Ep 30: Technology Innovations in the Clothing Industry with Former H&M CTO Alan Boehme

Saam Motamedi: Hi there, and welcome to Enterprise Software Innovators, a show where top technology executives share how they innovate at scale. In each episode, Enterprise CIOs share how they’ve applied exciting new technologies and what they’ve learned along the way. I’m Saam Motamedi, a General Partner at Greylock Partners.

Evan Reiser: And I'm Evan Reiser, the CEO and Founder of Abnormal Security. Today on the show, we’re bringing you a conversation with Alan Boehme, Former CTO at H&M, Procter & Gamble, and former CIO at The Coca Cola Company. For over 20 years, Alan has led technology teams at some of the world’s most recognizable brands. He has a wealth of insights for how next-generation technology can transform customer experiences and improve business processes. In this conversation, Alan shares how H&M uses technology for sustainability, his insights into the ways that startups can best collaborate with enterprises, and details about how smart mirrors that were piloted at H&M are now in use at both H&M and COS to enhance the customer experience. This episode was recorded in 2022 when Alan was Chief Technology Officer at H&M. Well, Alan, thank you so much for making the time. Saam and I’ve been really looking forward to chatting. Saam, do you maybe want to kick it off for us?

Saam Motamedi: Yeah, we’re super excited to have you on the show. You’ve got a storied career and you’ve been CIO and CTO at some of the world’s largest companies, including General Electric, Coca Cola, P&G, and now H&M. To start, maybe just give our listeners an overview of your career and how you’ve gotten to your role in H&M currently.

Alan Boehme: Yeah, I wish I could say it was all planned, but the reality is that I don’t think in the last 15, 20 years I’ve actually pursued any jobs. It’s just been a matter of happenstance. H&M was very interesting to me. There was a partner at another venture firm that was responsible for looking after one of the LPs. The LPs happened to be members of the family that has a controlling interest in H&M. And they said, “Would you mind talking to them about digital transformation and what it takes to transform an enterprise, and to share some of your learnings over the years?” And I said, “I’m on my way to Davos.” I said, “I’ll just stop in and see you in Sweden.” I should have checked to see how far it was from Zurich to Sweden, I thought it was closer than it was. So I stopped in and sat down with some of the members of the management team and just had a general talk, lessons learned from days at GE, and days at DHL, and Coca Cola, and Procter & Gamble, and others about what do you need to do to really transform a company and digitize a company? And we had a very, very nice talk. And at the end of the talk, they said, “This is really interesting.” They said, “Where can we find somebody like you that would be willing to come over here and help us and work with us?” And immediately I just said to myself, I really like these people. I like the values that the company has with employees. I like the values around sustainability and circularity. All of these things. And I really liked the people I was talking with. And I just happened to very flippantly say, “What about me?” And they said, “Would you really consider it?” And that’s how things started. So for the first year and a half or more, I ended up working, and still do, nighttime hours in the US in order to be able to accommodate daytime hours in Sweden. And it’s been quite a journey through COVID, quite a journey through the tumultuous business cycles that we’ve all been through, what’s been happening in different parts of the world, and we’ve made a lot of progress. That’s the good news.

Saam Motamedi: That’s super interesting. There’s a couple of things I want to double click on, but I want to start with values, because values and culture is a theme that we love digging into on this show. You mentioned the values were a big draw in your decision to join H&M. Can you talk a little bit more about that, and then talk about how that intersects with the technology and IT organization that you now lead?

Alan Boehme: Certainly. I’ve been with a lot of different companies. What I’ve learned is that a lot of companies don’t walk the talk. There’s a lot of things that have been put out there for shareholders, a lot of things have been put out there for analysts. H&M is a company that walks the talk. When we were talking about the needs for circularity, the needs for sustainability, and not just to benefit H&M, but to benefit the planet, it really sunk in. This is a company that is planet, people, profit. I’ve been with many companies that are profit, profit, profit, although they tend to put themselves out as other things. So when you can look somebody in the eye and you can understand that a company really wants to change things, not just for the betterment of itself, not just for the betterment of its industry, but for the betterment of the world, that’s who you want to associate with, because everything else doesn’t matter at the end of the day, it’s what are you going to leave for the next generation? What are you going to put in place for the future generations? Not just from a business perspective, but from a social responsibility perspective to achieve. And H&M certainly is a leader in that, in my mind, of all the companies I’ve ever worked for.

