The Next Big Question
Hosted by: Drew Lazzara and Liz Ramey
Prior to his role at Redbox, Stephen served as the senior vice president of corporate information technology for Outerwall and also held leadership roles in IT for Red Sky Technologies.
How Will Changing Consumer Behaviors Redefine Business Strategy?
JULY 21, 2020
This week, we talk to Stephen Lavin, CTO of Redbox, about how to keep up with rapidly changing consumer behavior and how Redbox is adapting their strategy to maintain a strong customer base. Listen as Stephen talks about consumer engagement and innovation from the perspective of a CTO.
Drew Lazzara (00:14):
Welcome to The Next Big Question, a weekly podcast with senior business leaders sharing their vision for tomorrow, brought to you by Evanta, a Gartner company.
Liz Ramey (00:24):
Each episode features a conversation with C-suite executives about the future of their roles, organizations, and industries.
Drew Lazzara (00:33):
My name is Drew Lazzara.
Liz Ramey (00:35):
And I'm Liz Ramey. We're your co-hosts. So Drew, what's the next big question?
Drew Lazzara (00:40):
Well, Liz, this week we're asking, 'How will changing consumer behaviors redefine business strategy?' To help us tackle this big question is Stephen Lavin, who is the chief technology officer for Redbox. Prior to this role at Redbox, Stephen served as the SVP of corporate information technology for Outerwall and also held leadership roles in IT for Red Sky Technologies. And, as you'll hear in our conversation, he's got a little experience in the food services industry. Since it was founded, Redbox has always been closely attuned to the needs of the customer. They were at the vanguard of the view-on-demand revolution, and the transformations that followed have always been driven by the consumer. In this conversation, Stephen walks us through the ways Redbox goes about understanding their customer, how innovation must both anticipate and respond to consumer needs, and what the push and pull of expectation in the marketplace means for an agile business strategy. Before we sit down with Stephen, I want to take a moment to thank you for listening to this week's episode. To be sure that you don't miss out on the next Next Big Question, be sure to subscribe to the show on Apple podcasts, Spotify, Stitcher, or wherever you listen. Please rate and review the show so we can continue to grow and improve. Thanks again, and enjoy.
Drew Lazzara (02:09):
Well, Stephen Lavin, thank you for joining us on The Next Big Question.
Stephen Lavin (02:13):
It's a pleasure, Drew.
Liz Ramey (02:14):
Stephen, we are so excited to have you here, and before we really get into the meat of the conversation, we would love to get to know you a little bit more. So I have some questions I'd like to ask you.
Stephen Lavin (02:23):
Liz Ramey (02:24):
All right, so they're making a movie about you... What would the title be?
Stephen Lavin (02:31):
So, you may think this strange, but what came to my mind right away was ‘The Sound of Music.’ I'm feeling a little bit like Julie Andrews, right? Having to take care of dependents, thinking about our business, and escaping from tyranny, right? And bringing the authority, who would be my peers and certainly the Board along with us on this journey into the sort of this... Digital-virtual landscape, which was sort of thrust upon us.
Liz Ramey (03:03):
Fantastic. I'm glad to know that Julie Andrews would play you in a movie.
Stephen Lavin (03:08):
Oh, absolutely. We're going to have to shave her head, but once we get past that, we'll look exactly alike.
Drew Lazzara (03:17):
I'm just picturing you twirling through an Alpine meadow right now, Stephen.. It's a very vivid image.
Liz Ramey (03:18):
Stephen Lavin (03:23):
I'm imagining that myself right now. The air is fresh and cool, and it smells great.
Liz Ramey (03:30):
What are three words that your friends would use to describe you?
Stephen Lavin (03:34):
Ones that I can repeat on a podcast, so you can publish? Would probably be... I'm extremely loyal to friends and to business and family, dedicated, trustworthy. Those are probably three that have served me real well. I can think of a few more, but at the end of the day, my word is really important to me, and that sort of fits into the loyalty piece. And look, I've got to be dedicated, if I say I'm going to do something. So I think those are probably the three best.
