SIC 143 | Systemax

Ep. 143 Systemax COO, Ritesh Chaturbedi

Jan 11, 2021

 

Our guest today is Ritesh Chaturbedi who is the COO for Systemax, a value-added industrial distributor going to market through its operating subsidiaries primarily under the name Global Industrial, and related brands. He has extensive experience in operations, procurement, customer service, technology and critical growth operations.

Ritesh is also sought after by CXOs as a Strategic Consultant & Advisor. His strong track record of success spanning numerous industries has given him a unique perspective that is both broad & deep. To share his expertise in partnership with like-minded professionals, he co-founded Ramasha Holdings, a strategy / technology & management consulting company. Ritesh has worked with prior clients including companies such as BJs, Adorama, Ditech, and Sears Canada.

In This Conversation We Discuss

  • How to know your metrics and inventory
  • How Systemax operates and the industrial resources they provide
  • What makes a great customer experience
  • Essentially a 3-minute MBA on simplifying your business model
  • Fitting the needs of your customer rather than creating a product then finding the customers

Resources

Connect with Ritesh Chaturbedi: LinkedIn

Systemax – https://www.systemax.com

Connect with Cameron: Website | LinkedIn

Get Cameron’s latest book “Meetings Suck: Turning One of The Most Loathed Elements of Business into One of the Most Valuable

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Ritesh Chaturbedi is the Chief Operating Officer at Systemax, a value-added industrial distributor going to market through its operating subsidiaries primarily under the name Global Industrial and related brands. His extensive experience in operations, procurement, customer service, technology, and critical growth operations. Ritesh is also sought after by CXOs as the strategic consultant and advisor.

His strong track record of success spanning numerous industries has given him a unique perspective that is both broad and deep. To share his expertise and partnership with like-minded professionals, he cofounded Ramasha Holdings, a strategy, technology, and management consulting company. Ritesh has worked with prior clients, including companies such as BJs, Adorama, Ditech, and Sears Canada. Ritesh, welcome to the show.

I’m glad to be here, Cameron. Thank you for the opportunity.

It’s interesting that you did some work with Sears Canada. How did that end up coming about?

I was at Sears Holdings Corporation for about four years. I was recruited right out of Amazon to transform and grow their eCommerce operation. Later on, I took on the eCommerce business as well. An offshoot of that was in Sears Canada. The CEO of Sears Canada at that point in time, after I had left Sears and while I was consulting, had reached out to me because he and I had done some work in the past.

I was recommended to him. He was looking at some cost-cutting measures as well as how to drive eCommerce growth, especially around the marketing as well as hard lines. He also wanted some expertise in customer experience. That’s how I was tapped. I was an alumnus of Sears Holdings, and then I ended up going to help a subsidiary of it in Canada.

It’s Sears with their catalog business. You used to go into these stores in Canada years ago. You would look through a catalog, fill out this little form, and bring it up to somebody. I’m surprised that they were so ahead of the curve with it that they missed the boat on eCommerce. They seem to have missed it completely. What happened?

It’s a good intention but in the long run, it’s about timing and execution, not just Sears Canada but Sears as a whole. If you look at the history of Sears, it used to be Amazon in the catalog or paper catalog format versus eCommerce now, where everything is digital. If you replace digital with a paper catalog, it has everything. You could select. It had a normal selection and great pricing. You could send it over to Sears via mail and even buy mobile homes at some point in time that would be delivered to you anywhere in the country.

It was a little bit of a miss in terms of timing. There were a lot of things in omnichannel capabilities at Sears Holdings. I was part of architecting a bunch of them in my tenure there as well. We are ahead of the curve. For example, buy online and pick up at the store. It was part of Sears parlance for about a decade. Layaway was a part of parlance for about a decade. They had insurance. They had discovered a card came out of that from a credit card facility but I don’t think they pivoted fast enough in eCommerce.

They were present in eCommerce but I don’t think they pivoted fast enough in eCommerce. They did not innovate fast enough. They did not take that legacy model of brick and mortar and then engineer a creative destruction process of combining omnichannel from both retail and eCommerce into one. That’s my opinion. They have gotten a lot better but the whole company is challenged by several bankruptcies.

