The Road to Transformation Success
In our first-ever FlexPoint Fireside Chat, FlexPoint Consulting Founder & CEO Michael Daehne talks to Rachel Lockett, Chief Information Officer at Pohlad Companies, about Carousel Motor Group's innovative new pre-owned car-buying experience, Carousel Online. A "look under the hood" reveals that the Carousel Online team followed many best practices for successful digital transformation and avoided common mistakes that often result in digital disappointment.
Check out the video and read more about the Carousel Online journey at https://www.linkedin.com/pulse/road-success-digital-transformation-rachel-lockett/.
Opening
Michael Daehne: Good morning, Rachel.
Rachel Lockett: Good morning!
MD: Thanks, everyone for joining us for our first FlexPoint Fireside Chat. And, certainly, Rachel, thank you for being with us.
RL: Pleasure to be here.
MD: Our vision for these conversations is to connect with experts in the field of technology modernization and digital transformation and talk about war stories and tips and tricks and things that are working really well across different industries. We’re thrilled to have Rachel as our very first guest on the Fireside Chat.
Rachel and I have worked together on a number of big transformation initiatives over the years. She wrote a blog post recently about some really cool stuff they’ve got going on at Carousel Motor Group, and we thought that would be a great topic for today’s chat. Really thrilled to have you.
Setting the Stage
MD: Before we jump in, for those that don’t know you, tell our audience a little bit more about you and your background and Pohlad Companies.
RL: Sure, thank you, and I am very excited to be here. Excited, as always, to collaborate with you, Michael.
My name is Rachel Lockett, I’m the Chief Information Officer for the Pohlad Companies. The Pohlad Companies is a privately-held, family-owned group of businesses based in Minneapolis, Minnesota. Most people around here know the Pohlad family for owning the Minnesota Twins, but we also have Carousel Motor Group – a group of primarily luxury auto dealerships – and a few other businesses.
We’ve got a few businesses in the commercial real estate field, PaR Systems is a custom engineering and robotics automation company, and then a bunch of other smaller entities and business interests. I like to mention River Road Entertainment, they’re the movie production company that produced Twelve Years a Slave, Brokeback Mountain, and a new movie coming out called Dreamin’ Wild.
So, my job’s a lot of fun. I get to provide strategic IT leadership for this diverse group of companies, something different every day, and it’s an organization that’s really focused on technology, innovation, and providing some really cool solutions to the various industries that we work in.
MD: Awesome. And Rachel, you’re too humble to say this, but you’re also CIO of the Year I feel like every year in the Minnesota area and across the country and just doing some really cool stuff at Pohlad and with the different operating companies.
We got to work together on some of the commercial real estate stuff, and on engineering and manufacturing work. We haven’t directly worked together on Carousel Motor Group, but I just think some of the work they’ve done is so cool, and I’m really excited to talk more about that and hear more about that today.
RL: Yeah, I was excited to see the reaction to that article I wrote on LinkedIn, and it’s been fun talking with you about it and – like we say – looking under the hood at what they did, the best practices they followed to make this a successful digital transformation. You mentioned war stories, and I think there are so many war stories out there – so many “what went wrong” tales – which are very instructive, but it’s so nice to see when something goes right.
MD: I agree, and, being in the technology consulting space, the stats about the failed projects are everywhere. We use them, all the consulting firms say them, because it’s a little bit like, “you better get it right, you don’t want to be in the 80%” or whatever the numbers are now – three out of four efforts that are struggling or failing to meet expectations.
There’s just not a lot of thought leadership out there about, “we did something really well! Here’s what we did. Here’s how to do it.” So, I’m excited to talk about it from that perspective versus just the scare tactics of “don’t do this, don’t do this, don’t do this.” It’s a great example.
A New Approach to Car Buying
MD: For starters, tell our listeners about Carousel Motor Group.
RL: Sure. Carousel Motor Group has primarily luxury dealerships based here in the Twin Cities. We’ve got two Audi dealerships, two Porsche dealerships, BMW, the new store that we opened is a Ferrari dealership – the first and only in Minnesota. And then we also have some mainstream dealerships as well, including a Chevrolet and a Chrysler Dodge Jeep Ram dealership, so we’re serving both ends of the spectrum there.
And this new service offering, this new initiative – Carousel Online – is offering a new way of thinking about and delivering used cars through a completely digital process, completely online. And it’s the first of its kind, in terms of the level of service that’s provided. They really wanted to look at the experience that customers have in our luxury dealerships and offer that same premium experience to online customers.
