Digital Transformation at Stanley Black & Decker

Michael Krigsman: Digital transformation at Stanley Black & Decker.

Katherine Monasebian: We know upfront what we're trying to deliver and we work backward. Then that informs how we track and report against it. Measurement is very important.

About Stanley Black & Decker

Michael Krigsman: That's Katherine Monasebian, President and General Manager of North American Commerce for Stanley Black & Decker.

Katherine Monasebian: You might know us for brands like Craftsman, Black & Decker, DeWalt, Stanley, and more. We operate globally across over 60 countries. We have a history of innovation but most recently we've been very focused on ESG and social impact.

Michael Krigsman: You're almost 200 years old. You're undergoing this transformation, this digital transformation, and so what does digital transformation mean for a company like Stanley Black & Decker?

Katherine Monasebian: We're a very large business, and we are trying to do this during the most volatile times in business on record, so we're doubling down specifically on e-commerce and, more broadly, e-business. It's one of the top priorities of the company.

Michael Krigsman: Why is e-commerce so important at the company at this time, and what are the forces that have sort of come together to raise that level of importance?

Katherine Monasebian: The old rules have kind of been thrown out the door in terms of what is happening in the commercial landscape, what is happening with the great resignation, inflation, supply chain. I read the paper today about the D2C darlings, Bitcoin.

It's a changing paradigm and I think that the pace of change is going to only accelerate. So, I think that this has given us permission to really look at our business with a clean sheet of paper. To some extent, reinvent ourselves.

Stanley Black & Decker has endured the test of time because of the ability to recalibrate and to adapt. I think e-commerce and, more broadly speaking, digital are part of the new commercial, and we are very bullish and, we've stated publicly, are looking to double our business in the near future.

What is digital transformation at an established company?

Michael Krigsman: How does one transform a business that is so old and of this enormous scope? And how different is e-commerce from what you're currently doing? How big a transformation and change is this?

Katherine Monasebian: It's not just about driving the transformation. It's also about just new ways of working and thinking. We really go against the grain of almost everything that a large-scale manufacturer has in their DNA from accounting to risk tolerance to just even thinking of things in the portfolio versus a long lead time ROI-driven investment.

It is definitely a massive challenge, but also exhilarating because there's, as I mentioned, a broad commitment that on this base of going from good to great that we are tasked with really collectively reinventing everything from our go-to-market strategy to how we execute together to deliver business outcomes.

Michael Krigsman: You made a very interesting comment just now. You brought in all of these different parts of the business. On the surface, if we talk about digital transformation, you could say, "Well, we put up a website and we can sell stuff online," or, rather, e-commerce. "We sell stuff online."

Why do you have all of this other stuff around it? Why is that so essential?

Katherine Monasebian: Many of the initiatives that we are working on are firsts at SBD, which is exciting because they are new possibilities, but everything is sort of on the periphery. It involves new capabilities, new skillsets. We're often going against the grain of kind of like how we do things.

I think that it's not just about being in an innovation group or a project. We are tasked with taking these ideas in context and then evolving them into hard execution plans that ultimately deliver to business outcomes and growth and profitability.

I think the challenge is how do you take this intention and translate it, you know, embed it into the ways of working and the thinking. Then ultimately, deliver (execution-wise) against net new ways of working and ideas in business models.

I think it's not just about a discrete effort. It's really transformation end-to-end at the organization.

Michael Krigsman: Why is it not just about a discrete effort? The reason I'm kind of drilling down—

Katherine Monasebian: Yeah.

Michael Krigsman: –into this point is because, again, on the surface, whether it's Stanley Black & Decker or any other company, when we think of ecommerce, for example, we think of a website. I don't think everybody really appreciates the extent to which innovation – as you just described it – going into execution, must have tentacles everywhere. Can you unpack that a little bit for us?

Katherine Monasebian: Digital transformation is en vogue. Everyone is doing it. It's the creative. There's a lot of jargon.

The board says, "We go for a shiny object," but really, to be in this kind of role and to really create sustained change, you really have to embrace systems thinking. You have to look upstream and downstream. You have to operate on the edge of what's possible.

There are financial, logistics, legal, and brand ramifications to really be able to deliver anything. You're a system and any one of those is a point of failure.

