How Frito-Lay has Accelerated with Enterprise Transformation and Design Thinking | Salesforce

Thank you for having me. Excited to be here.

Hey, it's been about a year since you and I were last together, and we were on stage at a Dreamforce keynote, as a matter of fact. What a year it's been. I think 2020 has been unexpected for all of us. So just wanted to check in. How have you been? How's the business been going and your employees and your customers? How's everyone faring these days?

It seems like it's been about a decade since we were together in San Francisco. I couldn't possibly have imagined the year that's unfolded, and I really wish we were back together again. But it's been interesting and it's been, I think, an incredible learning experience. Obviously a difficult environment for a lot of people. So I don't want to minimize in any way some of the suffering that people have had during the last year. But I'll say that for us, on both the business side and in the work that we're doing on our technology front, it's been actually a fairly incredible experience to see how we've had to adapt both with our customers, with our shoppers, and then with the way that we get work done. So just to give a couple examples, we're seeing a pretty significant shift in how people buy food. Obviously. People are obviously going out much less frequently to restaurants. They're shifting which channels they shop in. Large format. Big grocery stores are seeing a big resurgence. Obviously, E commerce is absolutely off the charts. A lot of people both between shipping directly and then buying and through click and collect in the store. Those channels are growing extremely rapidly, while other channels on the go, convenience away from home are declining. So we've had to completely shift the way that we operate our business. At the same time, we run a very large workforce. We've had to think very differently about how we protect our employees, how we make sure they can do their job safely in this tough environment. We've had to think differently about how we deliver our products to consumers. I'm sure we'll get into it later, but we've been leveraging our own and building our own E commerce platforms in order to make sure that we can reach our consumers effectively, no matter how they want to shop. And then we've had to think very differently about how we get our own work done. Right. We are still not back in the office. We don't intend to go back for another few months at least. And we've had to think about how do you do safe, agile methods? How do you do large at scale Development in a world that's 100% virtual while you're trying to reinvent literally everything about the business. So it's been an incredible year or so, and I don't think we're done learning yet, but we've had a fantastic experience trying to work our way through this very difficult time.

Well, what an incredible run through. It looks like you guys are attacking the challenges on all fronts. Now, if we rewind back to the spring, which also seems like years ago, what initial challenges? When we first came into the pandemic times, what were the initial challenges and how did you react to them?

We had challenges with literally every part of our business. And so if you think about the way that Frito La runs our business, we run large routed operations. And so we have employees that get on trucks and they service stores in a predefined sequence. They go from a, from a Walmart to a Kroger to an Albertson Safeway to a 711 and they reroute that during the day or during the week. And as you think about as Covid hit, multiple things changed all at once for that employee organization. We had to think about how do you adjust for changing service levels in those stores? As I mentioned, some of those stores got much more heavily shopped, some got less. How do you think about the employee and keep them safe during that environment? And then how do you think about the implications of those on the tools that we're developing with our CRM systems with Salesforce and some of the other e commerce tools that we're developing because it changes your agenda. You have to suddenly get into an environment where I need to be much more dynamic in how I schedule those routes, how I determine which stores I'm going to visit at which time. I have to get much more thoughtful about interacting with my customers when I can't approach them and talk to them in the way that we used to. So the way that you use CRM software, the way that you use your sales applications change. In a world where I can't hand an invoice to a receiver on the back door and have him sign it or I can't get in, you know, get and have an in person conversation with a store manager, I've got to think about how do I keep my employees safe in that environment and then how do they still continue to be effective in a world that's changing as rapidly and as flexibly as it is? And the other thing we had to do is we had to develop an entirely new way of getting to Our employees, I think we had a system already that we used called snacks2u, which I think we're going to see a demo of later. But that is a system that was designed for business to business commerce for our smaller bodegas up and down the street shops where we could send them products via drop ship instead of having a truck stop by. As you can imagine, that service by itself shot through the roof because suddenly you have a zero touch method of delivering product to small customers. But we had to take that and adapt that all the way down to consumers. If you think about consumers now for a while at least, certainly didn't want to go shopping, they didn't want to leave their home. So we had to think about how do you take an offering that was built for business and delivered into the consumer world as well. And so within the first three or four months, we had to tackle all of those different challenges. The rerouting of our employees and the assets that we have, the rethinking of how we use our sales software, the rethinking of how we use our E commerce platforms, and at the same time doing all of that with an employee and developer base that was now working virtually. So it's quite an interesting first three months.