MD: Yeah, you know what is interesting – you triggered a thought as you were explaining the all-digital experience – it’s been interesting for me over the last year-and-a-half building a new business all of the different things you have to go through with the banks, the insurance companies, and all the different entities. I was complaining to my wife a few months ago that one of the banks required me to fill out everything on paper, mail it in, then they had someone (I guess) doing manual data input, and eventually it showed up in the online portal. But I’m very digitally wired, and in 2022 it was like, “why do I have to do this in an old-school way?”
Car buying is something that is absolutely old school. We were talking about our first experiences buying cars, and the “let me go back and talk to the sales manager” or “let me talk to the boss and see what number I can get” experience.
RL: My son is nineteen and going to college, and we wanted to get him a car to take to college. Our car that he gets to drive; we’ve been very careful not to say, “his car.” To the parents out there.
MD: I’m sure, to him, it’s his car though.
RL: Right, when I’m not around.
I remember when I was nineteen buying my first used car. The experience he has had just recently was so vastly different. I remember, the family all said, “take your grandpa along because he’s the best negotiator, and he’ll make sure they don’t take advantage of you.” And then sitting there, next to grandpa, we’re talking about this car. And the guy says, “alright, I got to go back in the back and talk to my manager.” He’s gone for like 20 minutes, and we’re sitting there sweating, uncomfortable, and miserable, with some lame music playing in the background. And he comes back with a number written on a piece of paper. I mean, it was ridiculous.
MD: For sure.
RL: And my son, he has this experience where, basically we pull up the website on my phone. I can very easily text over the two or three cars that I’m looking at that I think might be good options. He looks at them on his phone, gives me some feedback – again, over text messages. He’s off somewhere else, we’re not sitting in the same room together. We decide on the one we think is the best. I start going through the process. We were processing a trade-in, even, so we take photos of the trade-in and submit them. Finalize the whole thing.
Next thing you know, his new car pulls up in the driveway.
MD: It actually showed up?
RL: Oh yeah, they deliver it right to the driveway. The people delivering it, they understand the experience they’re delivering here. So, they’re like, “okay, you get in the front seat, we’re going to take a couple of pictures of you.” I mean he’s just being treated like this total rockstar. It is such a different experience from what we recall.
MD: It is crazy. You know, I think we’ve seen this across some other industries. The one that comes to mind is Zillow in the real estate industry. Zillow or Redfin, or whichever one you want to look at. I just sit and scroll on my phone. We’re not looking for a house, I just look casually. And that is such as – what’s the buzz term? – a frictionless experience, to just do that, versus going to talk to your realtor, go get in your car, drive to the houses, look at them.
But the automotive industry is one that, for a while, has been behind on that. And I think Carousel has really taken the lead and leaped forward in delivering this.
What is interesting – and this will get into some of the stuff you wrote about – the ultimate experience is very simple by design. It’s simple for the user, for the customer. You choose what you want, and it shows up – I’m oversimplifying – but it’s so easy. But, under the hood, there’s so much technology and process and people and change inside Carousel Motor Group to make that happen, and to make it feel so seamless.
RL: And also to make it comfortable. We’re all used to shopping online, especially in the last couple of years – thanks, covid, it made a lot of people who were not going to ever adopt online shopping – they moved to it out of necessity, so everybody’s a lot more comfortable. But still, when you’re talking about a car, that’s not quite the same as ordering a pair of socks or a book off of Amazon. It’s a little more scary.
And so Carousel Online had to build in a lot of the information and the tools and the things that would give you that comfort level so that you’re willing to spend that kind of money on an online purchase and just wait for something to show up in your driveway, unseen.
They’ve got some really great tools. The entire CARFAX package, and they do a virtual inspection and walk around with the mechanic who did the reconditioning process. They’ll give you the list of all the parts they used in the reconditioning. They’ve now added a virtual test drive. The depth and quality of the photos of the car. They’re really replacing that comfort level that you get from walking around and kicking the tires.
In reality, they’re able to provide much more data and information and create more reassurance than you would get just from walking around it and kicking the tires.
MD: Isn’t that amazing?
Vision from the Top
MD: Well let’s dive in. In the article, you highlighted seven or eight key things that the team did really well that led to the success of Carousel Online.
