Season 1, Episode 1: "How can I enable my organization?" with David Markwell, SVP of Technology @ Loblaw

Andrew: Hey, it's Andrew, and welcome to Network Disrupted, where technology leaders make sense of network disruption together. Quick note before we start. If you're crunched for time, I do send episode summaries to the Network Disrupted email list. Sign up for that, if you'd like, on the website, networkdisrupted. com. With that, let's get started.

Speaker 2: How have you enabled your infrastructure? Fundamental change over the last five years, and partnering with the business is critical. The tools exist on the cloud change at the rate necessary. Secure by design.

Speaker 3: Network Disrupted.

Andrew: Something I often see technology leaders struggle with is this inability to marry their initiatives with the core business. Frankly, it leads to IT having less relevance when the business needs them now more than ever. Today, we're talking to David Markwell, SVP of technology at Loblaw. To give the non- Canadian listeners some context, Loblaw is the biggest network of grocery and pharmacy brands in Canada. Brands like Joe Fresh, No Name, President's Choice fall under its umbrella, both online and in their almost 2, 000 physical locations. In the next 20 minutes or so, you're going to hear how David thinks about managing friction with his counterparts, how he understands his customers more deeply, how he's grown into his leadership role, and what actually matters when pushing your business forward. To shed a little bit of light on David's mindset, I want to tell you this little story. When I asked him what he does, he spent maybe 15 seconds walking me through the what of his job description, which is really what you'd expect it to be. He then spent five minutes telling me what he thinks his responsibilities are to Loblaw. To him, that's not just making sure everything works, but guiding the business through smarter and more future thinking investments. It's helping the business deliver against strategic imperatives like improving the customer experience and optimizing supply chain. It's about managing risk, and it's also about helping the business modernize itself in both technology and mindset as they stay ahead of the curve. With that, let's get started. Obviously... Well, from my understanding, Loblaw is in a massive number of businesses that a consumer walking into a single retail store doesn't necessarily appreciate and understand, but that partnering with the business is critical. I think that... I mean, has there been a fundamental change over the last five years in how that partnering worked? You talk about moving from a monolithic ERP system that sort of delivered via project- based IT versus providing the technology and capabilities in partnership with the business and sort of a focus on the technology side as opposed to more of a project based IT. Is that transformation seemingly well along the way at Loblaw, but was it a difficult transformation, and how long ago did it start occurring?

David Markwell: The fallacy is that... Especially in a business like Loblaw, that, as you mentioned, is fairly large and complex, it's actually a composition of many different businesses and services. There's very large businesses. There's... And within those very large businesses, some are very homogenous like Shoppers Drug Mart. It's a consistent banner experience across 1, 400 stores, and then you look at other large businesses like our discount division, which are actually a collection of multiple banners. Some regional. Some national like No Frills. Even within two very similarly sized businesses, you have variation in terms of their needs and their evolution in terms of the go- to- market strategy, and then you've got smaller retail businesses like Joe Fresh, or T and T, Fortinos, where you're dealing with a network of 20 to 30 stores and a very different customer value proposition and a different mindset in terms of how they see their business. They also don't have the economics or scale to put solutions in, necessarily, that are the same that you would put into a$ 20 billion business, so that... And then you've got your different services like supply chain or finance or HR, who are going through their own transition, or the bank, and they're all in different phases of their own product life cycle, so that would be thinking about a product or where a business is. It could be very much in sustain mode." We're just running the business. We got what we need, where we"... And that was fine. We found that was fine always in terms of how we interacted. Where the friction always occurs is when businesses move... It's either a new business that immediately goes into start off and then high growth mode, or it's an emerge... Or it's an existing business or line of business that is coming out of it's sort of sleepy phase." I've been doing the things I've been doing for the last 10 years, and now I need to transform myself." So supply chains is a good example. I joined Loblaw 12 years ago to run the technology side of our supply chain transformation back then, so for four years, we changed everything about the supply chain network. The physical buildings, the processes, the systems that supported it, and I think did a fairly good job because for seven or eight years, they didn't really need anything, and then you start back up in the last year or so with more automation and just because the economics of the labor market, there's internal and external forces that force a business unit to rethink how they're operating. You can't just have people manually inaudible picking grocery anymore, and also, people don't want to lift 30, 000 pounds a day, so there's different dynamics that come about, so that business turns from a sort of steady state business back into a transformational or growth business, and that's what we were finding that the friction occurred. It's really not... It's a long way to go about saying that you need to be flexible in terms of how you engage with your business stakeholders. You can't assume every business is in the same state. I think that's, I think, our biggest learning, and it's just a matter of really understanding what that business needs at that particular time, who the stakeholders are, and then fronting that with a model and with the right people, who get it and can jive with that team. That's really the other big learning, to think about the business and technology as one team, so now I've been encouraging movement of people from the business into the technology teams and vice versa. I've had a number of strong leaders move from my group out into the business units. I think that's also the way that the industry is going. More and more, technology is the business and you can't have business leaders anymore who are technology neophytes. They need to understand how they can leverage it enough. They don't have to be deep technologist coders or engineers, but they need to understand enough about how it works and how the mechanics of getting things to market work, so that they can actually plan effectively and drive the maximum value into their business unit. We've also found that sort of movement of people and mindset shifts hugely valuable as we've evolved as a business.

