Who's Mining the Store?
In the first of a series of "View from the Top" interviews, 7-Eleven President and CEO James Keyes says the role of IT is to help the company sell more stuff by creatively using point-of-sale data.
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They did it by taking the scanning data, converting it into a friendlier format and pushing it back to the store managers. But they stopped short of having the system make the buying decisions for the managers. Most companies assume that data and a good algorithm can make better demand decisions than a human being. But there isn't an algorithm in the world that can predict what is going to [sell] in the local neighborhood that evening. Only a store manager can do that. Fresh food is now 40 percent of sales in Japan, with only 10 percent [waste].
When I saw what they did in Japan, I became a believer in the power of technology to make every 7-Eleven store better at retailing, and I also became a believer in our ability to satisfy customers' desire for portable, high-quality fast food.
7-Eleven's CIO, Keith Morrow, reports to you. How is that relationship structured?
Many companies look at the IT department as a service organization, and they satisfy the needs of their internal clients. We look at the technology department as a key stakeholder in our ability to satisfy the customer, so IT is as important a player as merchandising in their ability to help us respond more quickly to customers. Technology is a key part of our strategy, and our CIO is a key member of our executive committee and involved in our strategic planning process.
Myself and other top executives, including Keith, [get together] on Monday mornings to address both pressing tactical issues and any strategic decisions for the week. Then every Tuesday, we have a meeting with the entire management staff—as many as 2,000 to 3,000 people via videoconference. It is best to communicate with everyone directly so everybody hears the same message [about the business strategy]. Then, all the managers cascade that information down to their staffs.
I also have one-on-one meetings with Keith, but the main opportunity is that we have made him part of the central business team.
How do you decide whether to fund a new technology investment?
Many IT investments are made with a strict reliance on cost reduction [to generate ROI]. We do have that element, but we are using revenue enhancement as the primary return on investment criteria for our technology investments—and holding our people accountable for it. It's harder to measure, and it's harder to justify, you know, how much of the sales lift came from the technology versus better training or better product? And so therefore, a lot of companies find it very difficult to justify their technology investment on the revenue side. But we've had 33 consecutive quarters of improved same-store sales. It's no coincidence that our introduction of [the decision support system in the stores] was at about the same time that we began to see those sales gains.