Evan Reiser: That’s awesome. That’s a pretty common theme, I think, that people get to a point in their career where they really start being more and more intentional about choosing what they do and who they work with as a function of values, and I imagine that affects the team, and the culture of that team, that you build as well. You mentioned one of the things that caused you to first intersect with H&M was digital transformation. Do you want to take a second explaining how you define digital transformation? What is it and how is it changing as the world becomes increasingly more digitized?

Alan Boehme: It’s a complex question because I think you have to look at it from a number of different angles. I look at it through a prism. You can’t look at things through glass and think you’re going to see straight, but you really have to look through the prism and see how the light bends. And I think that digitization is one of these things that first started off as automating processes and that goes back to 15, 20 years ago when the big ERP vendors came in and we’re going to digitize you, we’re going to automate a process. And all that really was efficiency plays, productivity plays, consistency plays. I think we’ve evolved into the era when all of the social networking companies and the tech companies rose up and we’re really using information in a new way. What’s interesting is I’m old enough to remember these things that we talk about with machine learning and artificial intelligence today. Actually, many years ago, American Airlines, Federal Express, and others had operations research teams and they were applying mathematical algorithms just under the term “operations research” in order to get efficiency. Digitization today takes on many different facets of it. It really is very different. You can look at it from a consumer standpoint, needing to keep pace or anticipate what consumers want next and where they’re going to be and how they’re going to interact. And this gets into behavioral aspects and you could even say psychological aspects of individuals in order to understand wants and needs and things of that nature. There’s the digitization in order to be able to deal with the changes in the geopolitical or the economic crises. Today, if you start looking at what’s going on for a lot of international companies, they’re having 4x issues. They have the cost of goods in one currency, revenue is generated in another. We have seen the dollar rise, what is that going to do to companies? You need to be able to take into consideration how you digitize your capabilities in order to protect yourself against this or take advantage of it if you can. You have the digitization of just what we really saw tested during COVID: do you need to have physical workplaces? What is collaboration going to play in the future? How is this all going to come together and tie things together? So we can’t look at a digitization program for a company, because a company is no longer a single corporation, it’s made up of individual business units, whether it’s internal facing or external, that all have certain things that they must achieve. The real opportunity here is to focus on those things, to be advantageous, they are disruptive for you, they give you a competitive advantage. That’s where you want to double down. You want to look at those things that are commodities, where you can apply best practices that have been around for years and years, whether it’s from the ERP vendors or it’s from the systems integrators, and you want to commoditize that as fast as possible in order to provide consistency, in order to fuel growth in the future. But this is about flexibility. This is not about cost out. Flexibility will trump everything in the future. The ability to decentralize and fragment, which used to be a bad word, is going to be really what digitization is about, pushing things out to the edge as fast as possible and empowering people that are responsible for the business decision to be able to make it is really the key. So that’s been, I think, the changes in digitization and where we are today.

Evan Reiser: Are there examples of how you’ve applied this digital transformation strategy in H&M, and maybe specifically, I’d love to hear about ways you might be using technology to really reimagine or reinvent what that customer experience looks like.