Liz Ramey (04:09):
Signs of a good leader.
Stephen Lavin (04:10):
Oh, maybe so, thanks. I hadn't really thought about it that way.
Liz Ramey (04:15):
What has been your favorite personal technology device?
Stephen Lavin (04:19):
My phone. Let's see, I did have, until about seven years ago...I had a Samsung flip phone that had an alpha numeric keypad.
Drew Lazzara (04:33):
Oh, the T nine. I miss those days.
Stephen Lavin (04:35):
Actually, I think you're right. I don't recall what it was. I had just graduated to that after the alpha numeric chat, right? You know, hitting the same number three times to get to the letter at the end. But without a doubt, at your fingertips now you can do, and get, almost anything. And it never ceases to amaze me -- the innovation as it goes to the wrist, right. With watches and similar wearables -- it's just amazing to me. It is difficult obviously to be super productive on a phone, but when you think of it, when I've gotten to this level in my arc of experience, and leadership has gone more towards people than it has towards... My hands aren't in keyboards anymore, right. So there's no engineering happening. But the access to information and being able to use that information to make decisions that I'm expected to make -- nothing you can't do on a phone.
Liz Ramey (05:42):
I was just thinking about you twirling around in that field with a Walkman, and you were going to say that Walkman was your favorite.
Stephen Lavin (05:51):
Well, it's funny -- I've had all of those. I had the disc one, the cassette ones, multiple iterations of those. My phone in the Alps might work? I have no idea. I have never been to that open field and thinking about that, but I'd be fine if it didn't.
Drew Lazzara (06:08):
Well, Stephen, we're here today to talk about where consumer experience and expectation is taking your business and your leadership. I know that's something you think quite a bit about in your role at Redbox and in your industry, but before we get into that question, how did you get started in IT leadership?
Stephen Lavin (06:27):
So actually, Drew, I was in fifth generation food service. My family had restaurants and nightclubs in Philadelphia and New York City, and that was really my first employment. And I worked through junior high school, after school, high school, and all through college in our restaurants and our catering companies and our night clubs, too. And it was just something that came kind of natural. My father, however, was a rather interesting entrepreneur in that we leveraged technology a lot for those businesses. We had multiple kitchens, so we'd use, if I remember right, they were Tandy 1000, in Hayes modem, VisiCalc spreadsheets for ordering, right, for consolidated, ordering. He used Xenex, or the Tandy Radio Shack, 10-and-a-quarter discs for general ledger and for accounting. And we installed the first point of sale touchscreens for retail in restaurants in the United States.
So we were always very... We were always out there, and actually, they had taken my original IBM 5150. I don't know if it was an AT or an XT to be honest with you. I haven't kept up on my history. But it was either an 8088 or a 286, and they repurposed that for that first touchscreen system. And I was out a computer. But it was just exciting stuff, and it was working for my family. So it was just sort of a hard driving, no failure kind of environment, which I think really -- when I think about when I made that arc to technology, which really wasn't until '91... Everything I learned in that business served me so well for getting into operations, technical operations. So it was more the purveyance of data and carrier circuits, resources. So I was able to maneuver relatively quickly, and those were sort of skills I always had, right. Let's call it managed chaos, right. But certainly being able to make kind of split-second decisions and sticking by it. Look, you don't, you clearly... and just humility, right? You clearly don't make the right decisions every time, but you learn on each bad decision, but also some of the good ones that you make, and it reinforces some confidence in your ability going forward.
Drew Lazzara (09:10):
Well, I can see also how that background in the food industry makes you sensitive to the needs of the consumer. That's a very customer-facing business, and you differentiate yourself in that business by providing great quality products, but also great quality service and experience. So I think a lot of those things fuse together for our conversation today. And so I want to start thinking a little bit about the future of consumer expectation and how you weave that into your strategy. But let's start with the present. Stephen, from your point of view, as you from your seat at Redbox, what does the digital customer expect from the businesses they interact with today? What is your understanding of the customer's needs and expectations now?
