WEBVTT

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Andy Laudato: If you can't keep
the lights on, you'll spend

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any amount of money, right?

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If you can't keep the server up and the
tech shows up and she wants 500 bucks

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an hour, you're gonna write the check.

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So.

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You gotta get it right and
then you gotta get it cheap.

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But you lose credibility 'cause the
data's wrong or it's incomplete, or

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you know, or even worse, people are
making decisions on incorrect data or

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incomplete data, or you're telling your
customer, oh hey Andy, I think you really

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need this menopause drug because I got
marked as a female instead of a male.

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Right?

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So I think foundationally making sure
that if you don't get your data right

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and you try to do the fancy stuff
on top, you're gonna blow things up.

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Clarity about what is number one.

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A little exercise that I talk about
is to ask all your execs to write down

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their top five projects in the business.

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They should all match perfectly.

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All, all of them should know.

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You guys are

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Casey Golden: How.

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Ricardo Belmar: yeah.

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Andy Laudato: Never.

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And then what you could do is, um,

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Ricardo Belmar: Welcome to Blade
to Greatness, the podcast where

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retail leaders sharpen their edge
one critical skill at a time, as

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we uncover the essential traits
every retail leader needs to thrive.

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I'm Ricardo Belmar.

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Casey Golden: And I am Casey Golden.

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Each episode we're joined by a guest who
brings one leadership skill into sharp

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focus, and today we're driving into a
topic that every retail leader thinks

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they've mastered until things break.

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Ricardo Belmar: That's right.

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We're talking about building the
real foundation of innovation,

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keeping the lights on, running lean,
and earning the right to innovate.

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And who better to guide us through
that than Andrew Laudato, COO of

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the Vitamin Shoppe and author of
the book Fostering Innovation.

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Casey Golden: Andy's hierarchy of
IT needs is like Maslow's Pyramid,

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but for tech leaders, if you're
trying to innovate without a

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stable foundation, you're basically
building a smart store on quicksand.

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Ricardo Belmar: Exactly.

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In this episode, Andy walks us through
how retail leaders can build credibility,

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optimize IT spend, and create the
conditions where innovation isn't just

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a buzzword, it's a business outcome.

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Casey Golden: And now just before we
dive in, I have a quick ask for you.

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If you like our show, please give
us a five star rating and drop a

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quick review on Apple Podcasts,
Spotify, YouTube, or Goodpods.

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We really appreciate your support.

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Ricardo Belmar: And please do us
a favor and check out the other

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shows in our Retail Razor Podcast
Network, the Retail Razor Show,

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Retail Transformers, and Data Blades.

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You can find them in your favorite
podcast player or visit our

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YouTube channel to find them all.

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Now, let's get into it.

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Here's our conversation with Andy Laudato.

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Casey Golden: Andy, welcome to
the Blade to Greatness podcast.

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Andy Laudato: Thank you.

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Thank you so much.

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Ricardo Belmar: Well, you're certainly
no stranger to The Retail Razor Show.

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Now you've joined the select number
of guests that have been on the

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mic with us on more than one show
so it's great to have you here.

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Andy Laudato: Thrilled to be back.

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Ricardo Belmar: So today you're
talking with us about something we

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think really is a critical skill
that retail leaders should master,

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building the foundation for innovation.

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. And in your book, Fostering Innovation,
that we've talked about before, you

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mentioned a framework that you've modeled
on Maslow's Hierarchy of Needs showing

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that innovation can only thrive when
foundational IT functions are reliable.

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So tell us more about.

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How the framework works and how
it helps leaders really build

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that foundation for innovation.

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Andy Laudato: Sure.

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Well, we all love to innovate and I
think it's fair to say that in retail

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we all have to innovate, right?

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It's innovat or die.

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So innovation is imperative for all of us.

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However, so much innovation
stalls out or fails.

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And what I've learned over the
years is if you don't build your

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innovation on a firm foundation,
it's just not gonna work for you.

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So.

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If you're gonna build a building,
you know, you gotta dig a really

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big hole and pour concrete in it.