The first one, which is something we’ve been talking about, is vision from the top. On these projects, when you have not only someone who has an idea but can articulate the vision to the team and get folks to rally around it, it makes all the difference.
Where the vision for this come from? Tell me more about that origin story.
RL: A lot of the credit goes to our leadership of Carousel Motor Group who had a great vision. Chase Hawkins leads that organization. He’s highly experienced, and he is that visionary who really saw the opportunity in this space.
Also, the team, in their initial analysis, shopped the competition. They realized that a lot of people who are trying to get into this space and selling used cars online were treating the customer like a transaction. Chase has this firm belief in that premium experience from the luxury dealerships. They really set out to create that almost concierge feel to purchasing a used car online.
The vision from the top, agreed, best practice that was absolutely followed and a big part of their success.
MD: Very cool. We’ve talked a lot about vision. From the top is important, too, because I think in a lot of organizations these big projects – “hey, we’re going to invest in X” or “build Y” or “develop Z” – sometimes there’s vision from the middle. Which is good and valuable, but if you can’t get the top to be bought in and understand, or if it’s not coming from there, you end up running into all these roadblocks, and I think that’s one of the things that was really paramount to the success of this initiative. Vision came from the top and the whole team was bought in and rallying around it and rowing the boat in the same direction.
RL: The concept, the idea, came from the top level of leadership from Carousel Motor Group. But we’ve still got the ownership and corporate leadership above that. They were also on board and supportive and really understood and agreed with the vision – it was in line with where they want to take the organization as well. We did have to go up a little bit and get that buy-in and support, but it was there right away.
Investing in a Great Team
Dedicated Resources
MD: The next thing you talked about was dedicating resources. Tell me a little bit more about that and what they did at Carousel.
RL: I mentioned Dan Olson in the article, they tapped him – great, experienced leader – to build his team, and he built a rockstar team. Everyone on that team has that same vision. The common mistake – and I know you’ve seen this – is to simply pull people who might have a little a free time on their hands, or make the initiative a side responsibility for people who are already fully utilized. You’re never going to succeed that way. That’s probably one of the biggest downfalls of those 75% or 80% of projects that fail, is not dedicating their resources. Carousel Online really did it right.
I know you’ve seen it done wrong, and hopefully have seen it done right a time or two.
MD: It’s one of those things that is kind of in my playbook. When we’re working with a client, and we get through that visioning phase and we say “we know where we’re going.” When we get to that next phase of, “okay, we need to make it a reality. We need to develop a plan and assign resources,” I just know – it’s probably in the top two or three things on my list – that I’m going to have to argue with, persuade, debate – whatever term you want – some leaders, not all, but some leaders about assigning their top talent to the initiative.
It’s human nature, it’s what I would do in their shoes too, to say “no, Rachel is my key player. I need her for running the business. My sales might dip. My operations might get less rigorous or less well run.” And it’s all totally understandable. But if you say, “Well Rachel will do it nights and weekends in her spare time” or “Michael’s a B player, but he’s got some free time, so we’ll throw him at the project,” that’s when you get into hot water with the project.
It’s not because folks are malicious or have bad intent or don’t want it to be successful, but if you’re really pursuing that bold goal, you need to be bold about the talent that you assign to it.
Developing Talent
RL: And just curious, have you seen examples where a company went ahead and dedicated the A team to the project, and the core business that was left behind did just fine? Maybe even realized some things and was able to go above what they were before.
MD: Absolutely. You know I’m a huge sports fan, and college football in particular.
RL: I knew a sports analogy was coming.
MD: My beloved Texas Longhorns almost beat Alabama this weekend, but one of the challenges is we had a bunch of injuries coming out of it. Several of our star players are injured and might not play this week. And while that is a bummer that we’re not going to have our stars, the coach said, “hey, my second string and third string team is getting a chance to step up. They’re going to have to go play, they’re going to have to carry the team, they’re going to get way more reps than they would have otherwise sitting on the bench.”
And I think, to your point, that’s what often happens if you take your “star talent” and tell them to shift over to a strategic initiative. Most of the time, that next level is hungry to do more and to take on more responsibility. It’s not like they’re just twiddling their thumbs. I’ve found it to be an amazing talent development opportunity and pipeline to say, “we need you to make sure that our ongoing operations continue to thrive while so-and-so moves on to this strategic piece.”
RL: And moving so-and-so, moving your top players over to this new strategic initiative, that’s a way to keep them engaged and challenged. Maybe they’re getting bored over here running business, the day-to-day. You may need that challenge to retain that great talent.