Alan Boehme: One of the things that we’ve done, I’ve always been involved with early-stage startups. In fact, I’ve always skewed to early stage, for those people that know me. And I’ll give an example of something that we’ve done recently by leveraging the ecosystem, as I say, to get things forward. There’s a lot of data that is locked in tags on garments. The data is locked in an RFID format, and traditionally retailers have used this in order to do stock taking and be able to grab information as to what’s going on in the store, if you may, at a given moment in time or what’s in the warehouse. We decided to lift the data out of our core ERP systems, and core systems out of the warehousing systems and others, and we created a data layer, and the data layer and the data model in the store now mimics what’s in the warehouse. By using RFID readers embedded in the ceiling, by using RFID readers in walls, we can get 99% accuracy of everything that’s in the store. At the same time, that information of you as an individual when you pick a garment up and you walk from the store from one area to the other, we can track what garments are going into the fitting rooms and which ones are being left behind, which ones are being tried on, which ones are being returned to the rack. We can create an experience for you with a mirror if you have the wrong size, so that somebody can bring you the garment to the fitting room instead of you having to get dressed to go get the next size. Because we know what size is in the fitting room, and if you say, I need something larger, we can get you the next size up. If you  need something smaller, we can get you the next size down. We’ve played around with having you check out in the fitting room. Why do you need to actually go to a till to check out? So by lifting the data out and making it available, using artificial intelligence and machine learning, it becomes more predictive. The nice thing about this is we put the whole thing together in 45 days and got it up and running in a store in a POC. We did it by partnering with some small startups, by understanding the process, by driving it like you would drive a regular IT project, setting expectations, and we did it in partnership, across the board. 45 days to get a POC up and running, and now this is rolling out in our COS brands around the world.

Evan Reiser: That’s really impressive. Saam and I primarily work in the software world and doing projects, let alone deploying and activating at the POC, in a pure software context is difficult. So I can’t imagine, once you enter the real world and it gets more complex, that’s quite impressive.

Alan Boehme: I think what happens is if you have good partners and there’s so many good partners in the startup community, and if you can align the goals and objectives and everybody knows that they’re playing for the long tail on this thing, we’re playing for the long tail, they’re playing for the long tail, that means we all have something to prove. And if you have common goals and objectives, you have a timeline that you want to hit. The most important thing is we’re getting fabulous feedback from the users, both the employees in the store that now had information on their tablets where they could actually see what was going on, as well as customers that were interacting with the mirrors to be able to try on different things and make proactive suggestions. That’s how you win. The complexity of the technology was taken away by each one of the startups that was involved. All we had to do was come up with a common way to integrate and a common way to operate, and that was the key. No longer taking on the responsibility of the technology, leave that to the technologies that are hungry and they want to prove what they can do. And this was the first time the technologies were used in this way for almost all of the vendors. They had never thought of putting it together in this neat package.

Evan Reiser: That’s so cool.

Saam Motamedi: Yeah. I was equally struck by the 45 days in particular, just given we’ve had so many guests come on the show and talk about this disconnect between the potential of AI and ML, but then the actual impact they’re realizing, or in many cases, unfortunately not realizing in the context of their environment. It sounds like you’ve had success here. How did you approach finding, identifying, partnering with startups to solve this specific problem? And what are some of the surprising lessons that you learned through that process that might be useful for other CIOs or CTOs listening?