Stephen Lavin (09:51):
Wow, so, interestingly, although a lot has changed in the last 120 days, right? Given the global situation, the pandemic, I think a lot of those elements were already there. And those things that I think about -- and I mentioned it with the phone -- although I didn't really use this phrase of 'just in time.' I think that people's expectations have changed in regards to thinking about something, discovering something, and consuming something, right. That time has contracted quite a bit, or at least in my experience. And again, just like if you have a phone in your pocket, you could be walking down the street, you'd be thinking about something. You could look it up on your phone, if you want to research it, you can. If you want to make a purchase decision, you can. And you can do that all while you're standing on a corner somewhere and put the phone back in your pocket. That momentum has increased.
I think in the last 120 days, now there is the sense that people really don't want to gather very long. Guidance suggests that you really shouldn't be around lots of people in the same space for an hour, right? So those pressures are only increasing. I think that velocity for consumers to discover and convert on whatever that is. For us, I think it's always been kind of like that. You've got mobile apps, right, and you've got the web, and of course we have kiosks. Our customers, the incidence of browsing on the web or browsing on the app has increased a little bit because they don't want to hang around the kiosk, for example, right, or stay in line at the kiosk, making a decision. And it's one of the things that we changed towards the end of April, which was a zero touch experience, where you could reserve online or in the app, you could go to the box, you could tap or swipe your card without touching the screen. Your disc would vend, and you can bring it back the same way. And obviously you hold the jewel case in the disc. But the concern for retail partners and also their consumers was touching these point-of-sale systems, right. That's a perfect example of a rapid listening to the voice of the customer, but also listening to the voice of common sense, and meeting a desire to -- it sounds terrible, but not get infected, and to manage that out. So I think that's an extreme, but I think the same principles and the same ideas apply. I do believe that consumer behaviors change more rapidly than they have in the past. And because they can, right. And they know that the businesses will be there to meet that velocity. And you see it -- you see it in the amazing number of apps, obviously not all good, but the ones that hit the marketplace that do well, or that get leveraged. And they help people at the end of the day get, assuming no malintent by the publishers, most of these that are of value rise to the top because they are.
Liz Ramey (13:12):
Interesting, Stephen. I have a personal phrase for what's going on with consumers right now. You said it very nicely -- kind of a 'just in time' way of thinking. I would say, it's almost an impulse culture. And I'm wondering, that the impulse is they want it right now, they think of something, they know they can get it very easily. But for Redbox, you do have to drive to a kiosk to then get the video. So what has this impulse culture, this digital customer -- what has that done for Redbox's understanding of their own business and customer experience?
Stephen Lavin (13:57):
So, those are good questions. We do have a solution -- and we've worked very hard in the last 18 years, but certainly in the last few years -- to build a tool set that will enable, and we're a value play, obviously, but would enable any type of consumer interested in consuming entertainment, particularly movies, whether it be streaming, or free live TV or IP TV or physical disc of the kiosks. So we do have streaming capability, and fortunately or unfortunately, depending on how you look at it, it's done extremely well, while we've been at home in isolation or people who've been quarantined. So that's been going well.
Although the business continues from a physical ramp perspective to go well for us, we're certainly not suffering like some retailers are, but people are much more mindful about their trip to the kiosk. And they are discovering before they go. So they are either reserving, or they're making a purposeful decision by searching that kiosk either via the app or the web technologies with some sense of confidence that comes from knowing that when they get to the kiosk, their film will be there. But obviously, if you reserve it, you know it will be there. But I think having that capability is really important.
