Digital Insider

Stanley Black & Decker’s path to digitalization

Bernardo Lemgruber
Bernardo Lemgruber October 27, 2020
Stanley Black & Decker’s path to digitalization

Bringing digital into a centuries-old company requires great effort, huge ambition, and alignment with global stakeholders.

One of the most traditional players in the CPG industry, Stanley Black & Decker has been providing tools and innovative solutions to get the job done since 1843. With their customer obsession in mind, they’ve been heavily investing in innovation and digital excellence across all their business units. As one of the main actors pushing the boundaries on technology processes and digital transformation, Orlando Gadea Ros is the Business Innovation Director of  Stanley Black & Decker. He is our guest for the second Digital Insider, where we dive deeper into his thought process, learnings, and story with Stanley Black & Decker. Moreover, Orlando features in VTEX’s Collaborative Commerce Talks, a bi-weekly virtual event featuring top ecommerce thought leaders who share their learnings and practises in a post-COVID-19 world.

VTEX: Let’s start by understanding what it means for a company like Stanley Black & Decker, who has been around for 177 years, to go through a digital transformation.

Orlando: Yeah, sure. You know, there’s no question that the world is changing, especially now. I mean, it’s COVID! Things would probably take a few more years to happen. We just saw the accelerated pace of transformation hitting us everywhere.

For Stanley Black and Decker, it means a lot to be a company that is 177 years old. But looking forward, we know that we cannot keep on being the most innovative company in the industry if we don’t keep trying to disrupt ourselves. Those 177 years that we have in history might not mean much in this sense.

From the CEO of our company to our president, Jaime Ramirez, transformation is something that is really close to our hearts. It means ‘how do we push ourselves to better our company, to serve our customers, to better serve our end-users and the communities that we serve?’. And with that in mind, we are always looking into areas where we can leverage technology to improve our processes and drive better results for the company and our ecosystem.

VTEX: Knowing that the transformation needs to happen from the inside out, you’ve mentioned the CEO’s alignment… So what are the biggest challenges of going through that process now?

Orlando: There are many challenges. I would say the first thing is that transformation ripples down. You need to have senior leadership in your organization committed to this transformation. And I would go even beyond that: it needs to be part of your DNA. You need to have a company where everybody in the organization knows that transformation is a process that, as painful as it might be, is something that we all have to go through.

If we’re not pushing ourselves to the limits, and if we’re not pushing the company to be the best it can be, somebody else will. So you must be true to yourself. To your culture in the organization. It can be harder in an organization that doesn’t have this culture, or these transformation needs really deep inside, to go through the process of transformation. What might end up happening is that you can change some peripheral processes or technology, but it doesn’t really mean that you are evolving as a company and that you are moving forward.

So the biggest challenge would be that everybody understands that transformation is a process that we cannot escape from. And everybody in the organization embraces that. After that, there will be many challenges in everything you do. But if you have the core, right, you know, there will be things that you just overcome, and just things that will make it more exciting.

VTEX: It’s perfect that you brought up people and communication. Talking a little bit about the organizational structure, what and how it had to change or is changing for the digital transformation to be successful?

Orlando: Well, something important that comes related to this: we talked before about technology changes, right? But those technology changes will be affecting processes that were structured when that was what you could do. But then, with technology, you will have new processes.

Take, for example, what it’s going on right now. We are all working in companies that keep on building the infrastructure, keep on delivering their goods and services, and everybody is doing it from home. Eight months ago, you would go to companies like ourselves and you say “Hey, get ready, you have two weeks to get everybody working from home”. And I would be telling you that you were crazy. Yet, it’s something that happened. So technology enables you to do that.

But what are the changes in the processes or in the organizational structure that you need to be doing? One of the biggest changes in the organizational structure is that before, you had a clearly defined hierarchy. Now we are seeing organizations that are horizontal, that are organized around a particular project where you bring talent from different parts of the world, with different skill sets, to work together in a project for a short period of time, and then move on to the next one.

So that’s a huge change in the organizational aspect of the digital world, specifically. Being able to adapt to those changes, being able to move your pieces fast… To work in this chaotic environment is key to the success of the digital transformation. And I would say any operation today.

VTEX: Change will always be a work-in-progress. On this topic, is there any lesson you have learned and can share with us? Or a piece of advice on what to avoid? I’m sure that the audience is eager to learn more about that.

Orlando: Let me share with you a story told by my wife when she was putting together a puzzle with our son. He is six years old. This puzzle, unlike a regular puzzle, was in the shape of an elephant. So she told me ‘we started working on the puzzle and sure enough, I was looking for the borders—the pattern that I knew and I was looking for’. Then my son was just putting pieces together, checking if they fit. While my wife was looking for the borders, my son was putting clusters of pieces together until he started seeing the shape. Then, he was able to put everything together, while my wife, who was just looking for the borders, wasn’t moving that fast. 