Walmart and Target seem to be doing a pretty good job of it. I was surprised that Sears didn’t. It’s funny that you mentioned layaway. I was trying to explain to my kids what layaway was. It’s the opposite of credit cards, “You wanted layaway, and you started paying for it before you got it. A credit card is that you want, and you can’t afford it. They give it to you before you pay for it.” It’s backward.

Think about the innovation. They were able to sell this and improve their cash conversion cycle. At the same time, it gets a certainty around inventory planning. It’s classic. It’s a great solution to a problem.

Can you speak to inventory planning for us? I don’t know if this is tied in with Systemax at all but I would love some of your perspectives from what you learned at Amazon and what you’ve seen with other businesses around inventory. Let’s say that you are a business that is selling on Amazon or selling direct-to-consumer from the website through a 3PL. How do you know how much inventory to have and how often to be buying? Are there numbers, ratios, metrics or leading indicators you need to look at? Can you give us a crash course?

There are a lot of metrics around inventory, overall forecasting, as well as placement. Let’s talk about inventory forecasting. In the past, people used to use Like models. For example, if somebody else is selling a pair of jeans, they would watch how much sell-through that has happened, create a Like model, and say, “If I create a similar product, it should sell these many different units. There’s seasonality associated with it. I’m going to go procure it. There’s a lead time associated with that procurement. If you are doing it from the Far East, then you order ahead of time.”

In the past, the procurement cycle was fairly long. You would procure for summer in the winter timeframe. You would assume that there is a demand that is going to be out there. It’s based on the Like-for-Like model. You go to the best cost provider out there. It may be Bangladesh or the Far East. You manufacture, ship it back here, put it in your warehouses, and then distribute it to your stores. Hopefully, it will sell to you. If not, then you do clearance and so forth. It’s a fairly long lead-time process.

On the forecasting side, a few of the things that have changed over the last decade or two is that computing power has been extraordinarily cheap. With cloud migration, now you can put a lot of your statistical data on the cloud and use very sophisticated methodologies. You can use machine learning methodology. There are a lot of software out there that gives you a good forecasting piece of it, “If you have this product even though it’s not exactly what it is, it can create a Like-for-Like model and give you an overall projection around it.” That’s the forecasting process but the placement is very different.

You can forecast it. You need 100 pairs of jeans but where do you place them? Do you place it all in Wisconsin? Do you place it all in Texas? That becomes a lot more complicated because now, you are talking about state-by-state and region-by-region demand. You are taking the weather into consideration. If you have shorts, you might sell more in Florida even in the fall, versus you can’t sell shorts in the New York area around fall. The placement becomes a lot more complicated. You layer in the regional demand, which is 50 states. If you go a little bit further out, there are thousands of ZIP codes.

When you layer on seasonality, it becomes highly complicated. The way to tackle that is going to be based on a methodology that Amazon uses as well as a lot of retailers. We look at our inventory as short tail, medium tail, and long tail. Our short tail is about 10% to 20% of our inventory which cycles very fast with high demand. You want to keep them as close to the customer as possible and in high quantity as possible. That helps you place.

If you look at Amazon’s supply chain model, it is modeled around these three tiers. When they say they are opening DCs in Manhattan, they are not providing millions of SKUs in that small footprint in Washington, DC. They are placing the short tail very close to Cameron. When Cameron says click, I can pick it back and get it to you within a couple of hours.

Medium tail is what you call medium demand or medium volume. Those are what you put in centralized DCs or regional DCs. Depending upon your brand profile, either if you are a regional player or a national player, you can place it in different places. You can solve the long tail through a drop-ship network where you don’t carry the inventory. You don’t want to take the risk or you create a marketplace where other people can fill in that inventory. They do the fulfillment but you become the platform to fulfill the demand of your customers.

The complexity of this is incredible. Is there any way that retail can survive? When bigger companies like Amazon or even smaller companies can start having access to this analytics and planning, can retail as we knew it survives?