Look, I have a Home Depot in the neighborhood, and it's more likely than not that they're going to have something that I'm looking for, but sometimes they don't. I need to search other stores, for example, to see if I can find that, but it's not often easy. And it's something that I think retailers need to think about, which is 'Hey, if you're looking at your store while it's out of stock, you know what, I'll just tell you where it is, instead of you having to go out and search for it,' right. So it's almost like you're folding space at some point for the customer. The less buttons that you can help them push, the less they have to think about to get to what they want to do, the easier it'll be. Liz, you said something that was interesting too, which is that real-time or that just-in-time consumption, I think with the pressures on and the economics around what's happening in the country at the moment, we'll make those snap or quick decisions. I think they're going to be much more discerning. And I think the need to make a decision based on value, at least in the near term is probably going to increase. It'll be interesting to see, but you pointed out, this was accelerating anyway, as part of our digital life, right? This kind of model. And I think it's only accelerating faster as a result.
Drew Lazzara (17:00):
So Stephen, I wanted to quickly follow up on that. It's interesting that you think that these tools will make the consumer a little more strategic in their decision making. I think of my own impulse decisions, and I almost always regret them a week later after I realized I've made them. So I'm hoping that you're right for my own sanity and my own wallet. But with that in mind, how do you incorporate something like a more strategically thinking, value-seeking customer into a business strategy? How do you utilize that anticipation that you just described when you're building out programs for the future?
Stephen Lavin (17:35):
So I think, for us, we are extremely data-driven, and you can see patterns coming, right? Sure, we all read, we see what's going on in the industry. Look, we're the only rental DVD player in the business, except for Netflix mail order at this point, and there are some mom and pop shops still around. But in that space, we can see behaviors change, both from a sell-through perspective, whether it's at retail, a new movie on a shelf somewhere, we watch all of that. But most importantly, we listen to and constantly survey our customers. So we have an indication of where they're at. And what I meant by the strategy of being more discerning over time is that those impulse buys will change as a result of the size of your wallet. And people will search more for value. I think they're going to have to, right? Particularly with 40 million people out of work. And although we're helping in some way via stimulus, I still think that people are going to maintain a budget or have to think about it. I would be shocked if that didn't happen in some way. So there's always room for that additional value.
You've got to -- keep your ears to the rails, right? Like in the old days, if the train is coming or not. Reading into the data and testing and learning is critical for us. And we didn't have a robust way to test in market quickly in the past. In other words, if we were going to test in market whether it was a change in price, or it was a bundle, or a discount of some sort, it took some heavy lifting because the infrastructures behind the business were not built for... they just weren't agile. And I don't mean agile in the sense of like a methodology. I mean agile in the sense that you couldn't do things fast, right, and light. It took a lot of weight, and you wouldn't be able to get the data back right away. And that since has also changed. So we can now test lots of different things very quickly. And that was part of -- we all went through this phase, digital transformation, right? And we still have… Redbox still has probably a third of our way to go in that -- to reach that true market texture, right -- when we can plug in to other partners easily, when we can tokenize authentication, and be able to have customers single sign on across platforms. This was never in mind when we put kiosks out in the world. It was a rent and return model, and our biggest concern was getting more kiosks in the ground, right.
And then comes that arc of time when wow, like VHS, technology has moved on, right. So we've pivoted on that, as well. We did have a streaming, for example, platform years ago. But in the last two years, we have relaunched and won back our customer experiences and we're sort growing that business again, but we still have a phenomenal addressable customer base that continues to enjoy top value entertainment at home. It's hard to beat a 1.80 compared to streaming other things from a quality perspective. Yep, the convenience of sitting on your couch. I can't get you that physical disc that fast, but we have that option, too, if somebody wants to have that. So I think we've listened carefully to our customers, both in what they tell us, literally by asking them, but also in their behaviors in the marketplace and where people are gravitating for entertainment. And knowing that we still have people that love us that come repeatedly to the box. And that's what makes us really happy. This is a happy business,
Liz Ramey (21:36):
You know, Stephen, have you ever read the book or seen the book called Pattern Recognition? It's by William Gibson who is a science fiction writer?
Stephen Lavin (21:47):
I have not. No.