Andrew: That goes right to what I was going to ask you, and that's fantastic. I think that shift and baking people in on both sides... I don't think you can formulate a business strategy, and as you said, you don't need to be geek level understanding the technology, but you... Part of the business strategy must include the technology otherwise you're... It won't be an informed strategy, so I think that's fantastic that you embed people across. We see that a lot in the different traditional silos in IT now, of course. Whether it's security and the networking team, or just building cross- functional teams that are driving out this technology, but getting that business expertise into the teams and vice versa, I think, is critical. Otherwise, you create, I think, a stakeholder discussion that has gaps in it. Too much onus is on the technology team to figure out how to do something, translating business requirements, so that's fantastic.

David Markwell: Yeah, and that's a... I mean, and more and more, I think you hinted on the other key thing, which is these aligned objectives. Whenever we do any kind of strategic planning now, we have shared objectives across business units and across business units and technology against the outcome that we're trying to achieve. I mean, I credit our management board and Sarah for instilling that kind of collaborative culture across our business, that we're aligning on shared outcomes. I mean, I can give a business example. I mean, 10, 12 years ago when I joined, supply chain was intended to ship maximum cube, so they would stock the 63 foot trailers as full as possible and the stores were incented on turnaround time. The poor student would come to the back door and I'd go up the tractor trailer... Roll up the door on the trailer and all the stuff would fall on them and they'd be there for hours unloading. That's an example of misaligned objectives versus now, it's for operation merchandising or all incented on on- shelf availability, which is what the customer sees, so that allows this... From a supply chain merchandising, in- store operation technology perspective to say," That's how we're moving our thinking, to be customer focused." And," What does the customer," or also importantly," the colleague... That store level experience." Because certainly learned that colleagues that are happy and satisfied also create an environment where customers can be happy and satisfied, and that whole sort of focus has shifted from internal focus to serving our customers and making sure that we're giving them what they need to live their life well.

Andrew: Right. Understood, which requires, obviously, that understanding of the business objectives, as you were mentioning before. The more degrees you can get away from your immediate customer, which might be the business, then the better aligned your decisions might be. From a... Obviously, there's lots of things going on and lots of things changing as you deploy the solutions in order to meet the businesses needs. Where have been... Obviously, I know there's been a lot of investment, for instance in cloud, but how have you enabled your infrastructure or your technology to change at the rate necessary in order to be able to meet these needs of the business at some level of predictable cost and still meet your requirements around cyber or compliance and governance? How has your investment technology fundamentally changed to enable those sorts of things?

David Markwell: Well, I think... I mean, it's an interesting question because so much of it is about mindset versus the actual technology. I remember I got this shirt years ago. I don't remember which vendor gave it to me. It actually wasn't one of the cloud vendors, but it said," There is no cloud. Just other people's computers." That whole mindset around compute or storage or networking, regardless of where it is... And the world is becoming more and more software defined, so it's not about cabling things or racking and stacking and sort of hands on anymore, but it's about leveraging those as assets to be consumed in an appropriate way, regardless of where they sit. Whereas you want everything being a low trust zone or an off network type zone. I mean, again, it's a mindset thing. It's not like we don't know how to secure it or put the diligence and controls around it. It enforces what I think is more appropriate, which is compliance to your standards. You may have gotten away in the past and been lucky because you've had production drift or things that you could manage, but going to the cloud and going to a standard containerized architecture and everything being software defined forces you to adhere to your own standards and to monitor and check that because guaranteed the... Whether it's the cyber criminals, whoever's out there, they all know when an endpoint comes unprotected a lot faster than you will because they're checking, so you better be checking equally well.

