend to go and learn.

We're super connected. Connected is part of our vocabulary. It's part of our general strategy. And really it's how we framed what we call our enterprise operating model. And this gets discussed all the way up at the board and C-levels on how we bring these functions together and how we choose to operate, and really, in a cross-functional, progress-over-perfection type manner.

Switching gears here. Some advice I would give to myself. I moved into my role about three years ago, and I moved from tech into our business. Our product management function sits in that merch capabilities function, which reports into our business line. And I'd say when I was doing some of that fresh shops work, I know we gave a very like, good, everything's great story. I would say I got a little bit like, hey, there's a better way of doing things, and I really was inward-focused and I was preachy. I didn't listen a lot. I was telling people how we could do things different instead of working closely with them.

And so I actually got an executive coach. I was fortunate enough to get an executive coach a couple years ago, and I did a big 360 feedback as part of that. Some of that 360 feedback was, yeah, Luke's a tech guy. Luke's really good at tech. Everyone in tech likes him. And there was nothing about, how is Luke our trusted partner, or how is he a strategic partner, or how is he sitting side by side?

It was great. It was great to have a coach. It was great to get that candid feedback. I was listening to the CSG presentation. It was very similar themes where I had to really find who that trusted partner was. I had to listen more than I talked. I had to really be vulnerable and over-index on empathy.

So some of the practices that I changed is I meet with people. I meet with buyers and planners once a week, users of our system, of our products that are there, and I have conversations with them. I had one about a year ago with our furniture buyer, and I was just asking him, how do you determine how much you buy and when you buy it? And he goes, well, I have a budget, and last year in COVID we were so short on inventory that basically I was just told, whatever the vendors had, buy. It doesn't matter what your budget is. It's like, oh, how are you doing that this year? And he said, I'm pretty much doing the same.

And it's like, well, furniture, this big bulky stuff, and we're just buying it like crazy. And it wasn't because he didn't understand or see some of those pieces, but it led me to start having a conversation with him on how can we do it different. And he's now one of our senior divisional planners, and he's championing a lot of this cross-functional effort.

So really developing some of those trusted partners are so, so key. In my past life, two or three years ago, I would have said, why would I meet with that furniture buyer? That's a UX or product manager's job to go do user research and understand their problems. And it's like, no, I need to get really deep and drive a lot of connection with a lot of our partners on here.

So if I were to give myself advice, it is to really index on those relationships, really index on building trust, really index on listening.

Here's some help I'm looking for. I would really love, I know there's a lot of people in this community, I talked to many of you last night, where you've been driving your tech transformation, but you're really trying to change the way your business teams operate with you. And we haven't figured it out. We are on the right path, all the things I talked about, I have utmost confidence, but I would love to connect with anyone that is going through this type of journey, on either evolving their business relationship or really trying to build some of those partnerships.

And that's all I had. So thank you very much for listening.