The future of retail, in Faisal Masud’s view, doesn’t force the customer to do anything the customer doesn’t want to do. That includes keeping shopping lists, poking around websites, getting into a car, or roaming the aisles of a store. It may even include placing an order, if intelligent software can accurately guess what the customer needs based on past purchasing patterns.”For our enterprise customers, we can predict what they’re going to buy next,” Masud said on a recent IL Live conference call. “So why don’t we just have a no-commerce model, where we are providing everything to them?”
Masud is an e-commerce veteran with more than two decades of digital experience at Groupon, Amazon, and eBay. He’s now Chief Technology Officer at $21 billion Staples, where he has overseen e-commerce efforts across the organization. Among the projects he’s been involved with recently are Staples Rush, the company’s same-day delivery service; Staples Exchange, a platform that allows thousands of vendors to sell through all of Staples e-commerce channels; and the Staples Easy System, a collaboration with IBM Watson.Edited highlights of our conversation with Masud are below. You can also listen to the complete call by hitting play below, or clicking the “down arrow” to get the MP3 file for later listening.
InnoLead: Let’s talk just a little bit about your role. You had been EVP of Global E-Commerce, and last December, 2016, you became CTO, which as I understand, it combines the roles of Chief Digital Officer and Chief Information Officer.
Why was that important for you or for the company? Do you feel like it makes it easier for you to have an impact in certain kinds of ways?
Faisal Masud: Originally, the reason behind combining the orgs was purely around reducing the amount of layers you have to go through to execute any major product changes, whether it’s the physical store or online.
I think that as we’ve progressed in this new role, what we realized is that having two separate silos for the CIO organization and the CDO organization just introduces a lot of complexity in just speed and being able to build products.We’ve actually moved rapidly to the Agile framework, where we have product owners for each critical area within both e-commerce and our overall technology stack, and I strongly believe that this is not something that just Staples will do.
I think you’ll start seeing this across more retailers, because we just can’t keep up with the pace of innovation happening in the retail space if we don’t have one single authority organization building and executing the software development behind all the products we want to launch in an effective way if you have a giant matrix to work through. We’ve seen the fruits of doing it.
Moving toward ‘Zero Commerce’
InnoLead: I’ve seen you quoted saying, “Retail’s going through a massive challenge. The next three years are going to be changing a lot faster than the last three or the last 10.”
Masud: Everybody can see what’s happening. You’ve seen mobile over the last three years pretty much overtake desktop in some categories.
You’ve seen the emergence of conversational commerce… Brick and mortar is becoming more of a showroom… With same-day delivery and what’s happening within drone delivery, the rationale for going to a store when you can get the product in 30 minutes doesn’t seem that valuable anymore. You’re going to get in a car, waste your gas, drive all the way, do all of that because of a commodity that you can get online? Probably not.Now, certain categories are going to benefit from having stores, obviously, because they’re a service provider beyond just being a place where you go pick up stuff. If you’re not in that space where you’re providing some value-add beyond just having the product, it’s going to be pretty drastic…
We’ve been talking about zero commerce, which is, why even have people think about going to place the order when most companies that have a good, long history with customers can predict the demand anyway? It’s stuff that we’re working on internally, where, for our enterprise customers, we can predict what they’re going to buy next. So why don’t we just have a no-commerce model where we are providing everything to them?…Change is pretty drastic, and, I think not all retailers are completely prepared for it.
A Smarter Easy Button
InnoLead: Talk a little bit about this project you’re working on with IBM Watson and Staples’s Easy System, because it seems like that ties in with what you’re talking about, around predicting what someone’s going to order next.
Masud: It does. Conceptually, where it started for us was, we had an iconic product marketing toy called the Easy Button for many decades. Everybody loved it; we sold millions of them.
We realized, internally, that a lot of office managers have these buttons, and while it’s a gimmick from a marketing perspective, it [could go] way beyond that, if we were to actually utilize cognitive [computing] power to allow our admins to place orders with those.That kicked off the discussion close to a year ago. It was a very small team that was spread across the organization, and the team started building out the Easy System.