I’m confident that retail can survive but they have to force themselves through this creative destruction process. Let me explain what that means. Retail is based on a static demand profile, which doesn’t change for weeks. You have certain SKUs in a storefront that is out there waiting for the customers to come in. Until it gets replenished or gets sold out, you don’t get through the replenishment cycle, whereas eCommerce is the opposite. Whichever customer comes first, we are going to get that order and then pull the inventory to the customers.

Instead of bringing customers to the retail store, you are taking the products to a customer. The first step of that transformation is combining the order flow, the financial flow, and the labor flow between eCommerce and the storefront. You can share the inventory between a retail store and what you have for eCommerce. Some of these retailers have centralized distribution centers for eCommerce. They are duplicating inventory but you can combine them and say, “If Cameron is in Arizona, I have a store in Arizona.” Immaterial of where the order arises, be it in the POS stand in the retail store or a click on a mobile, it doesn’t matter. If I can get that product to Cameron, that will be great.

Number 1) That transformation or that omnichannel transformation. Number 2) You must look at your tech platform data and analytics. I cannot stress this enough. The speed of eCommerce is in milliseconds and nanoseconds versus in retail, it’s hours. The magnitude of the difference is significant. Getting that technology and that capability is extraordinarily important. That’s the second part.

SIC 143 | Systemax

Systemax: The speed of eCommerce is in milliseconds and nanoseconds versus hours in retail. The magnitude of difference is significant so getting that technology and getting that capability is extraordinarily important.

 

The third part of it is if you look at Amazon’s evolution, they started at centralized DCs and went with regional DCs. Now, they are doing forward-deployed DCs, which are in the heart of different population centers. This is the advantage that retail has. Retail already has stores in all the population centers within a 2 to 3-mile radius. They can carve out a portion of their footprint.

Target is starting to do that. Even Macy’s is starting. They are coming around to this. Instead of using the storefront as a display, they carve out a portion of that retail footprint, that inventory, and the distribution center. That gives instant gratification, better inventory utilization, labor utilization, and customer experience end-to-end.

The ability to try on the product or taste the product before you is interesting. You proved you know your shit.

There were a lot of scars on my back through a lot of battles over many years.

That was a pretty random question to open with. That was amazing content. Tell me about Systemax so we understand in layman’s terms. What does your business do?

Systemax is our holding company. We are in the MRO industry. M stands for Maintenance. R stands for Repair. O stands for Operations. What we do is serve other businesses to do their business. In essence, if any business wants to open a storefront, they need equipment, wire shelving, racking, bolts, supplies, and tape. We provide that to them. If you want to open a warehouse, you need those 20-foot or 30-foot pallet racks. You need pallet jacks, conveyors, industrial fans, and industrial equipment. We provide that.

If you want to repair the products that you have already provided or invested your CapEx into, we provide those repair supplies, parts, bolts, all of those things that are required out there, and day-to-day operation. If you want janitorial sanitation products and safety products, which is pretty big for us, we provide that and sell these through four subsidiaries. Our biggest and most important subsidiary’s best-known brand name is GlobalIndustrial.com.

We also have a subsidiary called Nexel, in which we primarily sell eCommerce directly. The handle is NexelWire.com. The third one is IndustrialSupplies.com. The name is pretty evident. The fourth one is Avenue or Global Industrial Canada. We have been around for years in this particular MRO industry. If you want to do a Like-for-Like comparison, we are similar to Grangers, Uline, MSC, and Fastenal. We are the business that helps other businesses do their business.

As soon as you said Grangers and Fastenal, I knew both of those because I used to be in the autobody industry. My dad and my brother’s company is in industrial supply. They would be similar. I’m curious. You left Amazon to come over to Systemax. What was it you were doing at Amazon? What was it that Systemax saw in you to bring you over?

There’s a little bit of a slight correction there, if you don’t mind. I left Amazon to join Sears Holdings. I was there for about four years and then transitioned into an online travel agency with Fareportal. I did a couple of years of consulting. I was the COO of a mortgage company, Ditech. Now, I’m at Systemax.

