business

Talking Shop

With Paulo Carvao, General Manager, IBM

Paulo_carvaoPaulo Carvao is the General Manager for IBM's US Distribution Market with clients in retail, consumer goods, and travel and transportation. He brings more than 30 years of technology experience to these industries, as well as the perspective of a husband, and a father of two young adult consumers. 

The Next Brick: As physical and digital landscape for retailers and brands evolves, what is the biggest challenge you are seeing with clients as they try to understand their customer today?

Paulo Carvao:  The biggest challenge is the rising level of customer expectations.  Today, every customer, you and I in our personal lives, want to buy where we want, how we want, and when we want.  We’re used to immediate satisfaction and a low-friction relationship with whomever is providing the product or service.  At the same time, I’d say the rising level of customer expectations is also the biggest opportunity to differentiate. One can meet and exceed these expectations when a combination of business and technology innovates to recognize and support customer values, respect their time, put them in charge of their experience, and make interactions seamless within the context of their lives.  This clarity of purpose around the customer really unites people across an organization, too.

TNB:  How are you seeing thriving retailers seize this opportunity and make “wow” experiences reality?

PC:  A lot of attention is given to how to engage customers through new experiences – a focus on the front-end of the transformation. This is important but requires two additional and critical elements.  First, most companies need this effort to be self-funded. I’ve yet to meet a business with unlimited resources! So, it becomes key to derive efficiencies from your processes to save money for reinvestment in digital transformation.  Second, having created new experiences, you need to deliver on that promise. And that’s a lot about supply chain. What is happening behind the scenes, enables the customer to engage where, how and when they want. We’ve helped successful retailers and brands crack their own code of driving process efficiencies, and a modernized supply chain, but it comes to life differently for each based on their unique situation and vision.

TNB:  Which technologies are you seeing help create experiences customers want to have again and again?

PC: First, there are the foundational technologies like cloud and security.  Cloud provides the agility and flexibility to do a lot of this transformation at scale.  Security is critical to preserve and protect the data that can be a source of competitive advantage.  But, above all, this is about preserving customer trust, and you see that in the increasing regulatory issues, as well.

TNB:  If cloud and security are the foundation, what is the next wave of technology you’re excited by that will gain adoption and provide value to businesses and end customers?

PC:  Three big ones come to mind.  First, AI or machine learning.  AI is a reality now, and it can help on the front-end and back-end.  AI can help someone who just bought hiking boots be served content on local hikes, or hiking socks, not just be retargeted with more boots. This can open the door to new business models and revenue streams in the fuller life continuum of the customer.  On the back-end, AI can calculate and automate processes like fulfilling orders from the optimal warehouse or store to save time and money that can be reinvested.

The second is a video analytics.  The exponential increase in processing power and networks, means video analytics are better at understanding traffic patterns, and sensing demand, so retailers and brands can match offerings to near real-time customer activity.  We’ve seen video analytics improve store layouts and merchandising based on actual customer movement patterns. At the same time, we need to respect the customer and their data to avoid overreach that might feel “creepy”!

Third, is blockchain.  When data needs to be shared among multiple parties, like trade or invoice reconciliation, or better execution of loyalty programs, blockchain brings trust and transparency to everyone, including the end customer.  For example, blockchain is helping Helzberg Diamonds and Richline Group assure each customer that their diamond was sourced responsibly. It’s also helping Walmart trace food journeys in seconds, so customers get safety and freshness.  

TNB:  Sounds like these solutions require technology and business stakeholders to be unified in their goals.  What strategies or techniques break down the organizational silos that make it hard for people to meaningfully come together?

PC:   All businesses are quickly becoming digital, and it’s increasingly difficult to delineate technology from the business.  But, the reality for many organizations is that these are still different functional areas. So, how do you bring those together, in an environment in which old habits can die hard? It’s really about building trust.  For example, merchandising is core to the operation and profitability of many retailers who could benefit tremendously from data driven modeling and decisions. You could be facing a scenario in which you have a leader of merchandising that is visionary and adopting these technologies, or resistant and saying, “I'm going to do things my way because I know better” and that can be difficult.

The good news is there are agile methods that allow you to start small, build initial success and trust, and then scale it.  At IBM, we call it the “IBM Garage Method” and it brings business and technology stakeholders together through Design Thinking, agile development and continuous delivery techniques to build innovative solutions.  It empowers companies to think big, learn fast and scale success. When Soccer.com collaborated with our Garage, they built an ecommerce solution for customers to move seamlessly from browsing content to buying products without changing pages much faster than their prior development methods.  But, beyond the product itself, the whole organization benefits from a new agile way of working that can be replicated for future innovation.

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