In a highly matrixed, global organization, you can't really run by consensus or 80-person steering committees, or you have 40% of the information. Forget 80, 40, and you've got to go. There's no perfection. It's not all about efficiency and squeezing productivity out of repeatable processes.

It may seem trivial to launch a business, you know, an innovator's dilemma that could be perceived as distracting, dilutive, et cetera. But it's actually highly, highly complex to be able to execute and then ultimately to scale into a commercial strategy.

We were very clear when we started that we are not a center of excellence. We are not ideators, ivory tower, disconnected from the grind of the day. We want to seat the commercial table, and we want to have a P&L. That creates a lot of pressure to deliver against hard outcomes.

It's actually very complex from an execution perspective. The intention is almost easier than the actual delivery.

Michael Krigsman: I've spoken with other people who don't have a P&L but who, like you, are very focused on innovation and that creates some opportunities. But as you said, it also creates some disconnect because, without that P&L, it's very hard to get real visibility and priority inside the business.

Katherine Monasebian: You want to be interconnected commercially, I believe, and you want to be tied to hard outcomes. Innovation for innovation's sake doesn't work, and you do need to incubate, ringfence, or protect against the antibodies. Otherwise, you just can't move.

Again, innovators ... [indiscernible, 00:08:41]. You never put a dollar into something that you'd squeeze the core, you know, in a constrained environment.

But we went with kind of a hybrid. We do believe in the connectivity with our overall go-to-market strategy. We don't think that e-business or e-commerce will have the E. We think it will just be the ways of working in the very near future.

But we do have (on some of the growth areas) a little bit of not segregation but a little bit of incubation where they can work in small pods, where they can align around business efforts, where they're end-to-end accountable for things like technology delivery and, ultimately, for decision-making.

I think companies flex back and forth (centralized, decentralized), and the pendulum swings. It depends on the digital maturity. There's no cookie-cutter answer to org design, but we went with a hybrid approach.

The P&L, for me, is very critical. It's really closely connected with the broader company commercial strategy.

What is the role of data in digital transformation?

Michael Krigsman: We have a very interesting question from Twitter. This is from Arsalan Khan. Arsalan is a regular listener. He asks great questions. Thank you, Arslan, for that.

Arsalan says, "How did you convince people at all levels in the organization that digital transformation is about business transformation and also about data transformation and how you use data?"

Katherine Monasebian: It's not just enough to paint a compelling vision, enroll everybody, and get your resisters onboard. If it could only be that easy, especially in, again, a very matrixed organization. Herding the cats to execute can be very problematic because the intention doesn't necessarily tie to actions, behaviors, incentives, and such.

For us, a lot of the breakdown was not the overall enrollment. I think that there is broad belief in the strategy. I think it sort of was more in the day-to-day opening and reopening of decisions and really getting, from an execution perspective, things across the finish line.

We did everything from a roadshow. We did roadshows with all of our cross-functional partners. We sat in on their town halls. We had a very strong executive sponsorship and internal champions.

But a lot of it was just setting clear objectives that can help make the right decisions on a day-to-day and enroll folks in foundation setting versus the sequencing of more shiny object or more super funnel type of efforts. But it definitely is hard, and I don't know that we're there.

I think we're there philosophically. We still struggle with decision rights, with a commitment and a sustained focus. I wish there was a very simple answer but, unfortunately, I think the playbooks for change are very culturally and company maturity specific.

Michael Krigsman: What about the data aspects? That's another part of Arsalan's question, getting people to be data-focused.

Katherine Monasebian: The company believes – again, on a philosophical level – that data is important and that we should have fact-based data-driven investment decisions and such. The challenge, especially in growth areas, is that the data doesn't fit the mold of a financial return.

There are a lot of other metrics like speed to deliver, for instance, or customer receptivity, and things that are more proof of concepts. You don't have that robustness upfront and those are not seen as, okay, the data is then to inform decision-making. It's sort of a hindsight and a readout post.

We are, I think, again, philosophically aligned, but how much the data is driving day-to-day decision-making and embedded into the day-to-day operating decisions is the next phase of the journey.

Michael Krigsman: You've mentioned customers a few times. For example, just now, you were talking that sometimes looking at, for example, financial metrics alone may not – or, I'll just add, for example, efficiency metrics – may not tell the complete story regarding customer satisfaction, customer retention, things like that. It seems that there is a leap of faith that the company needs to take when embarking on this kind of transformation that things are going to be okay and that there's a relearning process as well.