Liz Ramey (21:48):
Well, it totally reminds me of that because there's a storyline where an organization is actually planting people throughout the world to where their products and things. So they're actually driving and changing behavior of consumers versus kind of reacting and understanding that. It's so fascinating to understand where businesses today can almost change customer behavior themselves, as opposed to reacting to that behavior. I don't know if you've ever thought about that. It seems as if, you know, Redbox really did that when the company started by asking... getting people to go to kiosks, but today in today's world, are you guys thinking through how you change a customer's behavior from your standpoint, as opposed to theirs?
Stephen Lavin (22:46):
I think that poses an interesting philosophical challenge, right? Because there's the change the behavior for profit, right, if you can do it. I think that your customers glean that, and it can sometimes work against you. I think there's really two things that happen. You test and see if you can change that behavior, but if you can't, you don't. And you respond to what the behavior is or what your customers do want. For example, we could turn off all the kiosks tomorrow, and say, 'Look, sorry, folks, you're going to have to pay 4.99 or up for on demand. And we're just going to have you move to the couch.' Well, for 40 million customers plus out there, that would be an issue for many of them, right? And we would be out of business. It's just not the model that works for us. Now that's an extreme, obviously, but I think you do that a little bit by responding to those customer needs, by helping them convert faster, by making your search have much more intelligence than it has in the past, right. Or by also understanding your customer based only on them, and assuming that they opt in to let us know more about them, to send them in directions that they have a predilection for in the past. That has been very powerful. Look, so I don't know if you're familiar with James Beard, and I'm flipping back to the restaurants for a moment, but my father once asked James Beard what his favorite restaurant was, and he says, 'Where they know me.' And that's an extremely powerful thing to say. Now, if I'm constantly manipulating you and trying to get you to do other things, and I'm just going to do it because there's more margin and maybe you'll go for it. Well, you know what? You probably won't come back anymore, and you're not going to have the same level of comfort as you did when you made that statement 'where they know me,' right. I think that's pretty powerful. So I went off on tangent, sorry, Liz, but there's no doubt that.... and I love that science fiction idea of placing products or it just becomes part of their life, right, and they have to consume it. I'm extrapolating that, not reading the book, but I could see that treat there, but I'm going to read it.
Liz Ramey (25:11):
You do have to, and so William Gibson is the author who wrote Neuromancer, which is what The Matrix was based off of. So it all goes.... So Pattern Recognition -- very fascinating.
Stephen Lavin (25:23):
I love patterns. I have a son that can solve puzzles like nobody's business. I never thought that I had, it's not so much the aptitude, but he's 25, moves down the chess board. He can do Rubik's cubes and anything you put in front of him; he can just see a path. And it's amazing to me. And a lot of younger people do have that capability. And I also have to think it's related to the technologies in our life and how it's made us open-shortest-path-first things, if that makes any sense, right. By using these innovations, you just don't have to take -- unless you want to -- the time that you had in the past to get what you want. And that's important.
Drew Lazzara (26:06):
I like the idea that what the customer is asking for is a sense of being understood and being responded to. And I think that is a pretty clear vision for what the future is -- treating your customers as if they're valuable and bringing them something of quality and then giving them ways to access it that meets them where they are. I think that's a pretty clear image of the future for customer experience. What I'm wondering, Stephen, is how do you take that and operationalize it? Once you have understood that these are the values of your customer, this is what they expect, and this is how they find and access your services, how do you make sure that every level of your organizational strategy is aligned to that experience?