That was early on in your career, then.

I tell my wife this. I mean it. Amazon is the Iron Man or the Navy SEALs training ground. I was there for five years. Those five years gave me, in my opinion, about 10 to 15 years’ worth of very deep and wide experience. It was during the period of hypergrowth. When I joined, Amazon was about $7 billion. When I left, it was close to $60 billion. There’s 10X growth in that short amount of time.

What years were you there?

2006 to 2011. It was such a great environment for people that wanted to learn, challenge themselves, and then stretch their management muscles. That was a very productive part of my career. If Amazon was the training ground, Sears was the first battlefield or theater that I was part of. I was able to transform the eCommerce operation and later on, the overall business as well.

Were you in Seattle with Amazon when you were with them?

I was all over the field. I started in Kennewick, Washington, running a call center operation. I transitioned into Lexington, Kentucky, to run one of the distribution centers and then, later on, take on reverse logistics for the company as well. I was also part of our subsidiary operations called WarehouseDeals.com at that time. I was not in Seattle, per se. I was in the field doing the hand-to-hand combat of taking care of customers and shipping products out.

That’s an amazing opportunity to work with them back in that era as well and then also to work with them during the whole global financial crisis. You must have seen some pretty crazy stuff going down then. Was that a blip for Amazon? Were they screaming growth anyway?

The growth was still there but there was a lot of uncertainty. During that time, there was a lot of press: “ be the next dot-com bomb. These highly capital-intensive companies such as Amazon that have not created a lot of profit might go down.” There was a lot of uncertainty but credit where credit is due. Our management team and our senior leadership were steadfast on one thing.

“How do we serve your customers and do it in such a way that the customers come back to you again?” That is the mantra that has been part of my career or that has propelled me since then. I saw what customer obsession could do and the power of customer obsession. Thinking ahead, executing ideas, making sure that the execution is flawless, testing, and trading on it was phenomenal growth area for us.

You’ve mentioned a few times the customer experience expertise you’ve got. Can you walk us through some of your thoughts around customer experience? What makes a great customer experience, and how do companies need to obsess more about their customers?

I will divide it into two parts. This is my understanding of customer experience. I led customer experience back at Sears. Since then, in every company that I have been with, customer experience has been the front part of it, including our company, Systemax. Our old strategy is based on accelerating customer experience. We call it ACE internally. The first aspect of customers is anticipating customers’ needs, identifying products and services that they may need in the future, and getting ahead of them.

For some founders, it is intuitive. They see it coming. They are very good at doing it. Some companies do it extraordinarily well. Some companies may not have that intuitive feel but they listen to the customers in a close manner. They are always surveying customers and listening to the customers. One part is anticipating the needs of the customer ahead of time and positioning your products, services, marketing, communication, and entire strategy around that piece.

The second part is what I would consider day-to-day. You need to think about customer experience as friction removal from the process and adding convenience. You take the friction out and add convenience in the grand scheme of things. That covers it. It’s anticipating customer needs, making sure that you have the products and services that they need, taking friction out of the process, and adding convenience. If you take those three elements, that covers the majority of the use cases that you can think about.

What does eCommerce do? It provides great selections. That’s what the customers need. They provide great price competition. That’s what the customers need. They provide great certainty, “If you order at this time, you will get it at this time at this price. These are the different capabilities or options that you have.” Friction is out of the process. In the old days, you would have to send a catalog to somebody and wait for a long time. You would have to call a call center and wait a long time. That’s friction. You take the friction out with eCommerce. It’s right on your capability on your phone. That removes a lot of friction from the picture.

The third part of the part is giving convenience or adding convenience, “I want to buy online. I want to pick it up at the store. Get me same-day. I don’t want to think about how many dollars I spend on shipping. Give me free shipping. Give me two-day shipping. I’m ready to pay for the subscription piece.” User experience, UI, or UX, as you see in the website that we talk about a lot or mobile, is all about taking friction out of the process and adding convenience back into it.