Well, and if you recall from last year, Michael, my favorite snack of choice is Cheetos. And I did not realize that Snacks2U was available directly to consumer. And that would have helped me because there were a couple of weeks of Cheeto shortages that really affected me badly there. So you've talked a lot about the pivots, really, these new solutions and innovations that you kind of needed to do this year. But last year when we spoke, we talked a lot about a broader roadmap, Right. The bigger vision of where we were going to go with Frito Lay North America here. How are you reconciling that broader roadmap with all the new things that just happen to have come up in the last eight months?

It's a great question because thankfully our broader roadmap was always designed to be what we call always and everywhere. Our goal is because we are in, as we mentioned last year, we're in 94% of U.S. households. You're not the only person that loves Cheetos. A lot of people love Cheetos. They love Doritos and lay's. They love our smaller brands. Bear off the eaten path Popcorners. When you add that portfolio together, we're in essentially every household in America. So our roadmap has always been how do we offer the Best snacks to literally anybody in America who wants to buy our snacks anyhow, anywhere that they want to shop. And how do you then tailor that assortment and make it as perfect and individualized and personalized for them as you possibly can? Which requires a lot of technology to connect understanding of consumers, understanding of shoppers in a particular geography, in a channel, in a segment, and then threading that back through what is one of the world's largest and most complex end to end supply chains. So as a reminder, we run the world's largest private fleet. So we have more trucks up and down the street than UPS or FedEx. And so we have just a massive fleet. We have more than 40 manufacturing plants, we process more than 4 billion potatoes. It's a massive and complex system. And our vision was always to use technology to take that system and tailor it flexibly enough to deliver exactly what consumers want, the way they want it. So that vision actually didn't change. That's still the vision that we're moving towards. What changed is how consumers wanted it during this Covid times and how they'll continue to want it, the specific snacks they wanted. We saw a huge shot up in comfort food, right? People suddenly, they love their Cheetos, they love their Doritos, just like you. They wanted to find out how do I continue to get this little dose of creature comfort that helps me get through hard times. At the same time, we saw a very large spike in specific some of our health and wellness products as people try to avoid the COVID 15 and make sure that they were eating healthy and had and had the right products available to them. And so the shift in what people wanted to eat was pretty significant and the shift in how people wanted to shop was pretty significant. But thankfully the vision never changed. What changed is some of the specific tactics that we had to use to adjust to those spikes in demand and adjust to those new channels that people wanted to shop towards. So what I'm thankful about is that we had already been down this path to make our system as flexible as possible. That was always the mantras. Use technology to digitize and manage complexity so that we could be always and everywhere. So because we were down that journey already, it actually made our pivot a lot easier than it could have been otherwise. So for example, we stood up that Snacks.com, which is the snacks you direct to consumers. You can go tomorrow Naracha and get on snacks.com you can find your Cheetos, you can find simply Cheetos, white Cheddar, Flamin Hot, Extra Flamin Hot, any size you want. It's all there. We stood that up in 30 days. We would never have been able to stand up a direct to consumer site. With direct shipping, you can get anywhere in the US $15 minimum and it's free shipping to your home in two days with over 400 SKUs available. We stood it up in 30 days and we did only could do that because we had invested so much in making sure that our backbone was flexible enough to handle anything that you could throw at it. And I wouldn't have guessed that it could have handled Covid, but it's handled it better than I thought it would have.

I think it's amazing to hear just about the sheer scale of the operation and then the incredible agility that you really set up a DTC business in 30 days. Now that's, that's incredible. And I as a consumer love the idea that there's like this predefined assortment that you know, that Neeracha loves and that customer centricity. You really need that 360 degree view of the consumer. So how did you get to defining that? Because that obviously is the holy grail for a lot of businesses.