Stephen Lavin (26:49):
So, if I put my hat on... the response would be different as a CTO with my partnership with the chief experience and chief digital officer, which is probably my strongest peer, but also my best customer, right, internally. We have to be aligned end-to-end, and I think of a classic book -- The Wisdom of Teams. It was John Katzenbach. He talks about the difference in teams, in how they get stuff done. And I mean the long arc of this is -- it's hard to take 300 pages and put it into two seconds, but in general, there are different kinds of teams. And high performance teams become mutually dependent upon one another's success. That's the punchline, right? And when you achieve that and you align on what data... Look, there's no room to be ego-driven or character-driven. We firmly believe that you have to use data to make the best decisions. And sometimes they will still not work out, right? No matter how black and white numbers and graphs appear on a chart, or how often customers tell you... And it could change on a dime by the amount of time it takes you to respond to that, things could have themselves changed, right? So to be able to align rapidly and get on it, because as soon as you get on it, the behaviors could start to change again. I think that becomes an acumen and a skill. And you have to have the technology that can also pivot rapidly, and these are nuances, right? These aren't huge... Like John Smith who has been loving romcoms, it's unlikely that all of a sudden he's going to start to love horror movies, right? So these things take time, but you see the patterns... Sort of what Liz was saying. You can inject the patterns. We can certainly just rent horror movies, but that would kill the business, too. But I think if you operationalize towards what's important, there's a feedback loop and a mechanism that happens, right. You'll know if you're doing the right things or not based on the data that you made a decision upon... Testing, for example, multi night out, or bundles, or would somebody be interested in another movie for half again the cost instead of twice the cost. What would make our customers happy in the consumption of their data? And then you have to make that happen. I think it's just a commitment to making that happen. The path that it takes operationally, if you're a high performance team, you'll figure that out. No two ways about it. And also look, it's hard, I think for me to extrapolate into any retail environment, but there are some 'knowns' that you're going into in this equation to operationalize this. I'm not going to start... We're not going to start selling bunny rabbits and burritos out of the kiosk, right?
Drew Lazzara (30:05):
That's a shame.
Stephen Lavin (30:06):
And go in a direction... It's not going to be that heavy directionally, right. And we don't have a mechanism or logistics to make burritos and put bunny rabbits in a kiosk, right. I know I'm being supercilious, but I hope I'm making the point that I think that within the realm of what you know is possible, you continue to expand and do the simple return on what that operation would be. I may not be answering your question quite the way that you would have liked, but keep hitting me with more details if I'm not getting the right point.
Drew Lazzara (30:44):
One thing I am curious -- actually, that was really illuminating. But one thing I'm curious about... I want to think of it from the leadership and the employee perspective. So if you work for an organization where your corporate value is in alignment with the customer and everything that you do, that is the purpose -- is to serve them in these ways. And to be able to adapt quickly and move quickly, like you've mentioned a couple of times. When you're an employee and you're in the middle of a project, you're doing 10 things at once, and maybe you can't see the beginning and you can't see the end, you're just doing tasks along the way. So when you're thinking about leadership and motivation and giving your teams the resources they need, how much of this customer centricity is part of your messaging? How does that impact the way that you inspire, lead, develop these people as they go through that process of implementing a project or an innovation?
Stephen Lavin (31:35):
Great question. I think in our lives and in any organization, regardless of the skill or the role, there are some people that do like just to be told what to do. There are others that are navigators, there are some that are victims, right. And there are others that like to be part of the vision and the strategy. I think at Redbox, we do have a culture where everyone feels valued. I would certainly hope that that's the case. I believe that to be true and is truly a part of the success of the business and the successes can be small, right. One thing in particular in the last few years, when we realized, and we're now in sort of the last year with the three-year transformation plan, transparency was something that was absolutely critical. People need to... What we learned from, and this is true of my organization technology, I have some insights into my peers organizations, but people do want to know that they're providing value. And if there is an initiative that suggests that we're going to bring in X dollars as a result of this code change or this initiative, or by responding to a customer a certain way, they like to see that it works, and they're fine seeing that it doesn't work. Even if someone disagreed -- this is one of the Amazon points is even if someone disagreed, we agree to disagree, but commit to doing it as a team. And we continue to do that at Redbox year over year. And we're fortunate also in that we've been able to bring in some new skills, because we've been doing a lot of new stuff, but we also have folks that have been in role and that have done different things in the business for many, many years.