If I want to contact somebody, I don’t want to wait on the phone. That’s friction. I’m taking the friction away by providing a chatbot or any capability on the website or a mobile phone. I want to call 24/7. You may not have a live person on the other side but a bot or a digital assistant can help me. That’s adding convenience. If you focus on anticipating the customer needs, taking friction out of the process, and adding convenience for the customers, that’s how I would summarize customer experience from my end.

SIC 143 | Systemax

Systemax: If you focus on anticipating the customer needs, taking friction out of the process, adding convenience for the customers, that’s the summary of customer experience.

 

You gave an MBA course in three minutes. That’s probably more valuable than anything anyone learns in an MBA program. That’s a mic drop. Walk off the fucking stage. You are done for real. I was in Ahmedabad in India years ago doing a speaking event. I was speaking with an entrepreneur there. He does $300 million in business selling oil. I said, “Car oil?” He goes, “Edible oil or cooking oil.” I’m like, “How many countries are you selling in?” He goes, “I’m only selling in two states in India.”

I’m like, “How is it possible you sell $300 million in oil?” He goes, “I understand. You Americans and Canadians identify a product nobody needs and spend all your time trying to market it to people that don’t want it. What I did was I found out that we need to use cooking oil. I sell cooking oil. In North America, you use one tablespoon of oil a day. We use a quart or a liter.” I’m like, “That makes so much sense.” He goes, “We identify the customer needs and sell into it.”

It’s what you are saying. The second part that you talked about that is intriguing is the friction removal and making it simpler. I was in Park City this summer. I was standing at the top of the hill. I looked straight down a ski jump. It was straight down and so efficient. I went on the bobsled. At every turn, I was getting bashed into the corner. I was thinking about the friction in all of these models and my model specifically for COO Alliance.

I think about a speaker who talked one day about customer service departments. He said, “The only reason a company has a customer service department is 1 of 4 reasons. Either our product sucks, the service sucks, we overset expectations with our customer or the FAQs on the website suck.” You intuitively understand all that and then the convenience factor. Why is that simple? Why do you see that so clearly? Has that been over the years? Did that come off the top of your head to you? Have you been thinking a lot about this?

I have been thinking about this for my entire career. I still feel like I’m missing a couple of the points but there’s this saying, “There’s a lot of sophistication and simplification.” From the beginning of my career until now, it’s all the different industries and roles that I’ve been in and all the different problems I’ve solved. I’m pretty sure you have done it in your career as well, Cameron.

When you look back and reflect upon your learnings, all the stories, and all the toolkit that you have created in your management toolbox, one day, you wake up and say, “I have to arrange this. There are too many of these things.” You start categorizing it in an affinity diagram way. The pattern starts emerging. In the old days or even now, we call it an experience in heuristics but it comes with a lot of those iterations. It’s my intuitive way of simplifying all of the challenges that my team or I have overcome or we have faced throughout our careers.

I don’t think there’s a single business that exists that couldn’t massively benefit from obsessing about those three things, though.

There are a lot of companies that are vanguards of this. Nordstrom used to be. USA is. Amazon is. There are a lot of other retailers that are coming around to this. Take the example of Target. They are using the same toolkit and same methodology but the end is the same. The means, the technology, the platform, the supply chain, the products, and the services might be different but at the end of the day, I feel like business is very simple. We can make it as complicated as possible.

I’m an engineer by background. P equals R minus C. Profit equals Revenue minus Cost. That’s what it is. How do you create revenue? You sell products and services. How do you create profit? You do it in a way that you can provide value to the customer at the lowest cost possible but you have to rinse and repeat. How do you rinse and repeat? You have to have customers pay for it. If you look at the principle hypothesis, that’s where customers come from.

It’s interesting though, that engineers don’t tend to make things simple. They tend to make things complicated or maybe it’s because I’m stupid and I don’t see that it’s making it simple. You’ve simplified it. Can you give us an example of when you’ve anticipated customer needs or what you did to anticipate them?

