How a DevOps Mindset is Influencing Target's Culture
How a DevOps Mindset is Influencing Target's Culture
SVP, Digital, Target
Sr Director Product Management, Merch Capabilities, Target
One of my favorite organizations that I've been able to study is target one of the largest retailers in the United States. So in my introductory remarks, I had mentioned how special of a place target has in the DevOps enterprise community, Heather Mickman and Ross Clanton spoke at our first conference in 2014 and 2015 describing their journey to rebuild engineering excellence and an organization that had outsourced most of the technology function and their quest to unleash the creativity and problem solving potential of thousands of the technologists. So much of the unicorn project was inspired by the amazing stories that they shared in 2018. A team from target spoke about the continuation of that journey, talking about how they were rethinking the role of architecture and governance, again, to enable developers to be productive and to tap the vast expertise of the entire organization. One of those leaders who spoke was Luke Reddick, who was then a principal product owner.
Now he's a senior director of product management in merchandising capabilities. And when he told me earlier this year about what he's been up to, especially about the role that he played in the COVID response, I knew that this was something that this community needed to hear about. I'm so delighted that he will be presenting with his former boss, Brett Craig, who used to be the senior vice president of merchandising capabilities. So he was a long time executive in target technologies. So many were surprised by his move, into this business leadership role and as probably a Testament to his successes, he is now SVP of digital. I think their story is so incredible on so many different fronts and has so many lessons for not just technology leaders, but business leaders as well. So here is Brett and Luke.
Thanks Jean for that great introduction. And thank you all for letting us come and present to you, Brett and I are going to talk today about how really the dev ops mindset is really influencing Target's culture as a total bid business, not just within our it and technology organization. So before we jump into that, I'm going to introduce target. So target is one of the largest retailers here in the United States. So we have over 350,000 team members, almost 2000 stores, almost 50 distribution centers. And we really have had quite, quite the last run over the last several years. So our investment in a lot of our digital capabilities and our total business is really starting to shine through. So before we jump into the actual content, I wanted to introduce myself and give Brett a chance to introduce himself and talk about how, um, our organizational context and structure really helps facilitate the relationships in the pieces that we're going to talk about later in this presentation.
So I'm Luke Reddick. I lead product management for our merge capabilities team. So what we mean by merge capabilities or my specific function is I lead all the product technology around how we allocate space to our stores, how that shows up on the actual shelves, um, assortment and financial planning. So that's our kind of main function of, um, what do we buy is that financially viable is that operational operationally viable and then our insights and analytics folks, all of the data and insights that fuels our merchandising capabilities. So I have a background in technology and engineering. So I'm a former technical product manager for some of our underlying data platforms. And I have background before that as both an engineering manager and a developer kind of growing up in target and a few other companies. So with that, I'll let Brett introduce himself. Thanks Lou have, and thanks Jean.
Uh, thank you to the dev ops community. It's really, really fun to be here. Um, uh, I have spent most of my career in tech roles, uh, starting as a developer and working through different aspects of it. And, um, one of the great privileges I had is to work with, with Luke and a whole bunch of other people that are on, uh, on, on this call today to actually think about the transformation of our tech business and the implementation of dev ops. Um, I, um, I have had the chance to move into other roles beyond technology. I spent a few years working directly with Luke and merge capabilities, and I brought a lot of that experience with me. And that's part of what you're going to hear about today is our journey at target, but also how we take the things that we've learned that were originally introduced in tech and use those to help influence, uh, how we want to be even better communicators, more agile, more nimble as an organization to continue to drive value.
Um, more recently I moved over to lead our digital business, and that is a great for me. It's a great bridge to bring back me a little bit closer to the technology, um, roots that I grew up in over many decades. So I'm going to go back to call it circa 2015, um, and talk a little bit about where we were as a technology organization. Uh, so, uh, at that point in time, we were, uh, we were struggling, uh, to, to be candid. Our, our spend as the rate of sales w was, was too high. We had so many priorities that we were making so little progress on. Um, and when, on the rare occasion that we did in fact, deliver a project, uh, our delivery model was most reliant on third parties. And so we didn't actually retain the IP. And so this created morale challenges and stability challenges, uh, and we were all just really rooted in just legacy ways of working.