Liz Ramey (33:28):
I'm actually wondering a little bit more about innovation. And of course innovation is really going to support what the new customer demands are... And also really help with the global changes that are happening now, in the last hundred and 20 days. From mine and Drew's discussions with other CIOs, the need for what I would call accelerated innovation -- from the ideation all the way to operationalizing the technology or service that's needed. That has just rapidly increased in speed. I'm just curious for you, what does innovation and the creation of new business value look like? You may be looking at smaller budgets or finite resources, and the consumer is also looking at, or working with, smaller budgets and looking for more high value. So how does that impact innovation?
Stephen Lavin (34:42):
Wow, that's a good and complicated question. And we hit on -- the good news is Redbox is definitely a value play. So we'll be there and continue to be there for when those... And we chatted about it a little briefly -- when those wallets get a little tighter. I think from an innovation perspective, no one can afford to take a lot of time or spend a lot of money on the grand slams, right? I think the business needs to iterate more, which means, again, you have to have technologies that support that agility, and also the speed of that innovation or the speed of that change, right? I mean, innovation is different than change. Change can happen for change sake. Innovation usually assumes that there's some momentum or a velocity or desire to get something done. So technology is going to have to go fast, and it's going to have to be faster. I've always thought of technology as being -- just like I typically every year -- I don't wait. It's not the right word, but I coalesce all that the business wants to get done in the next budget cycle or in the next annual operating plan so that I can help them meet that. In other words, they go first, right? They're my customers. I support them.
Traditionally, technology has been where the business might be like a PT-109 in the harbor, technology is this battleship. And it's a lot easier to turn that PT-109 around than it is the battleship. So not only do you have to be innovative, but you have to be ahead of your business and get lucky sometimes. And I don't mean lucky, like you just guess, right? No, again, you can be data driven. You can see the way the business is going, and then you manage the expectations of your stakeholders and your leadership. But not withstanding, you're going to have less of a budget. So there does, I think, have to be an open dialogue and a partnership with the business to go for the base hits. Does that mean we don't do grand slams anymore? No, of course not. But you know what, whoever decides to do the grand slams, and if it fails, I think you're going to be much more accountable and responsible than you have been in the past. And that doesn't mean you need to be afraid.
No, what it means is you be even more discerning, and you can't afford to be ego- and character-driven. In other words, you have to use data. There's just no room anymore. It's going to be much harder in the future to apologize for spending a few million dollars in getting it wrong than perhaps -- not that this ever was in the past, but definitely true going forward, right. I can see that. I hear peers say all the time business keeps coming to me asking me to do more with less, right. I don't know if that's the case. I think it should always be that way, right. And I don't look at it as a negative bias anymore. I look at it as a business requirement. And we have to figure that out, but you also, as a leader, have to push back on peers in the business and question… You have to have a questioning attitude. At the end of the day, that could question you out to the breadline, right. But I think everybody that's an adult understands what I'm saying. There are some things that you really got to question the value of that, because I'll tell you what, your employees will. If they don't believe in the mission, after you're being radically transparent with them, which by the way was a little earlier, one of the questions that came up, it's critically important to have your team on board all the way down from the person that puts their finger in the keyboard writing code all the way up to the chief financial officer, and then sideways to the left and to the right. It really has to be a 360-degree understanding of this mission that we're on. Now, that may not be true of some of the smaller initiatives, right. But certainly on the values or the key, the core initiatives of the business, it's critical that everyone be aligned.
Liz Ramey (38:45):
You know, I've been working with CIOs for more than 10 years now. And just that phrase of 'doing more with less' haunts me in my sleep. And I just keep thinking that IT just has a zero budget or even a negative budget at this point because of the business keeps taking money away from them.
Stephen Lavin (39:06):
Well, yeah, look, I am sort of old school, and I actually love being in technology, this idea of zero-based budgeting. I have to defend, and I would expect any one of my peers would absolutely have to defend, their ask. And that's the diligence that I think is critically important. And you have to... We have to look at these numbers differently than we have in the past. Whereas in the past, depending on the budget, maybe we looked at the zeros a little bit differently, right. But I'll tell you what, looking at a lot of smaller zeros adds up to one equal sum project, and all of them should be scrutinized, quite frankly.
