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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, uh, both in 2014 and 2015, describing their journey, rebuilding and engineering, uh, culture of excellence at 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. Uh, 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, um, unleash the, uh, creativity and, uh, productivity of developers. And one of those people who spoke then was Luke Redig, who was then a principal product owner, and now he's senior director of product merch management and merchandising capabilities.

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One of the most critical functions, uh, in a retailer. Last year, he spoke with his boss, Brett Craig, who is formerly SVP of Digital and is now the CIO of target. Luke talked about, uh, the incredible ways 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. Uh, were keeping store shelves stocked and team members and target guests safe, uh, with 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

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<laugh>.

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

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All right, I'm gonna set this up here, get my clicker. Thanks, gene for that great introduction. Um, I'm not 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 gonna jump right in. So I'm gonna give you a little bit of a, of a blast from the past and talk through some of the things Gene just mentioned. And then I'm gonna spend the majority of this time really talking about a new challenge that we have in Inventory Health. And then lastly, I'm gonna close it out with here is just what I would tell myself back in 2014, if I only would've known now what I knew then, or the opposite, you get what I'm trying to say. So first about Target, about me. So Target's a big company.

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Um, you see this slide every time we talk, it changes a little bit. Um, you can see from all of the different talks kind of how this slide has evolved. So one of, one of the things to know, and one of the things I'm really proud of, which also helps drive some of our problems, that is how fast we've grown, which is a good problem to have. But we grew from about a $70 billion retailer to $106 billion retailer over the course of the last few years with a lot of that growth spiking in the last two years. It's a little bit more about me. Um, I sit, um, in the merch capabilities organization, so I lead the product teams there. Um, the merch capabilities organization really supports, um, 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.

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Um, 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 pre previous talk was as a technical product manager. I was an engineering manager before that. And then on the personal side, so I'm married to my wife, McKayla. I have twin six year olds, George and Zu. They're in kindergarten right now. So that's been a big change for us and I support bad sports teams. And, um, I'd say I put, I'm a runner on here. I just, I like pizza and beer, so I run to have pizza and beer. So that's a little bit more about me. So I'm gonna jump into our, our history. So a lot of you guys have been at many of these, these summit or these enterprise summits, and you've, you've seen Target before, but I wanted to just talk you through and I, I tried to pull out a little bit of insights from some of these talks.

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So in 14, 15 and 16, um, 14 started with Ross and Heather, Ross Clan and Heather Mickman talking about really, I, I categorize as like the foundations of DevOps at Target. They talked a lot about breaking down silos between ops teams and certain dev teams. Um, 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 as tech and really see how this, this grows beyond. But really the, 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 to do is break down those silos and getting people working together in 2018. Um, Dan Cundiff, Levi Gyer, who's here, um, say hi to him if you haven't seen him.

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Um, we talked a lot about developer enablement and our, 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, um, interesting quote. I re-watched all these videos pre prepping for this, that was really kind of futuristic a bit for, for, for this. Um, so one of the things he talked about was like, we knew, like we had great tech capabilities. We talked about architecture a lot in this, but really we, 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, to generate value and really create, create where we wanted to go together. Which kind of led into to last year's talk where Brett, Craig and I, we really talked about our new ways of working and, and in fresh food where we had originally, um, were gonna 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.

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And we were able to jump in and work really differently. Um, and the results of that were tremendous. We, we just, with data, with insights, with capabilities, with collaboration, we're able to, uh, increase our profit and our fresh businesses. So think, produce, think dairy, think bakery, um, 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, on that standpoint and how that really set the tone for a new way of working. So Brett had a senior level position. So he was the SVP of merch capabilities, this, this critical org at the time. And really what, what he was able to do was really influence his colleagues to trust in a new way of working. And so, um, there was a lot of skepticism at the time. Um, so we did it in fresh food, we started doing it in our covid response.

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We started working collectively, having feedback loops and, and really getting, getting things going. And then one of the last, oh, sorry, I'm, I'm jumping ahead. So one of the things I'm really, really proud about is all those people that talked, um, are really playing critical roles here in our industry. So I'm not gonna go through all of this, but it's just really a testament to, to the culture that we've been able to do the, the values that we put around leadership, and you see kind of where some of these people are and making the, the impact and influence that they are in their, their companies today. So I'm gonna jump into our current, where we're at right now. So inventory health, so I'll paint the picture here. So the retail environment is pretty crazy. I mean, all of our environments are crazy, but it's really a combination of a few things.

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So inflation raising has, you know, our consumers really shifting away from discretionary categories like home or apparel and kind of 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, on sales, mix that with our, um, supply chain issues that still go on today. Um, and really the bottom right is our, 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, our broader ecosystem. So what we were doing with our distribution and stores, networks supporting $80 billion of business two years ago, we're taking that same space, that same supply chain network and operating $106 billion in business this year. So really what that's leading to is we are bursting at the seams.