And so there wasn't a recognition. And quite frankly, there was, uh, there was a few activists and visionaries that said, there's, there's, there's a better way to go about this. And so some of the issues that we knew we needed to address were prioritization. We're the skillset of the workforce to be more contemporary than what we were leveraging, including the makeup of the workforce, and making sure that we had an engineering culture, uh, that helped reinforce the importance of the spoke development and building IP within the organization that would help us to grow. Um, uh, we needed to anchor better to architecture, uh, and we need to move from project to product, um, embracing more agile principles, uh, and helping to delay or the organization along with that came with the, the necessity of actually loosening our risk posture, meaning that everything that we thought we needed to do, we really didn't need to do.
Um, but in doing so, it helped fuel prioritization and it helped generate some conversations about what are the things that we absolutely cannot miss. And why is all the other noise in the system? And I will tell you, this was a, this was an area where I grew a lot as a leader because we had a lot of conversation across my colleagues about how important something really was. There were a lot of things that were important to someone, but were they really important to all of us? Uh, and the answer was frequently? No. Um, so we went through a transformational journey to embrace product, to embrace architecture, to commit, to building more of an engineering culture within pack. Um, and, uh, while the outcome years later has proven to be hugely rewarding, it was not easy going initially. We quickly realized that in taking on this journey, we lacked critical skills in product and engineering and analytics.
And in user experience, productivity went down, stability was rough. We had a very, very rough holiday season. And, um, I think we all have some scars to bear from that. Um, but we didn't give up, we were committed to this cause, uh, and we believed that there just was a better way of working and we are pursuing it. Um, we made a heavy investment in learning. Uh, in fact, the target tech team continues to support a 50 days of learning. And, uh, what I mean by that is literally every engineer is given 50 days. Those are work days, not weekend days, uh, to invest in themselves, to invest in their own learning journey, uh, to help make sure that they continue to stay current, um, and that they continue to bring, to explore, to innovate. And what is really cool about that is the amount of collaboration that has happened across teams is been super, super powerful.
We also put a lot of time and energy into establishing architecture, principles, governance boards, being really intentional about our retail retail platform architecture, um, using microservices, of course, the notion, um, that the notion from, uh, from, from architects around, we must be loosely coupled, but highly aligned, um, helped us to really start to move any more positive direction. And we started to feel the energy from that. We also adopted some, uh, some ideas from our friends and, and key partners. We, we, we stood up a reliability engineering team, which is the Google model, uh, the SRE model, uh, and that helped us in fact, um, make sure that we were not only building something that was focused on features and functions, but we were actually putting the operational health into the same conversation, AKA starting to really embrace the notion of what a dev ops culture really looks like. Um, and as we've evolved to where we are today, we actually have begun to embrace these agile and dev ops principles in other parts of the organization. One of the things that I've been able to bring with me in my journey from beyond tech, uh, is this mindset and this experience and, uh, and the reasons why it matters so much, uh, and it is applicable far beyond just a tech and product organization.
So we're going to talk about a couple of short stories, um, all around how dev hops has influenced our culture beyond just within the tech and product organization. And back, we're going to talk a little bit about how I was able to bring my own experiences to bear, uh, in a couple of these initiatives, the first one is around fresh food merchandising. And just for brief perspective, our fresh food business is a substantial business. Uh, and it was underperforming by all of our core metrics, but I think more importantly, fresh food is a very, very personal need. Uh, our, our customers, uh, you know, care a lot about what they put into their bodies, how they use food to, you know, grow their families. And so our ability to deliver a great product at a great price is something that we take. We took very, very seriously and we recognized that we could do better.
So as we took on this endeavor, um, we started down our traditional path. Things were initially, you know, going okay, and then it, and then it slowed down the scope got wider. And so we of course said, well, let's add people, let's increase management reporting. Uh, and, and as I moved into the merchandising capability space and out of tech, um, I became one of the sponsors of this work. And I had some very candid conversations with my colleagues and said, we cannot continue to repeat this. It's not going to get us through, uh, that the right outcome. In fact, um, we need fewer people, not more people. And so we made the choice to actually pull people out of this. Um, and to in fact, stand up a very small group across this admin group, which included business people, operations, people, tech people, and product people, and say, here is a specific set of deliverables that we want to pursue.