That is the absolute holy grail. And it starts with the fact that we have, in our asset base, we have employees that are going into literally every store in America multiple times per week. So we do 500,000 store visits every week. So what that means is a Frito Lay employee. These aren't subcontractors. These are. Employees are walking in, they're meeting shoppers, and they're capturing shelf conditions using their handheld. They're understanding what's in the store, how it's moving, who's walking in. We then share data back and forth with our largest customers. We understand from them who are their shopper bases, what's being sold, how it's being sold. We integrate that data with other data that we purchase and develop on our own on terms of who lives in which subdivisions, what sporting events are happening, everything down that you can imagine about individual, not individual, but segmented consumers so that we can then create a 360 degree view of where they are, where they're living, what their household looks like, where they're shopping, and how those come together to create the ideal shopping experience for snacks for any individual consumer. We do that through a combination of. It's really a huge data combination of third party data from different sources, but a lot of first party information that we gather as we go out into the market with the Tools that are on our Frontline sales technology handheld that we've been developing with Salesforce and with IBM. That gives us a lot of proprietary information of what's happening in different stores all around the world that we can then aggregate all around the country. I should say that we can then aggregate to get a really good view of micro markets all the way down to the outlet level that I think differentiates us from our competition.

I love the idea of data collection, obviously from various sources, but also from that critical frontline Frito Lay employee who is in all these businesses and touching consumers and retailers every day. So if you think about your retailers, then how are they going to be better served as you have more information to build this 360 view?

It's a great question because they're struggling with that same flexibility challenge I mentioned earlier. Right. So their business, even within a particular store has shifted fairly dramatically in the past six months. Right. You're seeing a huge uptick in people wanting to buy E Commerce, people wanting to order, click and collect, people wanting to deliver directly from a store into people's homes. And you're seeing a lot of innovation from our largest retail customers to make that a better shopping experience. What I'll tell you is that puts a lot of strain back into their supplier network to be able to supply effectively into a outlet or a large retail store, not knowing how that product is then going to flow back out of the store. Because the way that you supply it, the way you stock it, the way you bring it in is different depending on whether you expect someone to pick it up off of a shelf or whether you expect someone to pick it up at 5, 5 in the morning from a picker, internal click list picker, or whether you intend for it to go right out the back door and into somebody's home. What we're able to do, because we have got this end to end view of the consumer and we have a flexible supply chain, is we can work with those largest customers and completely design and redesign our supply chain to make sure that we are connected to the way that their shoppers want to buy the product. And so we are able to flex. And if we need to have a product delivered in special totes that are easier to then take into a click and collect an E commerce business, we can help them do that. If we need to stock a different part of the store so it can be picked efficiently by their own internal pickers, we can help them do that. And we know from our data on their shoppers who is likely to buy which products when, so that we're not, you know, as shelf space becomes more and more precious for these retailers as they're trying to accommodate different business models, we know exactly what needs to go in the front of the store, what needs to go in the side of the store, what needs to stay in the back room, and how that is going to move over time based on the specific shoppers in that store. So that combination of having a lot of data down to the very specific micro market level of who's shopping and what they're doing, combined with a very flexible supply chain that uses data and digitization to get the ability to handle a lot of different delivery methods and service methods, has been really valuable to our largest customers as they've been trying to navigate this more complex world.

I think the flexibility is incredible in the business of this scale. Like I said before, let's do a little pivot to design thinking, A popular concept that's not always easy to apply in reality. Now, how have you used design thinking and salesforce to really help connect your commerce, your service, your employee populations to really drive that better experience, not just for the consumer, but also for your retailer?