The Easy System lives in the cloud. It’s powered by Watson — we are opening it up to other technologies, too, but Watson is the dominant player today — where we utilize their natural language processing, their conversational APIs, to allow us to communicate with the Button, via natural language, and then convert those utterances into actual tasks on the back-end, such as, place an order, reorder items, track my order, return an order, or investigate an item and get product inquiry on an item.If there’s any questions that are outside the realm of the Easy System, we’re able to, through VoIP, dynamically connect to a customer service rep immediately. If you’re chatting on the phone, on our app, we will connect you with a rep live at that point, if we can’t answer the question through Watson.
If you’re on the button, which releases in beta next month to our corporate customers, we will connect it live to a customer service rep, so at any point, we can have your issues resolved in a matter of seconds.The next big thing is, we also want to integrate things such as “Remember Me,” [taking] the basic tasks that an office manager has of repeating themselves all the time, such as remember my WiFi or be able to connect with the local vendors that you use all the time. We’re working hard to build those connectivities across the board to make the office manager’s life easier.
It’s going to take us some time, but we want to get there sometime later this year.
Delivering New Kinds of Office Services
InnoLead: I wanted to ask you about this partnership you have – and I think it’s an investment, as well – in Managed by Q, which is a startup that does office cleaning services, and maintenance, and general office management stuff. That seems like an interesting way for Staples to explore this service business model, but what was the interest from your perspective?
Masud: From our perspective, we’re in the business of office. We want to make the office run smoother and more easily for our customers. We saw that what Managed by Q and some of their competitors were doing in the space, and I was very intrigued by the notion of, “Can we make the office manager’s life easier?” by building a platform that gives hundreds of services to this office manager, at their fingertips, and allows them to get quality, guaranteed service levels for a plethora of things to do, such as office cleaning or furniture assembly. They could go get massages in the office, you can get services to move things inside your office, or get your network fixed.
If you look at a traditional office that has 100 employees, these tasks are the ones that suck up a lot of time for the office manager. What Managed by Q was doing was very attractive to us.After much discussion internally, we pursued an investment into Managed by Q. We actually led the round for Managed by Q… Think about it as a marketplace for office, where you can get any kind of service that’s administrative support with a click of an app, and those are provided by third parties.
Bringing in Tech Talent
InnoLead: I know when we visited you at the Seattle software development lab that you set up —and at some of the other lab locations in Cambridge and in the Bay Area — part of the equation was bringing new digital talent, new software development talent into the company.
Tell us about how you’ve done that and how well you feel it’s been working, because obviously the tech talent game is insanely difficult right now.
Masud: Look, it’s very difficult. I’m in the process of hiring a CSO and a CIO on my team, and it’s been quite the task. It’s not easy to get these people, especially the talented folks that are not looking, but that’s at the highest level.
If you go further down, what’s really helped us has been building out our labs in Vancouver, Seattle, San Francisco, New York, and Cambridge, because these folks don’t want to move, they want flexibility. They want the benefits that they would get out of a startup, and they also want the ability to be autonomous wherever they are.I was telling somebody earlier today that we used to have two telepresence units when I first joined four years ago. We have hundreds of those today, where literally people are dialing in from all over the country, and it’s seamless.
If you can’t have something as simple as that, where you can have a virtual mobile connected office environment, where the developers can communicate with anyone in a click of a button, you then introduce this burden of being in a certain city… We’ve gotten away from [that.]I feel really happy that we have hundreds and hundreds of engineers now on the west coast. Same on the east coast, where we’re becoming much more flexible, so they feel like they can be a part of the bigger scheme at Staples.
InnoLead: What was the hardest thing, in terms of working with HR, or getting other types of policies or minds changed to make that happen?
Masud: I have to say, I’m pretty happy with what our HR organization has done. It’s very different to other HR [groups] I’ve worked with.
…You’re talking about changing the way you pay these people, the equity cash breakout, the benefits. At our office in San Mateo, we have catered lunch, and gym is included in everyone’s daily routine, because those are the kinds of benefits that they were used to, and we have to come out and do that.Educating HR on what Silicon Valley offers and taking them on these trips to actually visit VCs and startups really, really helped, because they saw it live, how people worked on the west coast. Until somebody sees things live, it’s very hard for them to believe you on just face value.