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And maybe that's not the exciting
part, but if you don't do that, you're

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gonna have a building that's tipped
over, falls apart, or never get done.

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So, this hierarchy is all about that.

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And, so when you think about technology,
so for IT departments, let's just use

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the term KTLO, keep the lights on.

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And it's by far the most important
job, and it's the number one

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most important job of a CIO.

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And by the way, it's what gets CIOs
fired if they can't keep the lights on.

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And I'm talking about the registers
ringing and the network staying up and the

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emails, emailing, you know, uh, not to be
named, you know, big cloud provider had

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a little KTLO issue this just recently.

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And we all feel the pain of that.

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So.

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It's job number one is to do that.

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Now, you're not gonna win awards and
be on the stage and be celebrated

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and promoted or invited to board
meetings because you did that.

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It's the expectation of the job,
but you also can't ignore it.

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So in order to do that it's about
automation, it's about procedure, and

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it's really about learning and also KPIs.

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Whatever it is, you know, we can
use uptime and having an agreement

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that this system's gonna be up 99.9
or a hundred percent of the time.

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So that's job one.

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That's the foundation,
that's the concrete.

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And it's necessary but not sufficient.

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And so the next level of the
hierarchy, and back to, you

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know, you mentioned Maslow.

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People remember this from college, but
basically he said, if you're getting

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chased by a bear, you can't fall in love.

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And so.

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You gotta serve your safety needs.

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You know, you need a nice house and,
you know, keep the bear out and then

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you gotta feed stuff and then you
can move on and self-actualize and

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build a pyramid or whatever we do as

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Ricardo Belmar: Yep.

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Yep.

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Andy Laudato: That's
the same exact analogy.

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So next up on mine is to have a
lean and efficient IT department.

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If you can't keep the lights on, you'll
spend any amount of money, right?

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If you can't keep the server up and the
tech shows up and she wants 500 bucks

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an hour, you're gonna write the check.

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So.

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You gotta get it right and
then you gotta get it cheap.

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Make it work, and then make it affordable.

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And the reason this is so important is
it's really hard to be an IT leader and go

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knock on the door of your executive peers
and go, oh, let's go do this or that.

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Let's go do a project together.

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If you're own house isn't in order,
if you're not making your budget, you

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know, if you're not managing your staff
and your head count and your contracts.

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So, get it right then get it cheap.

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And so the next phase up is to be
a really lean, well-run machine.

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And a lot of the ways you
do this is the same as KTLO.

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It's about procedure and process
and a negotiation mindset and a

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continuous improvement mindset.

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Little things a lot add up.

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All right, so, we're moving
up the hierarchy and the next

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level I call create value.

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This is a lot of what people
think all IT departments do.

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Is they do projects to implement
software and you implement

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software to create value, right?

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So it's an ROI, we're gonna automate
some task and we're not gonna spend

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as money doing it, or we're gonna
put in software to better replenish

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our store so we can run with less
inventory and be more in stock.

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This is super important, creating value
and the be most beautiful thing about it

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is that done well, you'll free up money so
that you can then have money to innovate.

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So, anytime you can go and,
and work out these things.

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The important thing about this is to not
try to take on too many things and not

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to have projects that fail or overburden.

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So my big advice is to limit
the work in process people in

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agile and manufacturing, lean.

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I always talk about whip limits.

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How many concurrent things are you doing?

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I would venture to say every IT department
I ever went into in any industry

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always has too many projects going on.

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So.

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My advice is to say, however many
you have going on, say it's 10 or

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50 or a hundred, make a whip limit
that's about 75% to 80% of that.

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So in simple terms, if you're doing
10 major things and you get number

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one done so you have a priority.

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Instead of starting the next
thing, take the people that just

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got that work done and put them
on the new most important thing.

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The tendency might be like,
we got number one done.

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Let's go put all these
people on number 10.

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Well, you just took the people that
were most successful in your org and

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put 'em on your least important thing.

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So having them help out on
number one, we'll get that done

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and get that flywheel going.

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I think they call that crashing
the project, but it's like, yeah

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we got some people available.

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Let's go.

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Let's get it done.

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Clarity about what is number one.