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So we have certain categories that in, in discretionary that we've way over boughten like furniture, and we're, 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 discretionary and fre or some 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 and ls around apparel, around food and beverage, around home, around hard lines. And so the behaviors, the processes, the tools, the way we collaborate and work together, we didn't do it very well. They was good within the pyramid, but across, so when we started to think about things like, hey, we allocate our annual budget, um, and historically we spend to that budget, and yeah, you can make tweaks within your category of, hey, maybe, uh, seafood is, 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 do this.

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But we had never really done it across. And so that really started really this, this pretty big challenge. And and it's not just target that's facing this, but um, it's really, really been a challenging ecosystem for us. And so I had, we had talked, Brett and I had talked about this slide, we introduced it last year, and this is really what our cultural framework is, and it's grounded in three different things, inclusivity, connection, and drive. So 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, like 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? So 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, our operations organizations together.

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This is our entire enterprise, this is our business values and culture. And so Brett had a quote last year that, um, really set up this inventory health problem really well, where it's like this framework, although we didn't create it, um, actually tells the story. We're gonna go through highs and lows and challenges and things are gonna 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? So, um, this is some of the things on, on, I guess the right hand side of what you're looking at the left, left on mine. Um, so one of the things we did with this inventory health crisis, so I mentioned this like not being able to adjust spend across categories. Our senior vice president of planning, Dexter Newman is this fantastic leader and he's, he's a super like introverted, soft spoken, but he's just a great leader.

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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 a best in class planning organization? How do other industry experts and leaders handle, handle spend and inventory? But really it came into how we were working, like how do we have regular, frequent candid communication? So we stood up what we call steam teams. So it's not new 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 how do you run 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?

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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, which, um, these were things that my product team and my, my collective product team that I sit in this, this is how we work. We, we wrote these values down and these are things that are being embraced now across our entire merchandising capabilities strategy organization, which I, 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 tops down. I think he actually said fertilize from the top down, which I think gene, gene was like that.

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That kind of sounds like leadership's pooing on you guys, but we, we, we adjusted that, that quote a little bit. But it is this, you know, what started in tech led into how do we like start 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 are, we are driving really a different way of working across our, our entire enterprise. So the results, so I wish I had specific outcomes, it's still still going. This is still very much a work in progress. So it's kind of a hint for maybe a future talk. Um, but really here's what I'm super confident and I I love this and it's, it's our, my peers, my leaders, my team all really thinking about these, these things at the bottom.

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So we don't separate out people, pros and tech. We don't have separate roadmaps or intention maps like we like to call 'em because a roadmap is very declarative for a lot of folks. An intention map says, here's where we intend to go and learn. Um, we're super connected. Like 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 we choose to operate and really a, a a cross-functional progress over perfection type manner.

00:16:25

So switching gears here, so some advice I would give to myself. So, um, I moved into my role, uh, about three years ago and I moved from tech into our business. Our product management function sits in that, that merch capabilities function, which reports into our business 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. Like I would say I 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, I was telling people how we could do things different instead of working closely with them. And so I actually got a, 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.

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And some of that 360 feedback was, yeah, Luke's a tech guy, like Luke's really good at tech. Everyone in tech likes him and there was nothing about how, how do, how is Luke our trusted partner? Or how is he a strategic partner or how is, how is he sitting side by side? And it was great. It was great to have a coach. It was great to get that candid feedback. And it was, I was listening to the CSG presentation. It was, it was very similar themes where it was, I had to really find who that trusted partner was. I had to listen more than I talked. Um, I had to really be vulnerable and empath like over index on empathy. And so some of the practices that I change is I meet with, with people. Like I meet with buyers and planners once a week, like users of our system that, of our, of our products that are there.

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And I have conversations with them. Um, I had one about a year ago with our furniture buyer and I was just asking him, I was like, how do you like determine how much you buy and when you buy it? And he goes, oh, I have a budget. And last year in COVID, um, we were so short on inventory that basically I was just told whatever the vendors had buy it, like, doesn't matter what your budget is. I was 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 like 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 senior divisional planners and he's championing a lot of this cross-functional effort.

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And so really developing some of those kind of trusted partners, our so, so key. And in my past life and, you know, two or three years ago I would've said, why would I meet with that, that furniture buyer that's like our UXs ux or our product manager's job to go do user research and understand their problems. And it's like, no, like I needed to get really deep and drive a lot of connection with, with a lot of our partners on here. So, um, don't, like if I were to give myself advice, it is to really index on those relationships, really index on building trust, really index on listening. So here's some help I'm looking for. So, um, I really would love, I know there's a lot of people in this community. I talked to many of you last night around, you've kind of like 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. Like we, we are on the right path. All the things I talked about, like 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, or really trying to build some of those partnerships. And that's all I had. So thank you very much for listening.