Alan Boehme: I think the lessons I learned here, or I learned at Coca Cola 10, 15 years ago as well, it’s very consistent, is that first, corporations tend to define their problems too tightly and they’re looking for specific solutions. You lose the creativity of the startups, you lose the intellectual capital that the startups bring on top of their technology and services if you try to focus them in too much. So what you want to do is you want to present a business problem, instead of telling them how to solve it, asking them what they can bring to the table in order to make this work and make it solvable. That’s the first thing. Second is when you go out and talk to VCs, you have to have a partner. I went out to my friends in the venture community, I went out to my friends at Silicon Valley Bank, I went out to my friends elsewhere and I said, who is in your portfolio that might want to participate in trying to be creative, to come up with some solutions? And they brought us a number and we quickly went through a selection process, not necessarily on an end to end solution, but we were looking for the different pieces and we knew what we were looking for in general, but they opened our eyes up on different ways to be able to get there. We were able to down select it to a few. We had some great leadership within the company. A couple of people that worked for me just really hit a home run here and they drove the program and we integrated, and I said we need to have this up by a certain date. And I gave them 60 days, they got it done in 45. Again, this is for version one. And part of it was we wanted to make sure that we had alignment with the business. And we didn’t go back to corporate to get alignment, we went to the area managers, we went to the people that owned the stores, people that actually owned revenue creation in the field. Because I learned at Coke, if somebody in the field is actually able to produce revenue from what you give them, people will actually adopt it on a much broader and faster basis because nobody wants to take revenue away from a salesperson. So by making this really a grassroots effort, myself, providing the top-down, keeping people out of the way to get it done, top-down, and having people’s backs, if you may, that’s what made it very successful. So what happened was the area manager, the sales managers, the controllers, they all became the supporters for this and started pushing it. We now had to take it to the next level of management, to the senior management and the brands to do this. And once they started seeing it and I started seeing real customer satisfaction results, real changes in revenue, what’s happening with stock, keeping all the APIs that we created, it became a win. Now where things get bogged down is how do you now go from a win to scale. And the best way to do this, in my opinion, is you do a joint venture, and the joint venture starts off internally, where you have the brands or the functions partner with a central function that both put some money or skin in the game. That way it’s not, I’m trying to give you something or I’m trying to force something on you, you actually have to want it as bad as I do. And by putting that together, you then work with the partners and you say, look, we’re going to go roll out 12 or 14 stores or whatever it might be, number of locations, and in order to get there, you’re going to have to do some extra things too, and you’re going to have to set up support. We’re going to test your support process. We’re going to do these different things. But at the end of the day, if this works, it’s setting you up in the lead to do something else and it becomes mutually beneficial for all participants. I learned this at Coke, seven, eight, nine years ago, where we first deployed augmented reality for merchandising. We rolled it out to 27 countries in less than six months, and we went from physical merchandising to using visual augmented reality in all the store merchandising that we had in 27 countries across Europe. Lesson learned there: we were so successful, the technologies were so successful that Snap bought the technology out from underneath us and actually implemented it within Snap as their AR capability. So we should have locked it up more. And we worked out a deal with Snap, to be honest with you, that they allowed us about a twelve-month transition. But they were so impressed with what the technology did, they took it out from underneath us. Not a bad thing to have a major company buy what you’re using, by the way.

Evan Reiser: That’s right. That’s an amazing story. I agree with you, you can’t ‘processify’ innovation, although we’ve heard from other guests, it’s really trying to create a culture of innovation and reinforce the behaviors that lead to innovative outcomes. Do you mind sharing how you organized your team and how you reinforced behaviors to help discover and uncover some of the advancements that come from innovation?

Alan Boehme: I think the way we have to look at it is that innovation comes from anywhere and everywhere, in a corporation and around the world. It’s not bound by any geographies, but it’s easier to do in some places than others because of cultural reasons and acceptance. Some of the challenges are that you have to ask, where do you want to innovate? And you don’t want to innovate in everything. I do not want to have tremendous innovation in my standard operations of my company because the last thing I want to do is try the latest and greatest thing and bring down my servers, bring down my network that’s supporting €20 billion a year in revenue. That’s just not a great place to play with, let’s be honest. I don’t want to do something across the almost 5000 stores simultaneously, but I’m okay going into different markets and trying one store or two stores to be able to understand the cultural differences of what’s happening in certain Asian countries versus other Asian countries versus the Americas, et cetera. I can do it that way. Within the organization, you have to have very specific goals and objectives. You have to empower those to where it will give you a competitive differentiation for the long term. Something that’s sustainable for something that’s going to give you a short term competitive advantage. You want to innovate there very quickly. You don’t want to spend a lot of money. And then you want to get small groups of people highly motivated, understanding what the results are intended to be. Because when you innovate, you don’t always get the expected results, you might get something completely different.