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A little exercise that I talk about
is to ask all your execs to write down

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their top five projects in the business.

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They should all match perfectly.

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All, all of them should know.

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You guys are

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Casey Golden: How.

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Ricardo Belmar: yeah.

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Andy Laudato: Never.

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And then what you could do is, um, you
know, you could do a standard deviation

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and see how, how far you're off.

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But, clarity on what's
number one is so critical.

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Imagine that you get invited to
two meetings at the same time.

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Which meeting do you go to?

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For me, I always know because I
always take whatever project's ranked

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higher, it's gonna be my priority.

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Ricardo Belmar: Yeah.

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Andy Laudato: I don't care how
big your company is, there'll

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always be some constraint.

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Maybe it's a DBA and you only have one, or
maybe it's a creative or whatever it is.

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So when there's clarity on what's number
one, then there's better chance that

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number one will be successful on time,
on budget, on scope, on, on quality.

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All right, so we're
building up the pyramid.

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We got keeping the lights on,
figured out, running really smoothly.

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We're getting our projects done.

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They're prioritized.

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Everyone understands what they are.

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They're creating value.

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Finally now I get to innovate
and I mean, what I just described

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could take years of work.

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So I know there's gonna be a
little bit of push and pull.

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You can't say, oh, we'll be ready to
innovate in three years, but always

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keeping a focus on these levels
of the pyramid and shoring 'em up.

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Even if you're doing some innovation.

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And I know we'll talk more about what does
innovation mean as we go, but just to be

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clear on the pyramid, that's what it is.

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The last thing I wanna say is
some companies think they can

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separate these things out.

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Like, oh, we're gonna hire a, whatever
the term is, back office CIO, to

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keep the lights on and run it.

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We're gonna hire someone else to innovate.

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I just haven't seen that model work.

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I just haven't.

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Right.

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It's,

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Ricardo Belmar: Yeah.

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Yeah.

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Andy Laudato: I really think it's
important that these things are

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cohesive and managed together.

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Ricardo Belmar: Yeah.

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Casey Golden: you think it's very easy
for somebody to find that person that

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has the creativity and the innovation
and the pulse to innovate to be in

00:10:03.515 --> 00:10:10.096
charge of it, and also managing keeping
the lights on and process and doing,

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being in the weeds all the time.

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Andy Laudato: No, it's super hard, right?

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That's why CIO stands for Career Is Over.

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You know how.

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Yeah, well,

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Ricardo Belmar: Just a little.

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Andy Laudato: But
remember, this is a leader.

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We're talking about leadership.

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So it's a person that needs to
lead all that, those activities.

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So the, the core skill we need here
is not, I can config the server

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Ricardo Belmar: exactly.

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Andy Laudato: Run the portfolio
tomorrow, and then go innovate.

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It's a leader that can put the
right people in place and make

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sure they prioritize these things
and they're communicating the

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whys to their business partners.

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So, yeah, I think that that's the key.

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To find a really solid, well
balanced leader that knows

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how to put talent around them.

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Casey Golden: So what makes your hierarchy
of IT needs  critical for leaders today to

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be thinking about and to really understand
before pursuing innovation in the org.

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Andy Laudato: I love this question.

00:11:06.088 --> 00:11:06.478
So.

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You'll hear CIOs bemoan they don't
have a seat at the table, right?

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We need a seat at the table.

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There's even a book called A Seat at the

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Ricardo Belmar: Yeah.

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Andy Laudato: and it's
like, are we in the room?

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Right?

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Are they are execs off?

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And I'm not just talking about
the formal, the informal, right?

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When executives are sitting around
drinking coffee, deciding is the

00:11:24.756 --> 00:11:26.136
cio, is he or she in the room?

00:11:26.136 --> 00:11:30.456
And so I think what's so important is
you have to earn your way into the room.

00:11:31.236 --> 00:11:34.836
Believe me, if you're sitting in a
meeting and your phone's going off

00:11:34.836 --> 00:11:38.101
like that, and oh, this is down,
or that's down, or we're crashing.

00:11:38.101 --> 00:11:39.661
Or the stores, no one can check out.