I will give an example of 2022 in Systemax. When this pandemic started happening, we had a supply chain team in Far East Asia or China that sourced products and manufactured products for us. We knew ahead of time the impact of this pandemic would happen and the PPE requirement. In the earlier phases, we shipped out a bunch of PPEs from the United States to use within our operations and manufacturing areas in China. Knowing that, we anticipated a couple of things.

First of all, we needed a lot of PPE, gloves, masks, sanitizers, dividers, and a lot of safety janitorial and sanitary products, which we already wear fulfilling. That’s anticipation number 1). Anticipation number 2) We saw the impact it had on safety overall for associates out there. What we anticipated on our end was, for us to be able to provide the services and capabilities to our customers, we could not do it without taking care of the safety of our associates. That’s the second-order effect of that.

That was the second anticipation. The third anticipation is, “If we were going to have an impact based on our operational constraints, I’m pretty sure our partners, drop-ship network, and carriers like UPS, FedEx, and so forth would have a similar impact. This would be an adverse reaction to our customers as well.” Those were the three key areas that we saw that was coming down the pipe. We didn’t know the intensity, amplitude or frequency but we knew these were what we needed to do.

Early on, we put a SWAT team together of the best of the breed of leaders internally and said, “We need to go out and source these products that our customers need. Whatever it takes, let’s make sure that we have the assortment that our customers need.” The team did a phenomenal job. They scoured the Earth. When I say scoured, they scoured the Earth for the products that they needed.

The second thing that we did is we internally created a very high standard of safety and safety protocol around our associate base. We went remote within 48 hours. When we had to close down our site, our IT team, led by our CIO, Manoj Shetty, and his entire team did a phenomenal job. We are not a work-from-home culture. We went remote in 48 hours. Anticipation and preparation happened and were executed flawlessly.

We were able to provide PPE to our associates. We created social distancing norms. We went into rotation. We used the same products that we were selling to our customers internally to keep our associates at the base and, most importantly, our DC associates who can’t work from home safely. Our safety standards were a level or two above what CDC was prescribing or what we thought was reasonable.

The third part of it was anticipating the delay. This got manifested by us putting some capabilities on our website where we were able to communicate to our customers, “If you are in this particular area or state, and if that state is impacted due to carrier delays, we may not be able to get your products in time. Wait on it. We will get you but it might take a little bit of time.” We implemented chatbots, FAQ pages, and communication cadences. It’s proactively communicating to our customers, “I know you are going through this. We all are. We are all in it together but we are going to get ahead of it.” It’s proactivity in all of these three steps.

It’s proactive but it’s clear, clean, and not complicated. It didn’t take a whole lot of work to figure this stuff out. It took focus and strategic thinking side of things. How about on the friction removal side? Give me an example there. I’m going into all three here because these are good.

On the friction removal side, first and foremost, we innovated or improved our website experience. We were in a certain website experience that we upgraded fairly early in the year. We added a couple of capabilities. Instead, in the past, what we used to do was communicate, “If you order from us, we are going to ship it in 24 hours.” Our customers don’t care when it ships. What they care about is when it’s going to get to your doorstep.

We created the functionality and the entire supply chain innovation to say, “If you order at this time on this DD/MM/YY, you are going to get the product at your door.” We innovated around customer experience in terms of our web experience. We added chatbots, a chat team, and multiple self-service capabilities, “Where’s my stuff? I want to get an update on a particular cancellation and so on.” A lot of self-service was implemented at that time.

SIC 143 | Systemax

Systemax: We innovated around customer experience in terms of our web experience.

 

We also made sure that our IVR menu, if somebody had to call in, was very simplified to take that friction out of the picture. The last piece is if we were out of stock in certain areas, we were very vocal, “It’s out of stock. If you order, it’s going to be a back order.” We are not hiding behind and saying, “We have the stock. Buy it, and we will get it to you.” We thought at that moment that those would be the areas of friction. We removed all of it for our customers.