Katherine Monasebian: Yes and yes. We believe this is the right thing to do. We don't have the absolute clarity on the future.

We don't have the precision. It's not a manufacturing line where there is ambiguity. You have to lead from the front, and you have to have that senior-level endorsement that this is important and we're not going to be relitigating it every day and trying to figure out is it or is it not a priority.

That said, we try to hold ourselves to hard outcomes, and I think that those are important. We approach everything as a pilot or an experiment, which helps de-risk the upfront investment, and then we can build the business case through iteration.

I do think that how we think about performance metric, and even the mindset of performance-based versus fixed budget is radically different. There is no floor and ceiling. It's really iterative or even the idea that you test and learn and scale is just so different from our core business.

Yes, there has to be some kind of leap of faith that this is the right thing to do strategically. But also, I think, you really do need to get points on the board to get the credibility to bring others along.

It's not just about selling. You do really need to have hard performance metrics and define success tied to commercial outcomes or tied to customer outcomes. It can't just be innovation theater.

How does Stanley Black & Decker manage pilot projects for transformation?

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You started with pilots, or how did you manage that? I don't want to put words in your mouth.

Katherine Monasebian: We do almost everything in that way. We don't go big bang. We never go big bang. We always start with a small-scale approach to launching something.

We've deployed technology that allows us to test in a capital-light way and move quickly with speed. Then if something works, you throw gas on it and you go.

But I think that's been easier to get future funding if you're showing momentum on the investments that have been made. It's easier for more mature areas to show a return because e-commerce is just growing, so it's one of the biggest growth opportunities, so it's easier to get a return than it is for something net-new. Something net-new that has a lot of risk that's an experiment, it's harder to get points are the board before asking for a financial decision.

One technology decision (when I first started) I probably spoke to 100 people in the organization just sharing the vision, the ask, the business impacts. But I do think that it's important, in something that is new, to really approach it iteratively, not just to de-risk but (speed is your currency) just to go quickly, and then to gain the trust of the organization before asking for a larger commitment.

What is the role of culture change in digital transformation?

Michael Krigsman: When we talk about digital transformation, a lot of times people talk about, well, we need to put the customer at the center of what we're doing. You mentioned the business model earlier. Where does the customer weave into this story (however you define it)?

Katherine Monasebian: Our customers are our retailers, our distributors, and obviously, their success is our success. We have a very strong commitment.

It's really an open door because they're on the same journey that we are. I was just at a customer summit last week, and we discussed data and insights, assortment, dropship, and bundling promo strategies.

Michael Krigsman: What about the cultural aspect? Again, with digital transformation, I have heard from many business leaders that the culture change part is the hardest.

Let me ask you first, why is culture change necessary, you know, to put up a website? Obviously, it's a hyperbole. I'm playing devil's advocate here, but you put up a new website, and so we have to change the company. I'm going back to that again. It's just stuck in my mind. It's a hard concept to get across sometimes, the extent of change that's necessary.

Katherine Monasebian: What is the saying? Culture eats strategy for breakfast.

It's definitely culture that's underlying rules of how things get done that are unspoken. It's probably one of the biggest challenges or enablers of transformation because I think it really is ultimately all about people.

The ways of working for e-business is just very, very different. It's not hierarchical. You're working in an iterative fashion.

You mentioned agile, but it really is. That's a little bit used loosely, but in terms of iterating a product versus having consensus-driven ways of 12 people for a decision. It doesn't work from an execution perspective.

It does require cultural change to be able to create these pods that are empowered with accountability for financial results and decision making and that are able to execute.

Then also, when we were hiring the team, we wanted this infusion of talent. Our team has experience from agencies, from startups. Hybrid work has given us access to unmatched talent.

If we were to bring them all in and set them up separately, I don't know that they would be successful (not knowing the industry, the product, the culture of the company). So, we had intention around our org design to have 50% internal folks, to really marry the speed that comes from B2C and the agility with institutional knowledge and the industry and product knowledge that comes from having built the company.

I think that that has helped us maintain the subculture of execution focus, commercially oriented, speed, but also infuse it. Again, back to that I really feel strongly that it has to tie to the overall strategic objectives of the company.