InnoLead: Question from someone who’s dialed in: you mentioned moving to the Agile methodology. What are you moving from, and how did you make the case for Agile? Did you bring in consultants for Agile training?
Masud: We did. We’ve had Agile development in several teams on the e-commerce side for many, many years now. An example of that is our search team, internally, has been an Agile pod for the last three years.
They’re on their scrums daily and they release software literally every week, whereas our traditional legacy order management system was run on a waterfall methodology and framework, so obviously, longer release cycles, much more distributed, in terms of what gets released, what doesn’t, testing was much longer, big matrix to deal with.We have about 80 Agile pods today across the organization. We’re moving to more of them, across the board. The evolution’s going to take a while — it’s not something that happens overnight, as you can imagine. We’ve got training going on right now for existing teams, individuals that are in the process of learning what a scrum is and what a scrum master’s job is, and how does this all work.
Moving out of the project management mindset to a product management mindset has been our bigger agenda, because when I first got here, we had a lot of project managers, so it was a one-and-done, whereas, if you’re Agile, you also have to think about the product timeline. It’s not one-and-done, it’s actually, “What am I going to do for the next 3, 4, 6, 9, 12, 18 months, and what do those releases look like and how am I marching towards those?”
Eliminating Friction with Chatbots
InnoLead: This question relates to the IBM Watson discussion: do you think chatbots are a fad, or do you think they will wind up being important to online retail?
Masud: Chatbots are like anything else. …They’re just algorithms. You can put a fancy name on them, that’s great, but ultimately, the bots are built to solve menial tasks that people don’t want to do. You don’t want to track an order. On our app, it’s a pretty simple bot that we have running, that we know who you are. We can pull that data for you with one click.
Bots are here to stay for now because they [take friction out of] the user journey. Are they going to be doing every single task that’s in our environment in retail online? Probably not.The bots can be as simple as returning your order and fetching your return label, or as simple as answering your question when we know that we’ve seen a question like that before. Those use cases will exist, and we’re getting deeper and deeper into them at customer service.
InnoLead: A listener writes: “Who do you see is setting the pace today when it comes to mobile commerce, aside from Staples, of course? Who are the companies you would look at as poster children for mobile commerce today?”
Masud: A lot of retailers are doing a good job when it comes to mobile commerce, but I’m going to get out of retail for a second. If you look at sites like American Express or banks, they’ve actually come a long, long way. You look at Bank of America today or look at Amex Financial Service, apps are actually pretty advanced now and getting better by the day.
[With] Delta, I don’t go to delta.com because everything, even cancelling flights, I’m able to on-the-fly decide which flight to take instead, because their algorithms are allowing me to do that on the phone.I think that retail is advanced, but there’s other categories that are probably more advanced than retail. Travel, financial services…
In retail, like everybody else, we offer a full suite of omnichannel [technology] and so do the other players who are not competitive with us, say, Home Depot and Nordstrom. It’s all really great, but is it truly the way it needs to be, like shopping in a store? No one’s really there. Yeah, you can do returns now on apps, but you still need to print that piece of paper, so it’s still frictioned. It’s not quite there.
Creating Reward Mechanisms
InnoLead: Great. Maybe one question here to wrap up from me. I’m curious if there are other ways that you and Shira Goodman, Staples’ CEO, have been working to create a sense of urgency? I know you are a pretty impatient guy.
Masud: It’s not easy when you’ve been a very successful company for so many years.
The biggest thing is if you can set the examples, such as, here’s somebody who’s done this in this way. You build a reward mechanism for those who are actually doing a good job creating that faster environment and execution, and show that there’s a reward at the end of this. That becomes a cultural manifesto across the board.
Internally, Shira created this concept called FAST, which was short for Flexibility, Speed, Accountability, and Teamwork. There’s awards around it now. There’s recognition around that, which is really [focused on], “Can we be operating 10x faster than what we do today? Can we actually allow people to have ideas and not get bogged down by the matrix?”
She personally gets involved in some of these. The examples of Easy Button, same-day delivery, Managed by Q — these things would have taken years to launch, where we did them in weeks and months. Are we there yet? No, we’re close, but everybody knows the reality of retail. If we don’t do it fast, then we’re in trouble.
…Human beings like incentives. Once they see runs on the board, everybody wants to get runs on the board.