There are only a handful of measures that really matter, and we're asking you, and we're empowering you to figure that out. Oh, and by the way, we're going to put you in a common space because we, you to communicate person to person, not PowerPoint to PowerPoint. And that took a lot of muster across the organization to, to get comfortable with. But I constantly reminded my peers that what we had been doing simply wasn't working and I needed them to trust me enough that we could take a different approach, uh, and deliver a better result. Um, and so that was an interesting step. And Luke's gonna provide more perspective on some of the details that we went through with that I'll flash ahead. Um, um, and say it, it turned out to be a pretty good outcome, and it helped me grow a number of, uh, supporters, peers.
Who've actually began to see that this way of working actually might be their way of working that we want to apply in other places. And why that matters so much is when we dealt with a real crisis, when we dealt with a pandemic and had to focus on just getting down to the, the essentials while everybody was trying to figure out health and safety and how to work remotely, we were a lot more open when I say we, I mean, my peers and I were a lot more open to say, this is another opportunity for us to leverage the spirit of dev ops and putting just the experts together to help make sure that we're focusing on the things that only matter most. And so what, what has it been an outcome of that? And we'll talk a bit more about that journey as well, is that by empowering a small group of people across the organization, it helped actually drive through some of the uncertainty of new challenges that we encountered every day.
And we continue to see these new challenges as do. I'm sure all of you in your own businesses, your own industries, um, but we've actually began to grow this, um, this idea that was born out of the, uh, out of some great leaders in tech, but has now begun to grow across the rest of the operation, uh, at least within target. Uh, I will talk more about where we are in that journey towards the end, because there's much more to be done. Um, but it has been able to help us actually make impacts beyond what we would historically, not very good at doing so with that, uh, you know, and you'll see these themes, but with that, I'm going to turn it over to Luke to actually get into some more of those details. Thank you. Thanks a lot, Brett. So I'm going to first jump into our fresh food merchandising revamped experience.
So to provide you a little context. So this was 2018, Brett alluded to this a little bit, but we were in a pretty dire spot. So we could not keep in stock on our high quality perish, high quality perishable business. And quite frankly, he was raising the question of, should we continue to be in this business in a five, you know, longer term five-year longer-term horizon. So we had an immense competitive pressures. So at the time, and still happening today, I guess like the trader Joe's and the Aldi's of the world were on rapid expansion, our traditional competitors, some of the bigger players in the, the grocery market, um, were really kind of doubling down on some of this business for a lot of the reasons that Brett talked about earlier. So what did we, what do we do? So, um, we initially proposed a 50 plus person team from a consulting organization to really come in and fix this.
And Brett said it earlier, but I'll, I'll just, re-emphasize it, that in, in, we were just lucky as a company that he was in his role to come in and have the influence and authority to a, um, kind of put his foot down and say, no, there's a better way, but also propose a better way. So I actually got a phone call from Brett. Um, I don't know if it was shortly after a big executive meeting or not. And he asked me if I'd be willing to lead a pretty lean team to build sustainable repeatable capabilities for our fresh business and not just go after a specific project or a specific outcome in an unsustainable way. So what did we do? So, um, the first thing from my lens, I think was the most important thing is we had, we had our goal. We had clarity of what our goal of what our outcome needed to be.
So we needed to drive profit without sacrificing sales in these key fresh businesses. So think deli, bakery, think perishable think seafood and meat. Um, and so this was honestly the guardrails that were given us. There were a lot of ideas of things we could do, but this was ultimately the thing that we anchor to. And then we had a small empowered team. So the actual buyers and planners and people that allocate space, the people that work with our vendor partners to negotiate terms, um, all of those kind of functional experts were locked in a conference room. I say locked, we weren't really locked, but we were co-located together in a conference room. And we had myself and a couple of engineers that sat with these folks every single day. And we really understood and learn what their business process was, where some of the kind of opportunities for improvement was.
And we really leveraged, um, short sprints and Kanban boards and fast feedback loops to really tackle these problems head on. So some of the capabilities that we were able to deliver as part of this. So the first thing that we did was we really understood, like, how do we need to segment out our 1,912, or, you know, approximately 2000 stores by these categories? And do we need a different space plan, a different merchandising plan for each one of those, those footprints. So a much deeper level of segmentation capabilities that we were ever able to do that was data-driven in the past. And then we really use a lot of our science and analytics capabilities to go into those specific segments and say, how much space do we actually need to main mean sales and look at the trade-offs of profit with it. So if any of, you know, retail space is kind of king, so it's our most constrained asset within a brick and mortar store is your space.