Andrew: Yeah. No, for sure. I mean, personally, I think the cloud represents an opportunity to... As you say, there's different mechanisms to secure and ensure secure, but one, it gives you the ability to now design this system to be secure in a very different way than we would think of in terms of deploying servers in a data center, whereas you said location matters, so let's remove location out of it, but also, in terms of what you can observe in telemetry and how these things are defined in general and thinking about things like policy as opposed to firewall rules and containerizing things and reducing the service of what can even be logged into... The tools exist on the cloud to build something that is secure by design and can continuously monitor and ensure security. That doesn't mean it can't be hacked into, but my point is, I think a lot of people think of the cloud as a less secure place to do things as opposed to a massive opportunity to build something in a much more secure way. At this point, it's... There's a basic assumption everybody's moving to cloud, and they're either moving to cloud or they are investing a lot of money in building cloud use cases. Basically, allow their own data centers to be used like a cloud with the same capabilities, and we see that a lot with our very large financial customers, so they're building cloud native on premise, but the point is though to provide those same capabilities regardless and ensure that we're not talking about servers anymore, but we have flexible capacity that can maybe move out to the cloud as necessary.

David Markwell: And they're managing a different set of conditions, or they're managing their set of conditions, which is they have a large supply of assets they've already acquired. Moving to the cloud is as much a financial engineering exercise as it is a technical engineering exercise. You need to... Nobody wants to pay twice. You already have assets that's shooting out, your all backs in terms of depreciation or equity leases, and then to add in the cloud subscription or consumption costs on top of it, that's what everyone's trying to obviously mitigate because it hits your bottom line immediately. I mean, that's typically why people would go to private cloud beyond obviously the idea that you can somehow control it better, but that's certainly my perspective. We have on- prem build capabilities. We haven't built a manual environment in probably two years, unless it's a... I wouldn't say never, but I mean, there's the odd, strange condition, where we don't have that template or something needs to be stood up for a POC or crosstalk need. So you have those best practices, but we're certainly not... We'll leverage, obviously, the assets that we've got, that are still viable in our data center, but we're certainly not where ever possible buying assets into our data center, but we've sort of taken the hit a few years ago, from a financial perspective, to be ready, so it was almost like we did the pre- work financially three, two and a half, two years ago to be ready knowing that this would be the end game that we wanted, so that we weren't paying twice and that we were fitting within the financial framework that the company had set out for us, and that we're adhering to.

Andrew: Given the reliance on the cloud or given the reliance of things outside of the data center, how has that impacted the networks to the retail stores themselves? Has there been a shift there? For instance-

David Markwell: Absolutely. I mean, the stores themselves are becoming more and more dense with not just technology, but interactive technology, and that's driven a need for increased bandwidth to certainly the large stores that would have, for instance, a bank pavilion, a PC express, picking operation, lots of digital signage, colleague learning and training on their own mobile devices over wifi, those types of things. I mean, it goes without saying, and this goes back to managing operational risk... I mean, critical traffic like debit, credit, PC Optimum, a gift card, adjudication of pharmacy, all those types of things. I mean, that's always, regardless of what network is running through the store, regardless of how remote, that's always in critical high, and then that goes inaudible or SAP at the store. I mean, that's been protected, where we've had the... Seen the shift is in the next tier of traffic in terms of what's important in terms of go to market strategy for the particular retail operations and how do we allow the stores to become more like media centers or engagement centers without blowing the budget from a network bandwidth perspective. Part of that's been leveraging technologies on our legacy network infrastructure like compression prioritization, QoS, WAN acceleration type technologies to get the most out of that bandwidth, but now, as we're doing videos and digital media and other types of services... I mean, we've known for a while that's not enough. By the end of this year, we'll have upwards of 500 stores on our enhanced SD WAN network, where we're leveraging sort of dual internet or LTE type constructs, or we're required because the service isn't available, or just because the stores are so big, we just dedicated fiber lines. That's something that we're working through and it takes time to work through the whole network, but we're evolving the evolution of our store network as well.

Andrew: Yeah. Got it, and we certainly see a good deal of investment on the SD WAN side for those reasons. In some cases, that means deeper visioning lease lines or MPLS, whatever, and then therefore, being able to take advantage of multiple types of connections to support that compute. Just to pick up on... Your team's partnership with business is, from my perspective and talking to other leaders out there, the amount of in- depth partnership you have, and almost seemingly like the strategies are formed together is fantastic. I would imagine part of that... That's something that's very hard to teach a young person in technology. What does the customer actually want and why? What are the business requirements behind this? I would imagine there's opportunities in the technology groups, even at earlier entry points, to gain some experience on the business side.