We start all of our discussions about how to make that model work most flexibly with end to end golden threads that we use that are based on design thinking, based on a focus groups that we have at every level of the organization. So we have set focus groups from around the country that help us from the very frontline sales to the sales management teams at different layers and levels. We have customers who are focus groups for our B2B E commerce. And what we do is work with those folks to very quickly iterate using wireframes and golden threads, test and learn what is the most important functionality for them, what's the vision that they would like to see, how would they like to interact with Frito Lay? And then we work backwards and implement that in agile sprints. So everything that we do starts with what is that end to end design? How do we simplify everything as much as possible, make it clean, crisp, simple versus working forward from the technology we have, Starting from the end game, what are we trying to deliver to our customers, our employees and our employees, managers to make their lives efficient and effective. And so if you were to walk our halls when we were able to go in the office, you would have seen we've got these massive golden threads that are layered across the entire hallway that show all of the end points that we're trying to deliver, all of the final end states and designs that we want to deliver and then how that's going to come to life over time. We've moved all that thinking virtually now, so now you can go online and see it all if you're in the, in the right spot. But it's the same process and the same thinking we've had to rethink about how we work. You know, how you do, how do you do a stand up when it's all virtual? How do you post a golden thread? We can't walk up and down the hallway putting post it notes on it. We've moved all that thinking virtually. But it's the same process, it's the same type of thinking that we're using with Salesforce and with IBM who's our system integrator partners.

And your results honestly have been phenomenal in the larger PepsiCo world. Read a lot in the media about it. So if you think about this design forward agile approach and your ability to move the golden threads online, so to speak, how is Frito Lay North America emerging smarter out of all this?

Yeah, I think, look, nobody wants to have a pandemic or a crisis. So I hate to say anything that implies that we're benefiting in any way from it. What I will say is that I'm happy that we have been able to build in the type of agility and flexibility even at our scale. Because I think that is a truly competitive advantage, true competitive advantage relative to our competitors who produce products that are good but may not have the integrated systems that we have to be able to flex and adapt and service our customers and both our customers and our end consumers in so many different flexible ways. And that investment in flexibility, that investment in technology, the ability to have an end to end view to the customer and the ability to have a system and a supply chain and a go to market system that is digital and flexible I think sets us apart and has helped us come out of this pandemic or hopefully will help us come out when we finally all come out of it in a much stronger way. Because we've been able to prove to our customers that in a time of stress we will be there for them. We've proven to our shoppers that you know, when they can't find Cheetos or Doritos any other way, we will find a way to get it to their homes as fast as we can. So we've, we're putting points on the board with both our customers and our consumers to show that we're there for them no matter what's happening in the world around them. I think that can only help us as we come back out of the crisis.

Yes, I think that's always the big decision. Right. What's going to survive into the new normal versus what was just done for the immediate times. And it sounds like everything you're building really will survive, which is obviously a great business outcome at the end of the day. We've talked a lot about your Frito Lay employees who are out there on the. You Visit more than 300,000 businesses a week, from large retailers to bodegas to gas stations. I mean, even food trucks.

I understand.

So how. I mean, thinking about the community, right? This is your customer base. How have they fared over the past nine months?

Yeah, highly variable. And, you know, there's obviously some segments of our customer base. We service everybody. Right. As you mentioned, all the way down to the food truck in the street. Those are having challenges. Right. A lot of the away from home segments, clearly there's a lot of very, very difficult situations in away from home. And some of the small stores, some larger stores, some are doing extremely well in this crisis. Some aren't doing so well. I think our objective for Frito Lay is to continue to provide that service as best we can to every one of those possible customers and make sure that we're giving them these best assortment at the right time for their customer base. So even if they're in an unfortunate situation where the customer base is shrinking, we're not walking away from them. What we're doing is making sure that we can provide them insights on how do we make sure that when people do come in the store, when they come in the restaurant, we've got exactly the right product and exactly the right place for them for their customer to help to continue to keep the business moving as best we can. So it's a very. It's a highly variable market. And again, our goal is to work with each of our customers, deliver the maximum possible service so that we can help them sell as many. As much product as they possibly can of ours and of everybody else that walks in that store.

So it sounds like you get a lot of feedback from these 300,000 businesses. How about feedback from your employees? How do you gather that and incorporate that into the plan?