Evan Reiser: Going back to, I think, the H&M culture, you talked earlier about sustainability. I’d love to just hear are there examples where you’re using technology to improve sustainability in ways that people on the outside may not expect?

Alan Boehme: Yeah. So we’re doing an awful lot in a number of areas. And some of the things that we’ve talked about is we have a machine that we helped co-create which can take old clothing and actually consume it, extract the fibers, and can create a new sweater for you, very quickly. We’re finding a way to contribute to the circularity by reusing things. We have simple things that go on where we can measure your clothing, your waist, down your legs. We can create denim that fits just perfectly for you. So there’s so many different things that go on in the areas of material science. There’s so many things that are going on in agriculture that are changing things. And we like to be involved in so many of these things. We run contests externally, our foundation does, in order to encourage entrepreneurs to apply, and if they apply, they can win some money to continue their research. We’re working with universities on a regular basis. This is a community problem. This is a societal problem. No one corporation is going to be able to fix it on their own. But if we work together and agree on what our end result is going to be or intended to be, we will do a lot more for this planet.

Evan Reiser: That’s actually a really interesting example because it’s one of these, like, win-win-win things. It’s more efficient for the business. You actually create a superior product for your customers and are contributing right to the mission of sustainability.

Alan Boehme: And when you get these win-win-wins, then you know you’re onto something, and that’s when the change occurs. Now there are challenges and then there continue to be challenges. Technology will evolve as AI gets better, and we start getting better with vision processing. Those things are going to get better, but we’re headed down the right path. That’s why I’m so positive on using and working with young entrepreneurs and working with young startups, because they may not have the entire solution. But if you have that vision and you can put it together with what you have and your knowledge now, you can really co-create something, and we really are in this era of co-creation and makers that we need to take advantage of, and large corporations just are not used to doing that. Large corporations try to take advantage of small companies. The reality is you learn more and can do more by partnering, and partnering on the right terms that are fair and equitable in order to do things in the future. Too many large companies don’t understand that, and that’s why they don’t succeed. The ones that understand it are the ones that actually take that next S-curve leave.

Saam Motamedi: Maybe staying on the theme of partnerships. Alan, you’ve partnered with lots of startups across the different companies you worked at. What are some of the characteristics of the best early startup teams and founders you worked with?

Alan Boehme: You don’t need to have large name brands out of the box. In fact, that probably hurts you. The sales cycle to go for a large brand is going to run down your cash. If it runs down your cash, you’re going to give up more equity. If you give up more equity, eventually you lose control. Okay, not a good thing. I’ve been an advisor to many startups over the years. The most successful ones, the ones that have become unicorns, the ones that have really made it to the top, have recognized that they want to work with one large company that’s going to push them in where they’re trying to go. They need to work with small or medium sized companies in order to be able to get the deals closed, to create the cash flow and create that cycle. Having that balance is so important in order for you to be able to maintain control and to be in charge of your own destiny, of where you want to go. It’s always hard enough to run a startup, but when you’re running a startup and having to fundraise at the same time, you end up unfortunately defocusing yourself and you end up doing things that are not natural. I don’t feel good about this, in the past, I’ve actually accidentally put a couple of startups out of business because I asked and I was too demanding as a large corporation and they didn’t say no. They should have told me, this is not part of our product roadmap now I’m not going to do it. But they were so interested in having the brand associated with it, they were so interested in having the revenue associated with it come in, that they actually put themselves out of business. And so it’s my responsibility as a large corporation, wherever I’ve been in that role, I now know that I need to tell them no. I need to tell them this isn’t right for them.

Evan Reiser: That’s great, Alan, and I appreciate you sharing. I have to imagine there’s a lot of startups that really benefit from that mindset in probably working with customers like you. So I’m sure there’s some fans out there as well. At the end of every episode, we like to do a bit of a lightning round with some kind of shorter responses and just go through a couple of questions, get your quick take on it. Saam, do you want to kick it off for us?

Saam Motamedi: Absolutely. How do you think companies should measure the success of the CTO?