And if you've ever worked with any merchandising organization, at least in my experience that in a default response is, is we had more space by had just one more foot, two more foot. I can really capture my goals and introduce the assortment that I want to or drive the innovation with with it that's in there. So this was a pretty big shift to really use data and intelligence to drive how much space should each category ideally get without, before they start getting diminishing returns on profits. And then the last thing we did is we were able to take these kinds of, I call them space and form segments. So building a unique assortment for that, and really start to localize some of the assortment decisioning. So we introduced some base metrics like mechanical shrink. So in layman's terms like, am I sending more to the store in a case that I can sell through before the next case comes?
So I'm sending 12 lettuce heads and I can only sell through five of them before the expiration date. You probably shouldn't send us those five, five lettuce heads, or you should renegotiate how much comes in each case. So just giving some data at the fingertips of the people, making the decisions and some sustainable tools, not only to help these businesses, but also really set the stage for our future capabilities in this space. So I'll jump into some of the results. So, um, just from a results standpoint, in, in this effort, we were able to increase our gross margin by 32% in these fresh categories. And we only sacrificed, we were in a plus or minus 2% on our sales piece. So that's 32% straight to the bottom line. The other big outcome is we were able to decrease the actual square footage we allocated to these fresh categories and aggregate by about 15%.
So thinking about that space being king that's 50% of our stores that we were able to allocate to a different business that may be more profitable or may be needed to drive innovation and really get in there. So that was just a huge outcome output from this effort. And then lastly, we built version one of what our kind of assortment planning product toolkit was. So as I lead that team today, we are taking a lot of that base foundation and those base capabilities, and we're iterating on top of that for the rest of our businesses. So with that, I'm going to let Brett talk a little bit about some of the cultural aspects that went with that before we jump into her second story.
Great. Hey, thanks, Lou. And I alluded to this a little bit earlier, the, the outcome of this, um, uh, actually exceeded a lot of people's expectations. Uh, and I would say the timeliness of the outcome had people, um, become a lot less skeptical when I say people, I mean, close friends and colleagues of mine, who, who were kind enough to trust me in taking a different approach, but we're certainly sitting on the sidelines saying, yeah, but willing to work at it. And the implication of that is it built a lot of trust. We've actually moved into a much deeper co-creation model, uh, in our food and beverage business and, and more broadly, and per the story that we're about to tee up, having, having leaders, peers of mine, then also come to the table when we had a crisis that was much more enterprise in nature and say, what's the right way to approach this without assuming or defaulting to how we've always approached.
Things actually was incredibly liberating for our team. And I would argue one of the most impactful reasons why we were able to navigate the early stages of this tragic pandemic, this crisis, uh, in a way that protected the health and the safety of our guests, uh, of our teams, but also helped us continue to be thriving as a business. So this would, this was a pivotal moment in, in driving a culture shift to that, um, that we, we didn't even know we needed, uh, at the time in terms of the, what was coming our way. Um, but I'm surely glad that we took it on. Okay. All right. So I'm going to jump into, back into this story in a little bit more details. So before I go in too deep, I want to give you guys a L I want to paint a picture of what our merchandising culture looked like from my point of view.
And I think from several others point of view, so say we were very siloed in our decision-making processes and our operations. Um, everything was about what's best for my division, for my category profits for this upcoming quarter, or my business is unique. So I need unique tools or capabilities or whatever it may be. And quite frankly, our, our business, um, when you asked a merchant was very merchant driven. So it was what is best for our assortment, not what is best for our end in operations or what is best for guests. So we were, we weren't, you know, this, this is painting a pretty grim picture, but I'd say the spirit, a lot of this was quite frankly how we operated. So we had a weekly action meeting that was very merchandising focused and attended. And honestly it was outside looking in a lot of celebration about what each individual category was doing and not a lot of inward thinking about how do we collectively come together as a team of teams and make better decisioning.