Our employees are the heart of the business. Frito Lay was founded by people driving trucks, selling snacks off the back of the truck. It's an entrepreneurial culture. It's an entrepreneurial business. And that is how we need to continue to drive this. As I mentioned, they are part and parcel to all of the technology that we develop. We have very disparate networks of focus group participants, of first users who are helping us design what it is that we need to design to make sure they can do their job most effectively in the future. Because I'll tell you, we want to get. The sweet spot is if we can get this blend of artificial intelligence based on big data about everything that's happening with a consumer and a shopper, blended with local market intelligence from those 25,000 employees who are doing 500,000 store visits to 300,000 unique customers every single week, we can put the human intelligence and the machine intelligence together. It's a dynamite powerhouse that absolutely nobody can match. So that is our goal. And we can only do that if we know what tools that our employees want to help them do their job most effectively. So that's why it all comes back to this design thinking and getting together with our employees on putting in their hands the exact functionality that we're trying to build and make sure it works exactly for them to balance machine intelligence with human intelligence.

Thank you. Now, I just wanted to wrap it up about talking a little bit more about snacks2u. I mean, we're going to show a little demo shortly. But as you think about snacks2you, and first of all, the B2B platform that turned into D2C platform, how do you think that cemented your relationship with your customers and how that got stood up in the partnership with IBM?

Snacks2You is a tremendous platform and it's one that provides more than just your standard dropship capability of products delivered to the back door. What it does with our customers is it has all the tools that I mentioned that are in the frontline sales reps hands about what's the ideal assortment, what should they have in their store, how do you maximize the sale? And it's put all that directly into the fingertips of our customers. So if you're a bodega owner through snacks 2 you, you can understand and play scenarios of if I stock these products, if I stock them in these parts of the store, what happens to my sales? How do I know and predict how much we'll sell of a particular sku? So I can make sure that I don't have any extra products sitting in the store that I don't need. Because obviously for them, cash is king. The last thing they want to do is pay for product that doesn't turn. So by giving all that information, all the investments we're making in 360 degree data and putting that in the fingertips of our customers. It helps them maximize the state of their business which then obviously helps build our relationship with Frito Lay and IBM. And the development that we've done has been central to all of that because they've helped us integrate all of that back in end to end data into a very easy to use e commerce platform that's powered by Salesforce. So it's been a beautiful partnership between our information, the IBM integration and design thinking in the Salesforce technology that I think has made a big difference to the small business owners around the country as they try to navigate this crisis well.

And what I love about snacks2u is that you've really democratized the data. Right? An owner of a little bodega has access to the same analytics its use supply to any of the largest grocers, say in the country and so they're able to then run their business with all those tools. I simply love that. Well, I think we're just about at the end of time today. Michael. It's always a pleasure talking to you. Thank you so much for joining us today.

I've had a blast. Thank you for having me.

Just a reminder everyone, snacks.com direct to consumers you can find those rare white Cheddar Cheetos. I'd highly encourage you to go there. In fact Leah, I'm going to turn it back over to you and you might want to check out snacks.com as well.

Woo.

I was just signing up for snacks to you because I can't be without my Lays. That was awesome. Thank you Neeracha. Thank you Michael. Such great information and watching how a company can pivot so quickly to meet the demands of their customers or the needs of their customers. Because let's be real, we all need a little comfort food these days. With that before I want to pass it over to Hillary who's going to dive a little deeper into how to Frito Lay deliver snacks to you using the best in class digital commerce experience for our customers. Showing commerce Cloud over to you Hilary.