You see, this is just so similar to what happens with digital transformation and transformation itself. We’re always thinking in a box, while we need to think outside the box instead. We don’t need to start putting the project together by setting the framework first and then work our pieces in later. We need to be working in clusters. And it’s okay if, as you are working on them, these clusters might not seem that they are going to connect. It’s fine. You need to learn to live with that but have your vision on how these clusters are going to connect and keep on working with them. Sooner than later, you will see that these clusters do connect, and you will have a much stronger product and a much stronger idea of what you were thinking before when you were looking for the borders. So that would be my biggest learning: you need to think outside the box. 

Moreover, you have to get comfortable with working in clusters, versus trying to have all the answers to the problem before even starting. And the second lesson is: there’s nothing like starting now. There’s no reason to be delayed, there’s no reason to think that you can create an amazing project plan that will last two years and the outcome will be perfect. Things are changing so fast, that you need to start now, and whatever you do, understand that you’re going to be working in these clusters. Be comfortable with that, be comfortable with changes, because as we all saw, changes are happening really fast and we don’t really have an option to embrace them or not.

VTEX: So we should be indeed planning, but we should also be faster in acting after we have a plan laid out. The team members need to follow their instinct and move forward with some action without trying to plan everything and to connect all the pieces of the puzzle before they start doing something, right?

Orlando: Exactly. You need to have a very clear vision of where you are going. Where is your team going? Successful companies have always understood that this is a basic principle for success, and that hasn’t changed with time. What has changed is that it’s okay to start working on the pieces of the puzzle. With this in mind, at one point, things will connect. You just need to understand that things will be changing. You will need to pivot on a dime. But that’s okay, as long as you keep on working towards the vision that you have as a company.

VTEX: What effect does this change have on the outside, when it comes to sales reps, clients, and other stakeholders? How do you think this rapid transformation is affecting the sales force and the jobs of the B2B sales reps?

Orlando: Transformation is affecting every job that is specifically on the side of sales. As you drive efficiencies across your sales chain, and you are getting closer to your customers, you are increasing and changing the touchpoints that they normally had. Historically, sales are the main touchpoint that you have with your customer. For example, in the case of Stanley Black & Decker, when I’m referring to my customers I refer to the hardware stores that buy tools to resell them. The sales team has been our biggest connection point to these stores and have been the best way for us to know what’s going on in any market. They have a personal relationship with the owners of the hardware store, driving the conversation with them. 

As you evolve and you start offering detailed options where customers can put customized orders—such as ordering at one o’clock in the morning or picking up their phone to get a quick order because they are running low on some products— the dynamic starts changing. This happens not only between your sales rep, your customers, and you as a company but also in the way customers and sales reps embrace this transformation. 

Before, a sales rep had one hour to go visit a customer and receive an order. Now, we know that hour can be used for more meaningful activities because our customer is probably placing most of his orders online. Despite the shift to online, he still wants to keep these personal touches with the company and our sales rep. The latter now takes the position of a consultant. Besides the fact that not visiting the store saves a lot of time,  the customer-rep relationship becomes more qualitative. 

Instead of visiting an account once a week, it’s okay for the customer to only visit once a month, and the rep has more time to spend on more customers and covers a bigger area. This digital transformation is giving our sales rep the superpower of omnipresence and it’s building great relationships with our clients, making sure that they are successful.

VTEX: I was reading a report from Gartner saying that B2B transactions are fast-moving online now and more than 70% of those start with an online search. And 50% of the buyers are millennials, which means they are used to these online purchasing experience they have now on Amazon and B2C websites. How is the transformation impacting Stanley Black & Decker customers?

Orlando: We are in a very, very traditional business, probably one of the most traditional businesses that I’ve ever worked in. When you’re thinking at an international level, you’re mostly talking about hardware store owners. So I had my question ‘How are these technologies going to impact them?’, ‘How comfortable are they going to feel using it?’. What I realized in the middle of implementing these projects is that they already use these technologies. I don’t know if it’s only millennials here. Everyone uses technology today. 

Back in January this year, I went to Bangalore in India, and we were talking about how the implementation of our B2B digital platform was going. As I was sitting with the customer, a person walks in. The owner of the store stands up, starts talking with the client, and gives him whatever he was buying. In the process, he realized that he was running low on some of the tools and I saw him grab the phone very quickly, typing ‘click-click-click’ and then he puts the phone back. He says: ‘Oh, I know about your platform. I saw this guy with a screwdriver, and I realized that we were running low on screwdrivers’. In five seconds, he was able to place an order and have it the next day. 

I was taken aback and it was so impactful to see how these processes are changing. With the new way business owners think about their inventory, the consumerization of B2B is opening a lot of options beyond just the way you engage with a company and procure the products you sell. It really has implications that go beyond the comfort of being able to order anytime.

VTEX: Since we’re talking about consumerization, I’ve heard that 80% of the companies are implementing B2B ecommerce. They believe that customer expectations have changed due to B2C practices, directly impacting the B2C evolution in the user experience that the B2B buyers want to have. What’s your opinion about that?