It’s interesting. As you were talking, for fun, I had to go on your website Systemax.com to see if the website was consistent with simplicity, and it was. When you go to the Contact Us page even to fill out a form to email you, all you need is your name, email, and message. You don’t overcomplicate it with seventeen fields. Everybody else makes it hard to contact you but there it is. Your website and email are all right there. The font is big enough. There’s some stuff that every other company seems to screw up. You are a fairly big industrial where you would typically be more of a blue-collar or more government-style website but not at all. It’s super nice.

The credit goes to the team that we have here. We have a very solid team. They obsess about these things.

How many people are on your team?

In the company, we have about 1,500 associates between the United States and Canada, 600 to 700 within operations, and 500 to 550 in sales. We do have a direct sales channel or a consultative sales channel, which we think is a differentiator for us. Most of our sales associates are OSHA-certified. If you have a fairly large project and you want to buy a lot of products, you don’t have to model around with the website.

Going back to taking friction away and adding convenience, even though it’s a high-cost methodology, we have a direct consultative sales group where you can call in. They will handhold you through that entire process as well. We have the folks in support functions and IT. We have about 100 between here and India. We have a finance group and so on. There are about a total of 1,500 associates between the US, Canada, and India.

When COVID hit, how long did it take you to go remote? I don’t imagine it was long.

For the 600 distribution center associates, they could not but for the remaining 1,100, it was 48 hours.

How do you take 1,100 people and go remote? If we had asked you, “Would you ever go remote?” it would have been, “No way. We can’t do it. We are not going to do it. There’s no point in doing it.” Forty-eight hours later, you are like, “We are remote.”

There was a lot of preparation and a little bit of luck as well. For years, the processes that we have put around controls and so on have evolved as we moved along. With the team that we have, specifically our IT team, we have already gotten a fairly large cloud infrastructure. It was not dependent on on-prem. Most of our capabilities and software could be immediately migrated over to the cloud. As long as our associates had an internet connection and a computer or a laptop, they could operate. If they didn’t have a laptop, we provided them with a laptop within 48 hours.

We scoured our inventory and then provided them with laptops. If they did not have broadband, we provided them with those mobile hotspots that connected directly to the telephony company. That would provide broadband. If they didn’t have telephony, we provided the equipment to them. We were prepared. The timing happened. It was a little bit of luck as well but the execution was flawless. I’m very proud of the entire team to be able to do that.

That’s extraordinary. What do you focus on in your role as the Chief Operating Officer in a brand this big and a company this big and distributed work teams? What do you focus on day-to-day? What’s your day-to-day and your month look like?

My day-to-day, my month-to-month, and my year-to-year don’t change. Going back to the key themes, the first strategic priority or tactical priority is taking care of our customers or delivering that wow customer experience. That is the bedrock of everything that we do. That doesn’t change. The way we do it is in every part of the business that we have. We always look at friction points and try to figure that out. The way we listen to the customer is that we have a voice in the customer process that I started when I joined.

We have a weekly survey. We look at our good, bad, ugly, and warts to understand from our customers what we are doing well and what we are not doing well and create very focused initiatives around certain big themes. That goes into what I would consider the weeklies and the dailies. Once we feel like we have gotten control of a wart or that wart has been removed, something else comes up. That gets slotted into that slot but the overall team of providing a wow customer experience doesn’t change.

SIC 143 | Systemax

Systemax: We really understand from our customers what we are doing well, what we’re not doing well, and create very focused initiatives around certain big themes.

 

That’s strategic focus number 1). Strategic focus, number 2) Doesn’t change whether it’s yearly, quarterly, weekly or daily. It’s utilizing the resources that we have and inspiring them. Let me explain what that means. One is the human resources, all the associates we have, and all the talent we have. A lot of times, people will talk, “Technology is the innovator or the catalyst,” but that doesn’t get implemented all of a sudden until you have the talent density that is required. You can inspire ordinary people to do extraordinary things every single day.

The second priority is having to manage a fairly large group of people, a lot of them hourly. You have to be able to inspire them, motivate them, and make sure that they feel connected to the broader picture of what we are trying to do and how their work ties into that. That’s the second part of managing the resources and motivating them. Technology and strategy come into it, and so on.