00:11:39.661 --> 00:11:40.921
The lines are forming up.

00:11:41.161 --> 00:11:42.631
You're just never gonna be invited.

00:11:42.631 --> 00:11:46.111
So demanding your way into the room will
never work because there's informal.

00:11:46.211 --> 00:11:50.111
Earning your way into the room by
having a really well run, organized

00:11:50.111 --> 00:11:52.871
always up ecosystem is what's key.

00:11:53.561 --> 00:11:54.911
Getting your projects done on time, right?

00:11:54.911 --> 00:11:58.091
If your projects are way over
budget, you can't really, you

00:11:58.091 --> 00:12:00.821
don't have credibility to sit and
talk about what we should do next.

00:12:01.541 --> 00:12:03.701
Because you gotta focus
on what we should do now.

00:12:04.211 --> 00:12:08.711
So the first three layers of
this pyramid are almost tactical,

00:12:09.221 --> 00:12:10.361
that need to be under control.

00:12:10.361 --> 00:12:11.621
So you can be strategic.

00:12:11.846 --> 00:12:12.176
Ricardo Belmar: Yeah.

00:12:12.446 --> 00:12:13.526
It gives you that credibility.

00:12:14.201 --> 00:12:14.621
Andy Laudato: Yeah.

00:12:14.801 --> 00:12:15.251
You earn the

00:12:15.281 --> 00:12:16.181
Ricardo Belmar: have those things, right?

00:12:16.241 --> 00:12:16.541
Yeah.

00:12:16.546 --> 00:12:18.586
You've established that baseline.

00:12:18.636 --> 00:12:20.376
It's why we call it the foundation, right?

00:12:20.376 --> 00:12:23.816
Because , you can't ask to go build
those other things if you don't have

00:12:23.816 --> 00:12:25.226
anything to build on that's reliable.

00:12:25.606 --> 00:12:26.206
Andy Laudato: a hundred percent.

00:12:26.386 --> 00:12:26.686
Ricardo Belmar: Yeah.

00:12:27.046 --> 00:12:31.036
So, Andy , are there any other
lessons that retailers can take from

00:12:31.336 --> 00:12:34.036
your model when they're trying to
balance that operational stability?

00:12:34.036 --> 00:12:37.906
'cause you, me touched on before that
there's always this push behind you

00:12:38.176 --> 00:12:41.686
for innovation and transformation,
even while you're trying to do all

00:12:41.686 --> 00:12:45.016
these things in the pyramid to keep
the lights on and to create value.

00:12:45.196 --> 00:12:48.556
How are any special lessons on
how do you strike that balance?

00:12:48.967 --> 00:12:49.627
Andy Laudato: Yeah.

00:12:49.727 --> 00:12:53.447
Especially if you're new to
the CIO role or to the company,

00:12:54.107 --> 00:12:55.337
to an IT leadership role.

00:12:55.337 --> 00:12:57.787
Look for things that have
low risk, high reward.

00:12:57.937 --> 00:12:58.117
Ricardo Belmar: Hmm.

00:12:58.555 --> 00:13:00.685
Andy Laudato: And so, you know,
we'd love to live in that bucket

00:13:00.685 --> 00:13:03.265
that there's not a big risk here,
but I'm gonna get a lot out of it.

00:13:04.195 --> 00:13:08.565
So, and the most easy
example would be analytics.

00:13:08.856 --> 00:13:11.826
Because there's not a huge risk to
add more analytics or to get some

00:13:11.826 --> 00:13:13.536
data or maybe glean some insights.

00:13:14.136 --> 00:13:16.356
Those are the kind of projects where you
can get some credibility while you're

00:13:16.356 --> 00:13:18.846
building the foundation is to do that.

00:13:18.926 --> 00:13:22.616
Just the opposite are projects that
we would call high risk, low reward.

00:13:23.276 --> 00:13:24.986
And my advice is to outsource those.

00:13:24.986 --> 00:13:27.316
I mean, with some examples
like the payroll system.

00:13:27.571 --> 00:13:28.741
It's super high risk.

00:13:28.741 --> 00:13:30.991
If you don't pay people, you
know you're gonna get in trouble.