Drew Lazzara (39:49):
Well, Stephen Lavin, thank you so much for being here and helping us think a little bit about the future of customer experience and its impact on the business. We appreciate it. Before we let you go, we do have a couple of cool down questions that we hope you'll entertain to end the program. So the first one is actually from a previous guest of ours, it was Mike Zachman, who is the CSO for Zebra Technologies. And his next big question for our guests is -- what is the future of the office, which I think is particularly pertinent question now, as we're supporting so much remote work. But in your point of view, what does the future of the office look like?
Stephen Lavin (40:20):
Wow... The beach.
Drew Lazzara (40:23):
Works for me!
Stephen Lavin (40:28):
Look, I think, it's funny that -- well, I think it's funny -- but you know, I've had people that report to me for years and, they feel funny about asking for some reason, it's because of the personal brands, right. And their level of commitment, dedication, you know, about taking a flex day or something like that. And I've always responded, 'I don't care if you're at the beach or at home, as long as you are getting done what you need to get done, have at it.’ And I do believe that things will be different. I do believe that the world has changed enough that these hundred-year pandemics are going to become 50- and 25-year pandemics. And there is some lessons that I think we've learned that are going to change that forever. I'm not sure what that looks like, but I do believe that both onshore remote work, as well as offshore probably, increase into the future. And that companies will take volunteers -- who wants to come back to the office? If they don't just do away with the commercial real estate entirely. So connection technologies, right? Those engagement technologies, some of which we've seen in the marketplace just grow out of their pants, just in the last 120 days or explode. They've become so popular, they don't even work anymore, but they're quickly building scale and adding scale to make it happen. They're going to be here to stay. I have to believe that to be true. When I think of this, I think of, wow, typically we've had offices in Bellevue, Washington, Chicago, obviously those are the main offices, but the reality is, I can have more people working for me in Needles, California, or in Oakbrook Terrace, Illinois, or in Bellevue, right. At the end of the day, the model changes. Now, it brings in a whole other people management scope, right. Dilemma of onboarding and training… So you've got to build in more time or how are we going to handle that? But you know what, we can figure that out. There's no doubt in my mind, but when you think of what a lot of companies spend on real estate, if you could drop most of that cost to margin, wow. Did it really take a pandemic to figure that out?
Drew Lazzara (42:46):
Well, lastly, Stephen, what is your next big question that you'd like us to post to a future guest?
Stephen Lavin (42:53):
I think I touched on it a little bit. And I'm going to be myopic in terms of the CIO, CTO or CDO suite, with this. And it's really this idea that we touched on relief briefly, which is, what is going to happen to the future of our wage earners? Now that the pandemic has sort of obfuscated -- and I'll assume it'll keep going -- the need for someone to be present in an office? When you think of hiring folks in San Francisco, a Java programmer in San Francisco commands a higher salary than one does again in Needles, California, right? Because the cost of living and other pressures related to that geography, what is this going to mean for us? Look, it's not going to be pivotal. You know, I can't imagine that it's going to level everything down by 40%, right. But these small, single digit changes in how we manage our business, depending on the size of your business and budget, will have a huge impact. And I think that's another reason to embrace, sort of along the lines of Mike's question, about the future of the office. I think there's a ton of opportunity there.
Drew Lazzara (44:06):
Well, Stephen, thank you so much. That was excellent.
Stephen Lavin (44:09):
Drew, Liz, thank you. This was a lot of fun.
Liz Ramey (44:14):
Thank you, again, for listening to The Next Big Question. If you enjoyed this episode, please subscribe to the show on Apple podcasts, Spotify, Stitcher, or wherever you listen. Rate and review the show so that we can continue to grow and improve. You can also visit Evanta.com to learn more about our C-level communities. Network share, learn with Evanta, a Gartner company.
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