MD: Top of mind example of that is a client of mine in the financial services space. They were fully committed from the top to putting the right talent in the right roles on the project. The CEO was very clear in town halls, with all the employees, of what it meant to be assigned to the project, the team, and what it meant for everyone else, and how the expectation for them to step up was there. I’ve found most folks to find that inspiring and a challenge that they wanted to accept. I think it’s so easy to get wrong, to just use a little bit of this person or another shortcut.
Blending Employees and Consultants Wisely
The other piece that we didn’t really talk about that’s hugely beneficial is, sometimes there’s – I can say this as a consultant – there’s some false logic that “we just put all consultants on the project.” Just let consultants or contractors do this.
The right answer is the reverse. Maybe you need some external help to help lay out the plan or technology expertise or whatever blended with your all-star team.
The place to use contractors is to backfill the daily operations and say, “we’re going to bring in someone for a year or eighteen months and have them cover the ongoing work, so that we can free up Rachel to go do this new work.” That is not a perfect solution. They’ll say, “well the contractor doesn’t know our procure-to-pay process or our sales order-to-cash process.” But they can learn. They’ll figure it out.
RL: Right, and that’s the already well-defined process that hopefully has documentation and people that can train them on it. Not this brand new thing that you’re developing that hasn’t been determined.
MD: Exactly.
RL: Great point.
Healthy Transformations Reflect Healthy Organizations
RL: Well, I know Carousel’s leadership wanted to be careful that I didn’t create the impression that they just took all the best people over here and left the business to run. We had a great bench of amazing talent on both sides, but the key point for them that led to success was that they did dedicate the resources and allowed them to fully focus on it. Lots of lessons to be learned from that.
MD: I think, then we can move on, you hit a good point here, too. Healthy transformation projects are often a reflection of healthy organizations. It’s not like you can have an organization with the wrong talent, the wrong vision, the wrong approach, the wrong culture and then magically do a tech project really well. They’re very related, and you hit the nail on the head. Carousel is not a place that’s got B players roaming around and chilling and relaxing.
It’s good vision, good people, good approach, good focus on the customer. That then showed itself in the Carousel Online initiative.
RL: Absolutely, that’s a great point.
Data-Driven Analysis and Planning
MD: You talked also about it being a data-driven initiative. Talk through that a bit, and I’d love to share some stories on that as well.
RL: They really did their homework upfront in analyzing the market and identified really what was the market opportunity. And then also, I mentioned, shopping the competition and doing that analysis, more anecdotal analysis. The data analysis that they did, too, on the percentage of sales in this area and what types of vehicles were selling helped inform what inventory they should be looking at and in really proving out the model.
I know in some of the projects we’ve worked on in the past, that’s been really important, making it a truly data-driven initiative and doing that homework up front.
MD: Totally. I think our very first collaboration together was with one of the commercial real estate entities that’s part of the Pohlad family, and as we went through that, it was very important to the executive sponsor on that effort to not only say where we are going and looking inward but also looking externally at the market and the competition and doing some benchmarking.
So, we did data-driven competitive benchmarking across a number of the key – I wouldn’t even call them technology areas – it was almost more customer-facing features and capabilities. And it painted, you recall this, it painted a really compelling picture, not only to say, “we’re behind” but to say, “they’re continuing to invest; we need to invest and optimize and modernize just to keep up, let alone to leapfrog.”
They’ve been doing amazing work the last several years and I know they’ve probably leapfrogged at this point.
RL: We’ll do a fireside chat about that later.
MD: Yes, exactly. But the data that everyone could rally around. It wasn’t subjective and fluff. It was what was actually happening.
And the other thing I love that you shared is the shopping around, really looking at the experience, not just the pricing or the tech or the process but the experience.
I have these vivid memories as a kid – my dad was a district manager for H&R Block, the income tax place, and sometimes when my aunt (my mom’s sister) would come over for dinner, she’d be like, “oh yeah, I went to XYZ location today to look at the competition for your dad.” My aunt was like the secret shopper. She would go to the other income tax places to see what the experience was like. “How’s the waiting room? How long’s the wait time?” My dad would take notes.
I was probably eight or ten years old, and I was like, “why is she going to shop around?” Sometimes you have to go actually experience it, not read about it or get some second- or third-hard information.
I think the team with Carousel Online did a really good job of understanding what the market was offering.
RL: They really did.