Culture is definitely unsaid, so it's almost the hardest to tackle because you can't even articulate it. It's those unwritten rules, and so you can have all of the intention but if the behaviors don't follow, there's a breakdown.

What are the metrics for evaluating digital transformation?

Michael Krigsman: We have another question. Arsalan comes back again with a question. This is about metrics. "Are there metrics that you thought were useless to collect for digital transformation, and what metrics are you actually trying to collect?" I think he's trying to get to the distinction between traditional metrics and digital transformation metrics.

Katherine Monasebian: I don't know if they're useless, but I think a lot of the time we force fit. We back into some of our businesses.

We've got a wholesale DNA, so this is sort of like how we back into the paradigm of a customer, which is our distributor. And so, we have financial reporting metrics that may not be leading indicators, that really don't measure things like engagement, don't measure things like customer satisfaction, don't measure things that are even just speed, as I mentioned, of deployment and such.

I don't know that they're useless. I just think that, for growth areas, they just don't help inform the roadmap or the direction because they are backward-looking and they are purely financial. We've been working on a lot of OKRs or performance indicators.

Basically, as I mentioned, everything we do is a test or an experiment so we know upfront what we're trying to deliver, and we work backward, know how we're defining success, and then that informs how we track and report against it. I do think that measurement is very important.

Michael Krigsman: I thought it was very interesting what you just described about engagement. Obviously, online selling and online engagement is so completely different from retail and, I'm sure, from the history of Stanley Black & Decker. Any thoughts on engagement and the digital relationship that you have with your customers?

Katherine Monasebian: E-business is very broad. It could be something like our B2B platform. We just worked on reporting for that. It's assisted orders from our sales rep (because this is an enablement tool as well) to customer orders, to amount of logins, to usage, to the average order, and then all the typical conversion, traffic, all of the typical Web KPIs.

I don't know that there's a templated one-size-fits-all. I think it's really about abstracting a way from the report and really trying to understand what decisions are we trying to make not reports or dashboards for dashboards' sake, but who is going to use this information in what way, and then let that inform what the right metrics are – if that makes sense.

Michael Krigsman: Yeah, it makes perfect sense. Really having clarity around the specific business goal that you're trying to accomplish and begin there; it sounds like that's what you're saying.

Katherine Monasebian: It sounds very obvious, but I think sometimes you lose sight of that because there's so much data, sometimes, that you can get lost in the sophistication of the reporting but lose sight of who is using this and what decisions are we trying to drive. It's really to inform decision-making. It's, yes, to track investment and to track performance, but it's really simplifying it to what's the business objective and then letting that guide reporting requirements.

Michael Krigsman: Why is this challenge so hard and why do we sometimes lose track of the fact that we need to begin with the business objective? It sounds like a very obvious thing to say, but it's not so obvious and not so easy sometimes.

Katherine Monasebian: I don't think it is because now it's getting more sophisticated. You have big data. You've got AI. You've got more access to data. You're scraping websites. You're getting customer information. You're getting insights.

There's so much. How do you distill it into the actual use cases and the very simple business objectives?

I think it just gets lost sometimes because there is so much more access now than ever before and there's so much measurability of really understanding that it's only as good as the decisions that it drives. I think sometimes it just gets lost when you have a lot more reporting sophistication and a lot more just volume of data.

Michael Krigsman: A big part of this then, there's this data overload problem that you as a company – and I was going to ask whether you as the president of this group – have to manage.

Katherine Monasebian: We have centralized and decentralized functions. There's a lot of centralized data teams that we leverage daily that are very tied into our priorities.

But then, on some of the more early-stage, scrappier efforts, we are working on those with our own dedicated finance and analytics teams. It's a hybrid.

There's a lot that we borrow from the broader strength of the organization, and then there are some things that are very specific to our efforts, which we have end-to-end accountability for.

Michael Krigsman: What is it like managing a business in this inflationary environment where it's hard to find people and we have a war going on? How do you plan? How do you manage through this uncertainty?

Katherine Monasebian: It's definitely daunting, to say the least. As I mentioned, we have incredible talent and we're really proud of the culture that we've built. But just everything is changing.

I don't know about you, Michael, but when I got my first job, I was so happy for the paycheck. You know? I'd be the last one out and the first one in.

Now, values have shifted. It's about meaning and purpose and professional development. They're our customers now, employees. They're in charge.