And that was a separate meeting from our weekly operations meeting, which was more of our supply chain store results, kind of operational focuses of this. So this was not a all-inclusive enterprise thinking set of routines. And one was really much around our merchants. And one was really much around our operations. And I'd say our product and technology teams were still, even though they were operating in a product model in more agile delivery practices. And a lot of the, the spirit of dev ops, they were still being viewed as really just the tech arm. So projects were stood up and they were, there was an engagement after the timeline and outcome was already determined and they were contracted over to product and technology to deliver on from many fronts, but then our pandemic happened. So these are probably some pretty familiar pictures to you on, on some of this.
But, um, we just had a crisis, like at first in March and April, it was our essentials businesses and our food and beverage businesses. So you solves shelves that look like some of the top, right. And right pictures on this slide, um, where they were empty and there wasn't anything to be found. Um, in that same time, we had just a real, real overage in inventory, on our discretionary business centers. So our apparel and accessory businesses weren't selling, we had stockpiles of inventory, both in our stores and in our distribution centers. And then we gradually saw a shift where we started seeing, um, in kind of the may timeframe. We started seeing trends and electronics in home office, in board games, in household leisure wear like, so we really seem like every single month we were dealing with a new issue. And at the end of the day, like we had a team to take care of.
We had guests to take care of these guests, come to target and rely on a safe, clean place to shop. Um, we have those 350,000 team members that were all dealing with their own safety, their own processes. So it was really just a chaotic situation. And we had to pivot into a new way of thinking to really get through it. So one of the first things that, that we were able to do as a capabilities team is really because we, we were uniquely positioned to see kind of the total value chain in which merchandising played in. Um, we were able to orient kind of what is the critical path value chain. So how do we set strategy? How do we allocate space or, or decide on assortment? And how does that show up when we're ready to introduce newness, uh, the, uh, change in the store and then how do we manage things in season?
So our capabilities team, we were fortunate enough to operate kind of in all of these pieces. And we were able to really play a role in bringing some of these disciplines kind of together to really start to understand what critical path is. The other thing that we did is we actually pivoted to a daily action meeting where we reviewed progress. We understood where roadblocks were. We understood who the right people were to make these cross enterprise decisions. So, um, that sounds like a standup to you. Um, I don't know what else it stands like to me, but this was a standup at scale. This was our business owners from across this value chain, really coming together and saying, what is the best decision for us to make for our team, for our guests? So really it resulted in really a total total mindset shift. So I'd say we really took an enterprise mindset.
So I talked a little bit about the daily action meeting, the damn meeting, um, but really we centered it around how do we cherish our field team members? So how do we protect them from all of the different unnecessary noise and change to make sure that they are, they are being safe, they are servicing our guests, they are providing clean stores and making sure these essential oils are in, in stock. If we have them in the store, they should be out on the shelves. We shifted our decision making to say what's best for our guests and for those team members. And we really started looking at metrics that weren't quarterly. Like, how do we start thinking about two year results? How do we really understand what some win-win longer-term things could be with our vendor partnerships? So just some specific examples. So I would say we paused a huge number of our clearance programs that were set to start in some of those early days, really just as a team member, labor savings, like they didn't have to spend the time, um, re stickering items and putting out news new signage.
They were able to spend that time working with each other, with our guests, with their families. Um, so that was an example. We did, um, a ton just in my own team's backyard of pausing, um, what we call transition. So when we go in and we introduce newness into our store as a season shifts, um, that involves a lot of store labor to go in and reposition the shelves, get new product put out on onto the, onto the shelves. Um, and so we were able to pause and actually reconfigure a lot of those, which are huge enterprise decisions that we were able to make in that daily action meeting. Then we had other measures of demand shaping. So thankfully we had targets circle are our primary emotional vehicles at the time. So we were able to take, uh, inventory that we had a huge high on, and we were able to run instant promotions for, for our most meaningful kind of fulfillment models that were out there.
So those are just some, some specific examples of the types of decisions, but it really fueled this broader enterprise mindset that we really still see coming through today, which I'm going to hand it back to Brett at this time. Cause I think there's a super telling outcome as, as our team's values and purpose come together, but I'm going to let Brett talk about that. Thanks. Um, I want to start with, it would be remiss for me not to the leadership across my peer group in what, what Luke shared. Um, I think it was a fair depiction of where we had been in terms of kind of people focusing on their thing. Um, but the reality is when, what, when the crisis hit all of us, the, the rallying around as a total leadership team around what matters most was incredibly inspiring for me. I have a deep appreciation for my peers and my colleagues, uh, in the way they've stepped into that.