Well thanks Leah and what a great interview. I could listen to Naracha and Michael talk for hours. Now when Frito Lay set out to design the best digital experience, they applied design thinking, bringing in a user lens. Early in the discovery process, they focused on understanding the desires and pain points of individual buyers and building a solution that addressed them. Now let's take a look at how Frito Lay is delivering for customers in Digital channels with snacks 2 you powered by Salesforce Lori, a new business owner just opened A small sandwich shop in San Francisco. A Frito Lay field rep popped in on his route and told her about snacks2u, a website where she can order Frito Lay products. She heads to the website and sees what snacks2u is all about. The world famous brands and how snacks2u is going to help her grow her business. It's her top priority. With an easy instructions and video content, Lori is excited to get involved. She begins to create an account. Often small businesses can be overwhelmed by where to start. They might send an email or call a potential supplier and just have to wait to hear back while juggling a million other things. Here her relevant data is captured by Salesforce in a consumer friendly way. Frito Lay understands that buyers are used to the consumer like experiences. So they wanted to provide buyers a seamless signup. When she creates her account, she can log in and begin to shop. No waiting for an appointment, no waiting in a line for a rep to answer. Lori can dive right in in a moment that's convenient for her. On Snacks to youo site, Lori can see featured products. Now these banners will be personalized over time based on her order and exploration history. She has access to Insights which will give her recommendations on products and quantities to guide her buying. This helps address two of the themes from user research with customers like Lori. A need for confidence that she's making the right decisions and a desire to have things be easy. So with her busy schedule, she doesn't forget things. Frida Lay even provides recommended planograms sharing merchandising best practices at scale. Frito Lake confirmed through research that customers wanted an easy path to reorder, even starting their order with a previous order. So they made it easier for customers by providing order history. So Lori would be able to replicate her order, adjust the quantities, add items and check out, saving her time and energy. Lori has access to resources where she can see answers to the most common questions and she can engage with branded content when she shops. She can search by category or by brand or she can scroll and simply be inspired by the breadth of brands, product assortments and new innovations that Frito Lay has to offer. What's really awesome is how snacks2u is delivering B2C like experiences for B2B buyers. Now Lori is all about the better for you options. So she selects bare chips and here she has all of the information she needs at her fingertips including real time inventory visibility which is critical with demand surges like we've seen in 2020. She adds 50 to her cart. And here she served up intelligent product recommendations to add to her cart as well. Making sure that she sees key products and top sellers, she selects Smart50 sea salt popcorn and adds it. Excited about her product selection, Lori moves through the checkout and the seamless B2C like experience continues while delivering that B2B functionality that she needs. Things like flexible shipping and payment options. Lori finishes her order. It's seamless, it's simple and done whenever and wherever suits her best. And on her confirmation, Frito Lay provides Lori with a snack score, telling her how well her order matches up with taste and preferences for her location based on product demand. With snacks2u we see how Frieda Lay applied some of the principles of design thinking, leading with user needs to build a desirable experience for customers. Now back to you Leah.

Thank you Hilary for showing us the power of Commerce Cloud. Now I know you want to learn more, you want to get hands on. Check out this trail mix SFORCE co Commercetrail. Go ahead and get hands on and learn even more about Commerce Cloud. Now I want to hand it off to Neeracha and Courtney because you heard Naracha and Michael talk a little bit about design thinking. We're going to dive further into enterprise design thinking with this conversation. Check it out.

Well, thank you and thank you to Courtney for joining us today.

Thanks for having me.

So just had a great conversation with Michael Lindsey of Frito Lay North America about how their investment and flexibility has really given them an amazing competitive advantage. So tell me Courtney, how does enterprise design thinking help teams deliver real business outcomes like Frito Lay?

Design thinking can have such a powerful unlock. We did over 650 hours of end user testing with Frito Lay and the insight that that gave them into how their frontline employees were using the product ended up helping us to prioritize their backlog on exactly where we were going to drive the most business value. In the Frito Lay engagement? Having design thinking at the center of what we were doing allowed us to prioritize the backlog with a maniacal focus on business value. And what that meant is that they were constantly delivering the features and the capabilities that were going to have the greatest impact on the organization.

Well, Michael referred to the idea of golden threads journey maps, just this amazing imagery with that. How is IBM Garage's approach unique here?

I think what we're doing in IBM Garage is we're not guessing anymore, right? We're not trying to fail and try again. But we're using the power of data and consumer insights to de risk innovation and to de risk transformation. And we're doing that by building real working products. We're not building museum pieces that we put on the shelf and one day dream about, but we're breaking the biggest problems down into the smallest parts. And we're able to build Those real working MVPs really iteratively and really quickly, but all focused on business value and how to pivot to where the greatest business value is.

That's wonderful. Museum pieces definitely belong just in museums, and I love the data driven approach. Thank you so much for your time today, Courtney.

Thanks for having me.

All right, Leah, back to you.