00:13:30.991 --> 00:13:32.761
There's legal ramifications,
they're gonna quit.

00:13:32.761 --> 00:13:36.121
But if you're amazingly perfect
at payroll, nobody cares.

00:13:36.901 --> 00:13:37.921
No one's excited, right?

00:13:37.921 --> 00:13:40.141
So you don't wanna roll into
a new gate and go, Hey, let's

00:13:40.141 --> 00:13:41.521
put in a new payroll system.

00:13:42.271 --> 00:13:46.711
And those are two extreme examples, but
I think it's a lot of these big, big

00:13:46.711 --> 00:13:51.091
projects like an ERP implementation, I
would call those high risk, high reward.

00:13:51.403 --> 00:13:54.433
And sometimes people are hard with
a mandate like, oh, let's do this.

00:13:55.468 --> 00:13:58.948
I would really try to push that off
until you have some more foundation work.

00:13:59.458 --> 00:14:04.108
Or if you absolutely have to do
a high risk, high reward project

00:14:04.108 --> 00:14:07.288
because it's mandated or the
company can't survive without it.

00:14:08.008 --> 00:14:09.628
Find a way to reduce the risk.

00:14:10.333 --> 00:14:10.513
Ricardo Belmar: Hmm.

00:14:10.528 --> 00:14:12.538
Andy Laudato: And the simple way
is to break it up into manageable,

00:14:12.628 --> 00:14:13.978
manage manageable chunks,

00:14:13.978 --> 00:14:17.698
Right, To make it agile, figure
out a part of it and break that up.

00:14:17.698 --> 00:14:20.218
But so the answer is, yeah,
you're gonna have to do some

00:14:20.218 --> 00:14:21.538
innovative things along the way.

00:14:22.318 --> 00:14:25.013
Try to find the low hanging
fruit, the high reward things.

00:14:25.013 --> 00:14:26.863
And that also adds to the credibility.

00:14:27.643 --> 00:14:31.393
And then one more thing I'll say is
when we say innovation, I think we

00:14:31.393 --> 00:14:34.663
all think right now like, oh, we're
thinking about ai, or some really

00:14:34.663 --> 00:14:37.783
amazing thing, or an app, or you walk in
the store and it knows who you are and

00:14:38.323 --> 00:14:41.263
products fall outta the sky and landing
your lap just what you never wanted.

00:14:41.533 --> 00:14:41.923
Ricardo Belmar: Right.

00:14:42.313 --> 00:14:44.863
Andy Laudato: But innovation doesn't
always have to be that exciting or sexy.

00:14:44.863 --> 00:14:46.783
I mean, innovation might be to a process.

00:14:47.473 --> 00:14:50.683
It may be how you keep the lights on,
it may be how you, you know, do that.

00:14:50.683 --> 00:14:54.323
So, the word innovation try to
really think about that meaning.

00:14:54.343 --> 00:14:56.833
It really just means doing something
different to serve a customer,

00:14:56.983 --> 00:14:58.093
is kind of how I define it.

00:14:58.093 --> 00:14:59.287
So that's

00:14:59.385 --> 00:15:01.375
Casey Golden: innovation
doesn't require a press release.

00:15:01.814 --> 00:15:02.954
Andy Laudato: Yeah, exactly.

00:15:04.119 --> 00:15:04.539
Mm-hmm.

00:15:06.104 --> 00:15:10.244
Uh, for me, boring is, boring is sexy,
you know, like, all right, I don't

00:15:10.244 --> 00:15:11.534
mind saving a few bucks, or doing

00:15:11.534 --> 00:15:11.984
Ricardo Belmar: Right.

00:15:12.014 --> 00:15:14.324
Andy Laudato: little bit better because
you do a lot of those and they add up.

00:15:14.714 --> 00:15:15.254
Ricardo Belmar: That's right.

00:15:15.404 --> 00:15:15.824
That's right.

00:15:15.824 --> 00:15:16.484
It adds up.