Orlando: I think that sometimes it’s easy to forget that when you’re talking about B2B, you’re not talking about a company selling to another company. You’re talking about a person working on a company selling to a person working in another company. If I grab an Uber and I leave my computer in the car, I can call customer support and they will pick up the lost item at the third ring. They will tell me not to worry and 30 minutes later my computer is in my office or at my house. It’s an amazing customer experience!

As more and more companies are delivering this amazing customer experience, my standards are increasing exponentially. If you’re building a relationship with your partners and your customers, whenever they need to contact you, you are not up to par to what it’s expected today as an individual, what do you expect of customer experience? How can you build that relationship? Increasing the touchpoints with your clients, it’s great, opens a lot of business and different opportunities. But it also brings challenges, such as the need to develop your customer support organization because now your customers will expect really fast answers. They will expect you to be right there when they are placing an order on their computers. 

VTEX: On that note, if we go a little bit on the technology innovation side, can you give some examples of how you are using artificial intelligence or any other kind of technology innovation towards offering this better customer experience?

Orlando: Yeah, absolutely. There are many ways to use artificial intelligence. Probably one of the most used in customer support is where you use AI to deflect a lot of the tickets and be faster to answer. I’m sure everyone experienced a chat with a bank. You know, they’ll be normally using AI. Same thing for us: questions like ‘where’s my order?’. Different orders are easier to automate. It really frees a lot of time from your customer support agent. But it also provides a better customer experience because it gives the customer an immediate answer. 

Then we see a lot of opportunities, especially when you tie AI into digital platforms. You would know what a customer wants or you would imagine different things about your customer based on the data that you get from sales. But what happens when you bring ecommerce techniques into the B2B environment? When you start seeing that somebody is browsing for different products, you realize that even though they are regularly procuring certain products, they will normally go to your website and look for other different products. That’s when you can use AI to start improving the way you communicate with them, especially in your marketing automation: putting triggers that would use AI and all these enormous amounts of data that you’re feeding into your system from analytics behavior, CRM, and make sure that you communicate, that you engage with your customer with more relevant information, that you give them better recommendations. 

Finally, another very interesting use of AI that we are looking into and running some pilots is product assortment. Something really interesting and very particular for our business is that for one of our salespeople, it could take five minutes to place an order when selling power tools. They may reach $5,000 in sales, but making $5,000 of sales in hand tools like screwdrivers and hammers will take them two hours because they have so many. By using AI you can come to your clients and give them three sizes of hand tool packages for them to buy and an AI will continue to clean and give you better recommendations on what is gonna make them more successful. 

VTEX: You gave me a good hunch when you talk about analytics and brought me to ask my next question about KPIs: are there new KPIs that the company is following that are ecommerce driven?  And how are you measuring the success of the digital transformation?

Orlando: That’s a great question. If you look at a traditional organization, KPIs would come a lot from your accounting systems, how much you did in sales. What capital turnover you had in one year. But when you start using ecommerce KPIs, you’re going to start running your business as a funnel. As you know, you manage it by bringing people into the B2B portal to sell them tools, making sure that they go through the funnel until they convert. The conversion continues to be a very important KPI. But now you can have all their conversions again. You can have people trained using the digital portal. There’s no better influencer than the person sitting behind the desk when you go to buy a tool. 

The digital platform will let you know how many people you have trained, and the KPIs that you’re interested in, especially on marketing. It’s very easy to measure success in terms of sales. But what happens with the sales you didn’t make? What happens, for example, when in a B2B relationship, your customer adds products to the shopping cart and removes these products without buying? You can treat this as an opportunity in the CRM for the salesperson. Then, if the salesperson goes and closes on this opportunity, that would be a KPI. Not closing this opportunity also gives an interesting data point that you can have on your sales team. 

Therefore, bringing ecommerce KPIs into the B2B relationship puts you on a different level. It may let you measure what’s working. But it also lets you measure at a deeper level, what’s not working. So, it’s something that we are very bullish about. And we’re really looking forward to continually evolving while rolling out across the markets.

VTEX: From your experience, what advice would you give to make digital transformation a smoother process for companies that are going through this process right now?

Orlando: First, let me tell you something about the word ‘smooth’ and ‘transformation’. They don’t go very well. For those of you driving transformation processes implementing digital in the companies, there’s no ‘smooth’ ride. It would probably look smooth for those working at other areas of the organization. But when you are writing the goal, it’s not a smooth ride. 

Having said that, you really need to be comfortable in the gray, understanding that things are moving really fast, that things change every day. And again, keep your goal in mind. Make sure that if things are difficult or the situation changes, you change what you’re doing but you don’t change your goal. You continue doing what you were doing and understand that every landing where people walk out of the plane is a great landing. So that would be my advice. Don’t wait for something that would be completely smooth because, if it’s smooth, you’re probably not pushing hard enough.

VTEX: Yeah. I think it’s great advice. It’s not going to be easy. If you feel that it’s been too easy, probably not doing the right things or what you had to do. That’s great. Thank you very much.

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