The third piece of my role is P&L growth and optimization. I do number 1 and number 2 well, the customer experience and my resources. The 3rd one is an output. How do I drive my P&L revenue? That’s the growth piece. Is it going to come from direct sales, eCommerce, direct affiliate programs, drop-ship, products or services? That’s the revenue part. On the cost side, how do we continuously transform, scale, and grow while reducing our costs and then providing that operating leverage to our company?

There are clear strategic priorities in these three buckets. There are multiple tactical projects or initiatives that we do on a weekly, monthly, and quarterly basis. Some of them roll off. Some of them don’t. There is an intense amount of KPIs that we measure, which I won’t bother you with. I follow John Doerr’s methodology, “Measure what matters.” If you can’t measure it, it doesn’t exist. We are a very data-driven and analytical company.

There’s one final question. If we were to go back to the 21-year-old or 22-year-old you, you are graduating college and getting ready to start your career, what advice would you give yourself that you know now to be true but you wish you had known back then?

Can I go with a couple rather than one? We can go hours and hours into this. This is something that I’ve reflected on quite a bit. As a leader and as a leader of leaders, what I would have gone back and told myself early on in my career is, “Be a coach, not a judge.” Being a judge is extraordinarily easy but being a coach requires understanding, empathy, looking at as many different points of view as possible, and coaching the team. That’s number one.

Number two, focus on learning versus impressing others. It’s easy early in your career when you come in right out of the gate. You have this bright mind. You think you are good. You want to impress other people, “I want to do this.” It’s all me-centric versus learning about what other people could teach you. It’s other people-centric. Don’t focus on impressing other people but learn. Be the true learning machine that you are.

The third, I would say, is to focus on inputs, not on outputs. Outputs can change. It’s having a conversation with my wife in the mornings when I wake up, “I love you, honey.” She’s like, “I love you too.” By the evening, when she’s frazzled and has tackled the kids, and when I say, “I love you,” she’s like, “What are you talking about?” It’s the same input but a very different output. Focus on the inputs. You can use outputs in postmortem and so on.

The last piece I would say is to be humble. It’s easy to get blinded by your expertise, aura or propaganda that people feed you but be very humble. Be humble in intellectual humility and your overall approach to people. You can learn a lot more from other people. Be humble that you don’t know. The more you know, the less you know. You have people that have diverse points of view, which are equally important. It’s that intellectual diversity, not racial diversity. Being humble is going to be important. That’s what I would encapsulate myself into.

SIC 143 | Systemax

Systemax: Be humble in your overall approach to people.

 

Ritesh, I could sit here and ask you questions for hours but we would become like a Joe Rogan or Tim Ferriss episode with hours and hours. This is great stuff. I’m super thankful for your time in sharing. I appreciate you being on the show.

Thank you, Cameron. It’s a pleasure to be here. I appreciate the time and the golden nuggets that you gave me. I appreciate it.

I appreciate it. Thanks so much.

 

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About Ritesh Chaturbedi

SIC 143 | SystemaxRitesh is CEO, Chairman of the Board, and Strategic Advisor with extensive experience in internet enabled businesses spanning several industries. He is currently serving as CEO of GogoTech, a privately held eCommerce company.

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Written By Cameron Herold

Written By Cameron Herold

Cameron Herold is known around the world as THE CEO WHISPERER. He is the mastermind behind hundreds of companies’ exponential growth. Cameron’s built a dynamic consultancy: his current clients include a “Big 4” wireless carrier and a monarchy. What do his clients say they like most about him? He isn’t a theory guy—they like that Cameron speaks only from experience. He earned his reputation as the CEO Whisperer by guiding his clients to double their profit and double their revenue in just three years or less. Cameron is a top-rated international speaker and has been paid to speak in 26 countries. He is also the top-rated lecturer at EO/MIT’s Entrepreneurial Masters Program and a powerful and effective speaker at Chief Executive Officer and Chief Operating Officer leadership events around the world.

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