David Markwell: The question is how do we give people the broad constructs?

Andrew: Right. You got it. That's really the question.

David Markwell: crosstalk they need to be where the customers are, so if people want to learn about stores, they need to be in stores, and they need to not just observe, but work in stores or do a rotation. We encourage that. When people talk about scan rate per hour as being an important metric at POS, why is that? Well, it's because if you don't stick to your scan rates, you're going to have lineups, and then people are going to be upset, and if the line gets more than three deep, people are going to drop their... Or abandon carts and walk out. It's understanding that and seeing that happen, sometimes, that people then say," Oh, well, that's why that's important, so that's what I'm building this business requirement around"... Right? And this is why... Not because we don't want to do it. Just because in terms of how that comes across to our customers, there's different ways to do that. There's messages on the receipt. There's emails. There's sign ups. There's ways people can take things home and do them versus just having a message on the pin pad, and then having people tap away or enter email addresses, things like that, that hold up the whole process. It's really people understanding how that works versus just sitting in an office far away from the stores and thinking this is a great idea. That, to me, is one of the biggest things we do. We try and have an active role. Certainly myself and my leadership team get out in stores as frequently as we can. Not just as shoppers like going on a weekend to get your groceries, but I'm actively going to stores, talking to the associates, talking to the people who are using the technology in these processes every day.

Andrew: Did you... I mean, you mentioned earlier that you started on the supply chain side in Loblaw and you've been there for a number of years. I would imagine you had some great mentors along the way. What's sort of... Are there things that you believe you've matured in the way you approach over the last few years as you've been moved up in leadership role that you wouldn't have been able to do a few years ago? What were the key skills you've learned as you've grown in the organization?

David Markwell: I guess... I'm trying to think. There's been so many. I mean, okay. Let's do the top two or three. I mean, I think the first one is the farther up you go, the more time you should be spending on developing and mentoring people, whether it's on your team, whether it's across the business. Building future leaders, that to me is the biggest lesson I've learned, and I take it very seriously when I actively mentor a sponsor in business, in store operations, in supply chain and merchandising, in the financial services group. Only because I see it as so important to be able to build our next generation of leaders, and despite all the technology, we get things done through people. The second thing is as you grow as a leader... In that same vein, but it's not just about the shadow you cast within your own group, it's about what profile and what value do you add to the greater organization? I'm active in a diversity inclusion committee. I ran our AI community. I built our analytics training program with some partners in the business side, and actively taken myself to a point outside of just technology, where I don't want to be seen just as a good technology leader, I want to be seen as a leader point blank, or a great business leader. That, again, has been an evolution of something I've gone through personally to understand that it's the shadow you cast and the value you add needs to be much greater than what you just do for your own group or for your own sort of line function. Again, going back to that... What would you... 10 years ago, or that would not have been my perspective. Probably would've thought that I know best and just pound my way through to success, and that's not the case.

Andrew: Yeah. I certainly... I think those are great one and two. Share that from earlier in my career as well. I remember a mentor once telling me," You did everything we asked you, did more than we asked you, predicted things we didn't ask for. Fantastic, but if you turn around, there's dead bodies littered on the street behind you." There's a way of doing things-

David Markwell: Now, turn around and rally them and do it again.

Andrew: Right, exactly.

David Markwell: Right?

Andrew: Right. Yeah. It doesn't quite work that way.

David Markwell: Right.

Andrew: Well, great. I want to be respectful of your time. This was... I really enjoyed the conversation. I think your approach is so thoughtful and so customer and business and employee focused. It's really... There's a lot to learn from that, and there's a lot to be proud of. It sounds like you're really... You're driving a business technology strategy that is future thinking and is really embedded where it should be, at least from my perspective, and I really appreciate that, and thank you very much for the conversation.

David Markwell: Well, yeah, and I mean, I'll end... I mean, I appreciate those comments, but I do... I would like to acknowledge that I've had a great team and I have a great team who always stepped up, and certainly, like I said, the leadership of Loblaw and Galen and Sarah and others have always really supported me and created a culture where these things can happen and be allowed to do things that inaudible I think that's just a credit to the organization and to the culture that they've built. I think that's been a big contributor.

Andrew: Fantastic. Awesome. Thank you very much again, and I'm more than happy to continue this conversation either on Twitter, at [inaudible 00: 26:01], or email me at andrewnetworkdisrupted.com.