I don't think that they, they would know that that actually, um, has anything to do with dev ops. I'm not even sure that all of them wouldn't know what dev ops is, but what the point is the culture change about getting rid of the noise and working in a collaborative, open, trusting way, breaking down silos is the spirit of what we're, what we're here to talk about. And so, um, so I do want to recognize them because it's been, it's been a trying journey for all of us, um, uh, but it wouldn't be possible if you didn't have that type of community, uh, to work with. One of the things that we have recently done at target is rollout, um, uh, a kind of refreshed culture of framework. We've been a purpose driven organization for many years. Um, and this culture framework is really just about continuing to remind us on what it's going to take to reinvest in the business, reinvest in each other.
And, uh, I think what is sort of telling about this is when you look at words like care, grow and win together, and then you see values around inclusivity, making sure everybody feels they can, they can be their best selves connection. The importance of that commune that I just mentioned and drive, and I'm going to spend just a more, a second here and more on drive because the bottom bullet on drive is something that I don't think that would have been in our corporate literature, uh, until very recently, because it says, choose progress over perfection. Uh, and the implication of that is back to the connectivity. It is about the togetherness of what we're doing. And so I personally love this framework. I am of course biased, but I do think it actually tells a very promising story for what lies ahead as we continue to navigate the ups, the downs, the highs, the lows of things that are happening across the entire global environment.
Um, but it positions us well to actually know how to rally together, uh, and think about, um, getting rid of the non-essentials and focusing on what do we, what do we need to make sure that we can absolutely protect, I did not create this framework, uh, but friends of my dad. And I think it actually is a really great reinforcement of the way of working that we have been adopting now for a number of years. All that said, of course there was more for us to do. I want to start with a quote I've heard just a week ago. I, my friend Laisha ward who is our community engagement officer, uh, was interviewing Lin-Manuel Miranda, uh, the playwright for Hamilton, uh, and it was a very inspiring interview and he was talking about his own creative process. And he, he said something that really stuck with me, his quote was remembering why we're on the journey, fortifies the journey itself.
And I think that's a great way to start to kind of wrap up what we wanted to share today. Yes, we have opportunities. We have room to grow in product thinking across target. Um, like all of you, we continue to be so reliant on tech talent and it's a very, very competitive environment. We all know that, um, but we're doing great work and we need to continue to make sure that we're investing in great talent, um, that helps us drive this not only from a mindset, but actually from a capability development perspective. And lastly, it's about continuing to drive the spirit of dev ops into the organization as we alluded to earlier. Um, my, my new role at target is a senior vice president of digital. And what that means is I, I run the digital business. So I'm accountable for the P and L uh, the product organization in digital roles into my organization.
Uh, it's a big global team. And in digital, as all of us know has become so much more of a gateway to retail, uh, certainly for target while other parts of the world, uh, China, India, et cetera, uh, are, are more digitally native than the U S the U S is certainly coming in that direction. And our digital business has grown exponentially. And so it is, it is roughly 20% of Target's total revenue. Um, and so that makes me excited and a little anxious at times. Um, uh, but it is also the primary growth engine for how we want to continue to build relationships and build affinity with our guests, with our consumers. And so the necessity of bringing a dev ops mindset and a dev ops culture into the digital business is a place that feels really great to me. It is, again, as I mentioned, is a, is a place for where I get to leverage my years of being a technologist, my experience in the more recent years as a business leader, put those things together, but how it also influence not only what we do, but how we do it. Uh, and so I'm really excited about the future and what lies ahead.
Great. Well, thank you all for listening to our story today. Um, as Brett mentioned, we are on the lookout for tech talent tech talent across all disciplines, whether that's analytics, whether that's engineering products, UX, you name it, we're we're higher. So we're still flushing out a lot of the details, um, as this talks being recorded. So I will coast live on the slack thread, more details about a networking events, but I just want to close out life thanking you all for, for being a part of the community for helping to shape myself in this community. And really just wanted to thank you for listening to our story.