The way I view it – and as you mentioned – it's a frothy market, and these skillsets command a huge premium. And so, I think you just have to compete on experience.

Everyone that I know that's joined us, they want to be at the center of transformation at one of the largest companies in the world, and they want to be builders. They don't want to think incrementally. They want to challenge the status quo. They want to deliver impact. I think that's something no one else can offer, so I think just embracing the opportunity and to really differentiate the experience.

How does Stanley Black & Decker compete for technical talent?

Michael Krigsman: I have to say, recently, I spoke with two different CMOs at two different companies, and they both were agonizing over the fact that they're competing for talent with the Google and the Facebook of the world and the incredible cost and the expectations that folks are having because of the bar that's being set by the largest tech companies. I have to assume some of that must filter to you because, in a way, you're operating a tech company inside Stanley Black & Decker.

Katherine Monasebian: Absolutely. I said to someone, I wanted to get an architect at one of our partners, and he laughed. He said, "Good luck," and so, you definitely have to be creative to get the skills that you need when the premiums in the market are just intensifying every day.

I think, definitely. It's not just like the gig economy and COVID. There are so many dynamics that have changed the talent game.

Michael Krigsman: We have a very detailed question from Twitter, so let me ask and see whether you can answer this. "Do you provide data sandboxes to play and experiment with data for people who are not directly involved with collecting the data?"

Katherine Monasebian: The analytic team that we have – we have an analytics and AI – may. We don't, but I love the idea of, like, what do you see here. I love that outside-in perspective.

Sometimes, a lot of the challenges are just so close to the details; you might not see the forest from the trees because you're too close to the intended outcome and all our biases come out. I like the idea of opening it up to someone external.

Michael Krigsman: What advice do you have for business leaders who hear this and are faced with the kind of transformation that you're undertaking? Where do you begin? Where does somebody begin with this?

Katherine Monasebian: I think, just with humility, that it's hard, it's messy, and it's trendy right now, but that's not really what it is in the trenches.

I guess my advice would be to approach everything with curiosity, with a beginner's mind; learn, change, overcommunicate – all the things that are in the change management playbook. Just stay positive, and just realize you're in great company.

Michael, you talk to people from every industry. Every single industry is flexing now to this constant change and reinvention. You're in great company that everyone from the department stores to the early-stage startups to everything in between is reinventing, so just to stay in the game.

Michael Krigsman: I love what you just said that digital transformation is trendy but not if you're in the trenches.

Katherine Monasebian: You can quote me. Yes, but isn't that the truth?

Michael Krigsman: Absolutely. The thing is, you read about all of this trendy stuff and, at a very high level, if somebody is writing about it or presenting it from a marketing standpoint (if you're a software vendor). But if you're actually in the trenches doing it, things don't always line up quite as neatly as in theory.

Katherine Monasebian: No, and you have to keep the right mindset and stay committed, resilient, take the punches, and keep going. It is imperfect, messing, and hard.

Michael Krigsman: Why mindset? What does that have to do with any of this?

Katherine Monasebian: I mean mindset is, I think, the majority of it. You have to basically really have bold thinking. You have to be able to think beyond incremental changes. You have to be able to handle the people. You have to be able to bounce back from setbacks. You have to be able to look, as I mentioned before, upstream and downstream.

It's not just about what you're doing. It affects all these other areas. Really understanding the consequences of some of these changes.

I think the mindset of – if there were a playbook, right? It's iterative and it's not going to happen overnight. It's a journey that can't happen with any one team or any one person. That mindset of being resilient and being a builder.

Michael Krigsman: Well, unfortunately, we're out of time. I want to say a huge thank you to Katherine Monasebian. She is the president and general manager of North American Commerce at Stanley Black & Decker. Katherine, I just can't thank you enough for taking time to be with us today.

Katherine Monasebian: Thank you for hosting. It was a lot of fun.

Michael Krigsman: Thank you to everybody who watched and especially to those folks who asked questions. I love your questions. Doing this live really is an homage to the folks who watch and ask those great questions.

Now, before you go, please subscribe to our YouTube channel and hit the subscribe button at the top of our website so we can send you our newsletter. Tell your friends because we have, actually, incredible shows coming up.

Everybody, thank you so much for watching and we will see you again next time. Have a great day.