00:15:16.733 --> 00:15:20.993
Casey Golden: Can you share an example
where skipping a found like foundational

00:15:20.993 --> 00:15:23.723
steps, undermined innovation efforts

00:15:24.250 --> 00:15:26.200
Andy Laudato: Yeah, I mean,
let's go back to the example.

00:15:26.475 --> 00:15:28.060
Casey Golden: like avoid that trap?

00:15:28.600 --> 00:15:28.870
Andy Laudato: Yeah.

00:15:28.870 --> 00:15:33.370
I mean, a lot of talk about, you
know, AI without good data is gonna

00:15:33.370 --> 00:15:35.200
make you, you know, a faster mess.

00:15:35.200 --> 00:15:36.370
And I think that's an example.

00:15:36.370 --> 00:15:40.870
If you haven't built out a really robust
data warehouse and it's in the cloud,

00:15:40.870 --> 00:15:43.300
and you don't have a data schema, but
you're like, oh, I'm gonna put in some

00:15:43.300 --> 00:15:46.030
really fancy dashboards in every store.

00:15:46.960 --> 00:15:49.600
But you lose credibility 'cause the
data's wrong or it's incomplete, or

00:15:49.600 --> 00:15:53.380
you know, or even worse, people are
making decisions on incorrect data or

00:15:53.380 --> 00:15:57.040
incomplete data, or you're telling your
customer, oh hey Andy, I think you really

00:15:57.040 --> 00:16:00.070
need this menopause drug because I got
marked as a female instead of a male.

00:16:00.070 --> 00:16:00.310
Right?

00:16:00.310 --> 00:16:04.520
So I think foundationally making sure
that if you don't get your data right

00:16:04.520 --> 00:16:07.370
and you try to do the fancy stuff
on top, you're gonna blow things up.

00:16:07.695 --> 00:16:09.735
Ricardo Belmar: That's a great
point, especially now with, and

00:16:09.735 --> 00:16:11.835
everyone is looking for AI to
solve all of their problems.

00:16:12.938 --> 00:16:16.238
Well, Andy, this has been a,
fantastic, enlightening discussion

00:16:16.248 --> 00:16:19.638
on how to go about building the
foundation and love the framework.

00:16:19.638 --> 00:16:23.438
Thank you so much for highlighting this
topic and putting some structure behind

00:16:23.438 --> 00:16:25.568
how leaders should approach innovation.

00:16:25.813 --> 00:16:27.403
Andy Laudato: Yeah, it's my
favorite subject, so thank you.

00:16:28.333 --> 00:16:31.063
Casey Golden: Yes, as always
Andy, you bring much needed

00:16:31.063 --> 00:16:33.343
clarity to these important topics.

00:16:33.657 --> 00:16:35.457
Appreciate you  joining us today!

00:16:35.818 --> 00:16:36.358
Andy Laudato: You are welcome

00:16:36.647 --> 00:16:37.937
Casey Golden: Well, I'd
say that that's a wrap.

00:16:44.518 --> 00:16:49.183
If you enjoy today's episode, please
give us a five star rating and review

00:16:49.183 --> 00:16:52.043
on Apple Podcasts, Spotify, or Goodpods.

00:16:52.393 --> 00:16:57.043
And don't forget to hit subscribe
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00:16:57.043 --> 00:16:59.053
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00:16:59.487 --> 00:17:00.537
I'm Casey Golden.

00:17:00.874 --> 00:17:01.894
Ricardo Belmar: We'd
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00:17:01.984 --> 00:17:05.194
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00:17:15.304 --> 00:17:17.624
about all of our amazing guests.

00:17:18.064 --> 00:17:21.334
Blade to Greatness is part of
the Retail Razor Podcast Network.

00:17:21.604 --> 00:17:22.624
I'm Ricardo Belmar.

00:17:22.938 --> 00:17:24.098
Casey Golden: Thanks for joining us.

00:17:24.278 --> 00:17:25.928
Ricardo Belmar: Until
next time, Stay sharp.

00:17:26.018 --> 00:17:26.798
Lead boldly.

00:17:26.858 --> 00:17:27.668
Stay human.

00:17:27.728 --> 00:17:30.398
This is The Retail Razor
Blade to Greatness.