Alan Boehme: That’s a good question. I think that it’s how much change you have implemented over time.

Saam Motamedi: I think that’s a really good answer. And the question is, how do you measure change?

Alan Boehme: Change would be the impact to the people, the profits, to the industry that you happen to be in, if you have incrementally advanced it or if you have made a leap change in some way that has a long-term effect on that company.

Evan Reiser: Well said. Maybe the other side of that coin, are there common mistakes that you maybe see newer CIOs or CTOs who are stepping into that new role take on?

Alan Boehme: I’ve probably made them all. And I think one is you have to build relationships. If you don’t build strong relationships, you have to be aligned to the business. You have to go in and understand the people that you’re dealing with and your colleagues and the people that work with you. I think the biggest mistakes end up being people and culture when you’re a transformational CIO or CTO, because it’s all about change. I was just talking with a friend, she just left a major technology company as a CIO to take on another role, and we were talking. She said, “I made it three and a half years.” And I think we have to realize that CTOs and CIOs, if you are going to be transformational, you will be done in three to three and a half years, maybe two, because you’re pushing hard enough to move the company forward, and that’s not always appreciated by people.

Evan Reiser: I like that. Maybe switching a little bit on the personal side, is there a book that you’ve recently read that’s had an impact on you? Maybe you can share what that book was and why it influenced you.

Alan Boehme: Ray Wang has done a book, Everybody Wants to Rule the World. Ray’s book and his insights are a fantastic read on the future and how to think of things. He proposes some new business models that are really worth considering in that book. But Ray’s book from Constellation Research.

Saam Motamedi: Staying on the personal side, what’s the technology you’re personally really excited about that we think will have a big impact over the next decade?

Alan Boehme: I think smart contracts still have not taken us where the promises are, so I think that’s going to have a major incident. My belief is that there’s still too much talk about the cloud, and we really need to be talking about the edge. That if we look at the interactions, we can’t defeat latency, so it’s going to push us more and more to the edge, which means we’re going to have to do more and more visual compute and ML and AI on the edge, and that’s going to restructure how we store data, how we process data. And I think that’s the big key for the future. The whole issues around GDPR and privacy, governments are changing very quickly. I think the combination of edge computation, edge processing, along with smart contracts is going to be solving that. When I came to H&M, everybody was talking about data link two and a half, almost three years ago, and I immediately said, data mesh. And then people looked at me and said, “Nobody’s implemented a data mesh for a corporation of this size yet.” And I said, “Well, we’re going to.” Because that was going to put the data out to the edge and let me start moving to where I need to be there. So I think it’s really those technologies right now, there’s the things that I like to play with, which are way outside of that, that I’m starting to explore personally. And I think there’s a lot more fun to be had in nanotechnologies, and I’ve been getting more involved in bioscience and things that I’m just really excited about from a personal standpoint, I’ve made investments in personally, and I think that’s where the next generation is going to come from. But right now, the others are probably the most immediate next reach.

Evan Reiser: That’s awesome, Alan. I really appreciate you sharing your thoughts, and I know we’re probably coming to the end here. I just want to say thank you so much for taking the time to speak with us and looking forward to talking again soon.

Alan Boehme: It was a pleasure talking with you guys.

Saam Motamedi: Thanks for joining us, Alan.

Alan Boehme: Thank you very much.

Evan Reiser: That was Alan Boehme, Former CTO at H&M, Procter & Gamble, and former CIO at The Coca Cola Company.

Saam Motamedi: Thanks for listening to the Enterprise Software Innovators podcast. I’m Saam Motamedi, a General Partner at Greylock Partners.

Evan Reiser: And I’m Evan Reiser, the CEO and Founder of Abnormal Security. Please be sure to subscribe so you never miss an episode. You can find more great lessons from technology leaders and other enterprise software experts at enterprisesoftware.blog.

Saam Motamedi: This show is produced by Luke Reiser and Josh Meer. See you next time.