Digital Transformations Are Forcing Brands Like Keds and Pernod Ricard to ‘Change or Die’

The 2 companies are overhauling how their teams work

Brands have a need for speed when it comes to digital.
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About a year ago, Keds started noticing that women were posting lots of photos of themselves on social media wearing the brand’s shoes at weddings. So, its social media and web developer teams started working together to create a shoppable feed that pulls in social posts on Keds.com.

It may seem like a relatively minor move, but it’s the kind of project that speaks to Keds’ larger goal of becoming more collaborative and agile as it goes through a so-called “digital transformation.” Since joining Keds two years ago, CMO Emily Culp has worked to bring ecommerce, marketing, social media and public relations under one team that’s increasingly laser-focused on treating Keds.com as the brand’s “No. 1 store in the world.”

“It should be your perfect merchandising opportunity, and it should be customized to whatever consumer,” Culp said. “That’s how we think about it—we flip the content-creation funnel on its head to make sure that we think about digital and mobile content first, and then we fan out to all the traditional channels, even down to visual merchandising in stores.”

Keds has good reason to mix up its culture and how it works. As Amazon and other shopping sites make shopping at brick-and-mortar stores increasingly obsolete, retailers are scrambling to move from physical to digital storefronts and pouring money into slick websites, apps and tools to analyze chatter on social media. While Keds’ parent company, Wolverine World Wide Inc., recently reported earnings that beat analysts’ estimates, the brand is also aggressively closing physical stores, shutting down 180 locations this year.

“Because of the digital intention for [retailers], which is, ‘I’ve got to change or die,’ they’re moving fast,” noted Garth Andrus, human capital leader at Deloitte Digital.

Cultural tension

That kind of rapid change can cause plenty of tension and rifts, especially within legacy companies like retailers, consumer-packaged-goods brands and manufacturers that are under particular pressure to perform.

“You’re starting to operate differently in a pocket [of a company] and then that leads to the need of rewiring for processes and those functions within a function,” Andrus said. “When the processes of the new area of the group that’s being more digital hits the part of the organization that isn’t very digital, the white blood cells attack and want to stamp it out. If an organization doesn’t take action on that intentionally, the strength of the current legacy culture can snuff out the nascent digital activities that are beginning.”

Andrus declined to name specific clients but in one example, a top 10 company in the Fortune 500 hired Deloitte Digital to rework the organization, which had four different mini operating units. Deloitte then consolidated the four groups but created nine levels of hierarchy in the process, which caused problems with setting expectations for employees.

“They needed things turned around in a very short period of time like hours versus days or weeks, and the organization literally said, ‘We don’t do things like this. We need two weeks. We need people to sign off on things,’” Andrus said. “This part of the organization was like, ‘We can’t operate like that. You’re killing us with our customers who are expecting immediate answers to things or solutions.’”

“When the processes of the new area of the group that’s being more digital hits the part of the organization that isn’t very digital, the white blood cells attack and want to stamp it out."
-Garth Andrus, human capital leader at Deloitte Digital.

Interestingly, the people most averse to change are not typically the oldest generation, Andrus said. It’s Gen Xers between 37 and 50 who remember predigital offices but “haven’t maybe experienced all the things that the older group has.”

Baby boomers, on the other hand, “get it because they have millennial children plus they’ve been around the block a lot more,” Andrus said. “They’ve looked at us and said, ‘This is different. This is not an incremental change. This is a fundamental transformation of business and if we don’t change, we’re going to be out.’ They know that it’s change or die.”

For large corporations steeped in deep traditions regarding how things are done, injecting a new way of thinking is tough, and businesses risk losing valuable talent and resources from digital overhauls. But there are ways to gradually role out changes, Andrus said. For one, start small.

“The research and our experience shows that if organizations start to get success in a pocket of the organization, another part of the organization starts to say, ‘Hey, that looks cool. I need to be operating like that,’” Andrus said. “It starts to grow that way—you get the embers burning, you fan the embers and more transformation starts to occur.”

Meanwhile, tech companies like Facebook, which Deloitte Digital works with, are struggling to add more levels of operation as they grow. “They’re relatively small hierarchies—most of these are four levels or so from top to bottom—and that comes with less complexity. But with growth, it’s increasing their complexity, it’s increasing the need for more collaboration.”

Take geography, for example. Tech companies built their fortunes while located in one central area—namely Silicon Valley. But with growth, teams are now dispersed all over the world.

“As they grow and move into other parts of the world, different facilities and locations, they really experience a big challenge around, ‘Can I be geography agnostic or do I have to have people physically present at my main location?'” Andrus said. “So they’re starting to use more collaboration tools or they have video and things like Microsoft Teams, Slack and Facebook’s Workplace.”

Data-based decisions

While brands are hiring firms like Deloitte Digital, Accenture, IBM and McKinsey to come in and flip their brands, other marketers like Pernod Ricard are hiring their own internal talent and using software tools to become more digital.

“Amazon is an easy, consummate example, and they’re just going to eat everyone’s lunch,” said Evan Huggins, manager of data analytics at Pernod Ricard. “If it’s not them, it’s businesses that emulate their model of convenience and personalization and accessibility to potentially disrupt our business.”

Earlier this year, Pernod Ricard—the maker of brands like Absolut, Malibu and Jameson—began working with Salesforce to collect and analyze data as part of a bigger customer relationship management, or CRM, effort.

Malibu, for instance, is currently piloting lead-generation ads on Facebook that collect email addresses. After 10 days, the campaign collected 1,300 new leads, and open rates between 43 and 77 percent, per Salesforce.

“It’s not just about email, it’s not just about data or technology,” Huggins said, “it’s about conversations wherever consumers are and never letting them cease. We’ve seen brand teams ask questions that were not asked before about how to do things, what they’re looking at, being more accepting of data and trying things with media.”