Independent Venture
MD: The other thing that you pointed out in the article and I think is so interesting and unique is this idea of independence from the core business. Tell me more about that in this example.
RL: Well, I already outlined that Carousel Motor Group consists of all these different dealerships. When they were starting up this new entity, everyone was excited about it, so it would have been really easy to say, “here, you can just get some of our inventory for a deeply discounted price” or other ways of helping and supporting that business.
And that seems, on the surface, like a great idea. But Dan and Carousel Online really wanted to make sure that what they were building was a viable business model that could stand alone by itself. So, he was kind of aggressive about turning away some of those favors from the other dealerships.
And the other thing about it, the new car dealerships have a lot of requirements and obligations to the manufacturers, and so the manufacturer drives a lot of the decisions, from the appearance of the stores to the technology that they use. Creating Carousel Online as an online pre-owned vehicle purchase process freed them up from those manufacturer requirements, so they were able to do things in the best way for the customer, for the user experience, rather than the way the manufacturers wanted it done.
In all those ways, creating an independence from the core business really gave them the advantage. Angie Gustafson, who I quoted in the article as well, said, “there were no guardrails,” which was a double-edged sword. It meant they didn’t have anybody telling them what to do, but it also meant they didn’t have any guardrails, and it was theirs to create it how they wanted to. And they did a great job at it.
MD: I love that you pointed that out. If you read articles and hear keynotes – well you do most of these speeches now, but if you ever hear other people talking about these things – some of the things we’re talking about you’ll hear often around having a vision and dedicating the right resources and funding, but there’s some elements that I think are so unique that you don’t hear about them. This is one of them, this idea of independence and giving almost a blank slate for creativity.
That’s why – you know this – when you look at disruptors in the market, these tech startups that will come in and just totally disrupt a fifty- or hundred-year-old company, part of it is that they just don’t have the constraints of trying to move the Titanic.
I think Carousel achieved that here by saying, “you’re going to trade on the brand, and you have the expertise and the experience, but you’re not constrained by some of how we operate now or the OEM [that is, original equipment manufacturer] requirements or whatever the case may be. It seems like it was really critical to enabling the success.
RL: It really was. And I will say, there’s a but there, or an and.
They did have the benefit of being able to build on the solid foundation – and part of that is the business, they already had this strong culture and this great team, so they were able to build on that – but also the technology foundation. I was directly involved a few years ago in completely revamping the technology platform for Carousel Motor Group.
This was probably more like eight or nine years ago – when I got involved, I’ll admit, it was kind of a hot mess. We had to completely redo the network architecture. They had half their businesses on one dealer management system [DMS], and one on another – that’s the ERP for the dealerships. We had to do a migration to bring them all onto one and standardize.
We completely redid the phone system, took them to an entirely new phone system. We did a cloud migration. I think we ended up eliminating 27 on-prem servers and moving them Office 365. And we ended up having to do all this at once. It was kind of an intense time period. But it was so critical for creating that solid foundation.
And then fast forward six or seven years later, they were able to make another communications platform migration and they moved to the Zoom phone system, which then became a key part of the customer interface that made Carousel Online possible, really. Talking with Angie, she said, “I don’t know how we would have done it on our previous phone system.” It was the right phone system at that time, but not moving forward to this stage.
Having that solid foundation was really critical to their success. And that was something they could leverage because they’re part of this broader organization. It wasn’t like taking the favors and getting free inventory, it wasn’t about the business model. It was about that technology infrastructure and foundation.
MD: And I know you were so instrumental in a lot of that work to lay that foundation. I think what’s interesting about it: if you asked your son about his Carousel Online experience, he’s not going to talk about getting to a unified DMS or the networking changes. He shouldn’t care as a customer or consumer. But all of that was table stakes before you could deliver a really good end user experience.
A lot of organizations want to jump to the cool stuff – “let’s jump to the really modern options, digitize everything” – but sometimes you have to do the ditch-digging work first to make that more successful.
RL: I mentioned in the article that I had lunch with Wayne Pisinski, who’s the head of fixed operations for the core business, Carousel Motor Group. I met him nine years ago, when I first got involved, and it was a mess. At this lunch, he said to me, “if our manufacturer came to us with just a basic, ‘you need to start using this new app or this new technology,’ we knew there was just no way that our infrastructure, our IT platform was going to support it, so we would just throw up our hands, like ‘why even ask?’”
After we made all those changes he said, “now they come along with something, there’s no question. We know we’re going to be able to get it done. We’re going to probably get it done faster than their expectations.” And that’s what created the environment where they could even pursue this kind of innovation and this business transformation, because they had the technology platform that would just handle it.
MD: Yeah, flexible and adaptable and modern and all those things.
RL: And properly resourced.
MD: Yeah, exactly.
Embracing Coopetition
MD: Along those lines, talking about the technology piece. In this case, one really smart move, as I understand it, was to leverage some existing technology to help accelerate the journey. Tell us a little bit more about that.
RL: Yeah, so you know this, it’s so common and just almost intuitive or instinctual for a business to think that they have to build it themselves in order for it to be their innovation. As a former programmer, I still fight that urge at times. But what they did is, we actually did some research and looked around to see others who were doing this. And we found that one of our competitors in the area had been working on a platform like this for this – and they’d been working on it for over six years. So, we said, “well that’s not the way to do it.”
Carousel Motor Group leadership talked to their partners, including one partner – Cox Automotive – and said, “you guys have a lot of the tools that we use in this broader suite of tools.” Cox Automotive is a huge player in this space. They’ve got a lot of the products and the services already. And they said, “we want to put some of these things together, and we want to develop something that will create this online platform for the pre-owned vehicles.” And Cox said, “we’re already working on it, too.” And so, that became this natural partnership. They leveraged the Esntial platform of Cox, and they stitched together a bunch of their other products and services that they were already using, and some new ones, to create the Carousel Online experience.
And Chase will tell you, it was so important to have that strong partner who was willing to, as he puts it, co-author the customer experience. And they were just as on board with the vision as what Carousel was. And so, Carousel didn’t have to start from scratch and make it all themselves.
They were able to accomplish this game-changing transformation for their business in a really short timeframe – less than a year – and get that out to market and make a real difference in a good timeframe.
I know you’ve seen things like that.
MD: Yeah, I’ve got a good story on that. Before that, though, it is striking to me, the timeline for this initiative. I recall a year ago, a little more than a year ago, you talking about this being in its early stages. And then when I saw your blog post saying, “it’s great, it’s awesome, my son bought a car,” I thought, “already?!” And I think, again, clear vision, good approach, but also not reinventing the wheel on some of the core technology components was a real accelerator and I think it de-risked some of the initiative.
It is tough because it’s human nature to say, “I can build this myself and be bigger, badder, better, it can have my logo on it.” Sometimes that’s the right answer, if there’s true secret sauce or differentiators you want to put in it, but if you can pull a piece in and get to the vision you’re looking at, I’m big on this idea of coopetition. Sometimes cooperating with your competition on certain things can be good for everyone. And I think that’s definitely the case here.
RL: Absolutely.
MD: One of the places where I saw this was with an oilfield services company that I worked with. We crafted this vision for them to implement remote monitoring – or telemetry – on all their units, all across the country, so they’d have a real-time view of what was happening and they could, at the mother ship, see the activity happening everywhere. And there was a strong desire to build it, build a proprietary remote monitoring capability, using some parts off-the-shelf and some proven technology, but really to make it their own. With the idea being, “we want to own this, we want to productize this,” all the right vision.
But we really worked with them on an evaluation of the cost-benefit of building versus buying a proven technology out in the marketplace. They ended up going with the buy, or lease, model, and it was a little bit of a tough pill to swallow: it’s not totally ours, we’re pulling a piece in, but same thing. They got it deployed faster than they anticipated, the cost was lower than if they would have built it themselves. The end customers, they don’t have any visibility into what the logos on the back-end technologies are and how that fits together.
RL: Right, what’s your goal? Is it pride and ego, or is to actually accomplish business results? Nobody is going to pay you more just because you did it yourself.
MD: Exactly, I think the other thing that, particularly now is more prevalent in addition to the pride and ego piece is the intellectual property and data-sharing components that, for good reasons, folks get antsy about. You can solve those with expensive attorneys writing the contracts. You can solve that upfront, it doesn’t have to be a deal-breaker. And you can spend a little time up front hashing that out and it can make the rest of the initiative so much more successful.
Again, not always the right answer, but I think more and more, it’s becoming a compelling option. Certainly it helped here.
RL: Yeah, very true.
Well-Managed Funding
MD: I think the last key thing you called out was funding. I think we’ve both seen that done really well and really poorly across some initiatives. Talk about that at Carousel.
RL: We funded the project, managed it properly, and then – I would say, just as importantly – the expectations from ownership and executive leadership and at the parent company were realistic for a startup business. Fortunately, again, it was within a successful, proven line of business, so there was that trust there. But they really did have the right understanding of what to expect. We’re still in the ramp-up phase of sales and may be for quite a while, but ownership gets it. They know that we’re building value rather than generating profits and paying it back immediately.
MD: Absolutely. I think the one thing we talked about offline a couple of months ago: there’s often, at the start of an initiative – when you’re in that visioning phase and everyone’s excited – the room, virtual or in person, the room is full with boldness, creativity, courage, willingness to take risks. That translates to funding, that translates to an executive saying, “I’ll approve XYZ amount for this initiative.” And everyone is like, “let’s go, let’s rock and roll.” Everybody’s excited.
The minute the project starts, everybody goes into preservation mode and cost conservation mode, and I think some of it is driven by the stats – 80% of these projects failing – that everyone gets so nervous about not wanting to be in the 80%, that you lose some of that courage and bold decision-making and risk-taking.
RL: It’s also when the invoices start rolling in, too. And we realize, “now we’ve got to start paying for all of this grand ambition.” It gets a little scary, especially if you start to get the financial side of the team involved.
MD: Totally. And you will “fund it properly” at the start, but then as the project evolves, as the initiative or the product evolves and you need more money for something – because something will go wrong, or there will be a surprise – and then that’s often when organizations don’t quite solve it appropriately in terms of, “maybe we need to grant 5% or 10% extra,” versus being a little penny-wise and pound foolish.
RL: I remember you told me a great story about this in another with of your customers – it may have been an oil and gas customer – it’s what happens, right?
MD: It’s human nature. It’s like when you manage a home project, there’s going to be a cost overrun. The GC is going to come and say, “the cost of lumber went up” or “the cost of labor went up.” And if you say, “I only budgeted X and now you’re surprising me” I just think it’s how we’re wired to say, “what could you do with half that additional money?” Again, you have to manage the cost, but sometimes I think organizations shoot themselves in the foot a little bit as the funding decisions go on throughout the project.
The other thing I’ve had a lot of success with is agreeing on a contingency up-front. Often organizations want to say, “it’s going to cost X.” Getting the organization to say plus or minus 10%, or plus or minus 20%, having that contingency fund for program leadership or project leadership to know, “I really don’t want to spend that, but there’s something there, and I need to pick my battles on what it’s worth to spend some of that.” That can be another good way to manage that.
RL: Very good point. This was another one of those best practices where we did it right, and the results are showing that it was the right approach.
Carousel Online’s Roadmap
MD: What’s next for Carousel Online?
RL: They have a great roadmap. Even during the development process, the team identified other ideas and vision, expanding on the vision and things that they can do. But they didn’t let them get in the way of launching on time and on budget. They created that future vision and that future roadmap of the subsequent phases. They’re adding new features and they have something cool they call Strategy Tuesday, where the leadership team of Carousel Online will get together and review the transactions that have taken place over the prior week and pick them apart and look at them, saying, “how could we have done that better?” Both from their own experience and customer surveys are huge, getting feedback from the customers.
Thus far, they’re excited to report, they’ve had nothing but five-star reviews. Customer feedback is really showing that they’ve made the right decisions, they’re on the right track. They’re taking those suggestions and feedback and their own observations and learning and creating a future roadmap and vision for the project.
Closing
MD: That is so cool. Well, if you need me to come test drive a Ferrari, if it would help in your research, I’m happy to do that next time I’m up in the Twin Cities. I guess you don’t have to be there, right?
RL: Right, for Carousel Online, it’s not just a local or regional thing. You can hop on and pick up your car, place your order today, and I think they can probably have it delivered to you down in Texas by the weekend. It’s a national service offering.
MD: Perfect. Excellent. I have really enjoyed talking through this – I loved reading the article, but it’s even better to talk through some of the stories in real life, or virtually at least. Thank you so much for taking the time and joining us for our first FlexPoint Fireside Chat. I’m really excited to see and hear what happens next with Carousel Online.
RL: Thank you. It was a pleasure, and I’m excited to see what happens next with FlexPoint. Following your growth and progression has been so much fun. I’m looking forward to the next opportunity when we work together, and looking forward to coming back on a future Fireside Chat.
MD: Thank you, Rachel.
RL: Thanks, Michael, take care.