Fred Meyer Jewelers Credit Card

the world of retail is changing, it’s morphing,it’s transforming. there is innovation happening and technology is at the center of a lot ofit. and so today on episode number 135 of cxotalk, i am speaking with chris hjelm, whois the executive vic president and chief information officer of kroger. kroger is one of the largestretailers on the face of the planet. chris, thank you for joining and how are you today?

Fred Meyer Jewelers Credit Card, michael thank you. it’s great to be on thebroadcast with you and i’m looking forward to the conversation. well thanks so much, so chris let’s jumpin. let’s begin by give us a sense of your professional background just to set some context.

sure, i started off in kind of in the earlydays of the educational process where computers were starting to get introduced into companies,and i got a computer information systems degree at colorado state university. from there,i’ve been lots of places; lived in lots of countries.i started off at hughes aircraft company doing manufacturing and erp systems, and that wasshort lived and ended up moving to fedex, where i spent almost 15 years and i endedup spending time in belgium and germany. had a great run there. finished up as the cioof the express business, which was a pretty amazing company.after that did a tour of duty out on in silicon valley: three companies in four years includinga startup, a turnaround that didn’t go so

well. i spent some time at ebay and afterthat my wife said you know what? how about something different and we moved to the midwest;lived in chicago and worked at orbitz. and then we went public, and got bought and andshe said okay, how about something a little bit more stable perhaps, maybe let our youngestson finished school in the same city. the kroger opportunity came along. i lovefood, that was a great opportunity to leverage and you know some of my skills and experiencesand i’ve been at kroger just over 10 years. so is been quite a career and i’ve learneda lot along the way. so when your wife wanted you to get a jobwith a stable company, i guess given the size of kroger and the scale, there are a few companiesthat could be as stable, so tell us about

kroger. give us a sense of how big the companyis, what the company does, some of the brands. i think for many people we don’t realizejust the extent and the scale of kroger. michael, it is quite a company. kroger’sbeen around for you know well over 130 years, and that obviously makes it a pretty elitegroup in terms of duration. the company itself we have over 400 associates, spread acrossyou know a good portion of the us. our core business is the supermarket business, whichhas lots of shapes and sizes from stores as small as 20,000 square feet to stores thatare you know up over 200,000 square feet those stores typically are all the way fromalaska, which would be fred meyer. down in southern california which would be ralphs.it’s in colorado in the form of king soopers,

and then pretty much east of the mississippiif that’s a general rule of thumb where you would find kroger with the exception ofharris tetter on kind of the south-east up through dc, which we merged with over a yearago. that’s just the supermarket side of ourbusiness. and then we have convenient stores. so think of those as typically 4,000 squarefeet or less, and those stores are also sprinkled across the country and we had geographiesthat are unique just to the convenience store side of our business in north california anddown in the panhandle of florida with tom thumb.we have over 300 jewelry stores, known under the brands of fred meyer jewelers stores,which obviously ties to the north west and

the fred meyer business, but also littmanjewelers which you will see in many malls across predominantly the eastern third ofthe us. we also have a fairly large banking business called kroger personal finance andwe have a credit card business that continues to grow quickly. then we also have a verylarge manufacturing presence. we have 37 manufacturing plants, a very large logistics network andthere are many more pieces, but i think that gives you a pretty decent feel for the sizeand the scale. maybe one other point to highlight: we’re in the fuel business in a big way,and that includes over 1,300 fuel centers tied to our supermarkets, so that’s 2,600supermarkets so roughly half have a fuel center. then we also have fuel in about 700 of thealmost 800 convenient stores. so we have over

2,000 outlets or around 2,000 outlets, andthose 2,000 outlets puts us in one of the top 10 in gallons pumped in the country. and you’re revenue is over $100 billionper year. that is correct, it’s a big number. so you tend to hover right around the walmartsize. they’re the largest but i think there isa couple of us that are you know vie for the number two spot and one of the things that’svery impressive with kroger is the growth rate over the past 47 quarters. and we’vehad positive same-store sales growth for 47 consecutive quarters, which by almost anyindustry measure is pretty amazing performance

and we are very proud of that as a company. okay, so we’re dealing with this enormousorganization with many brands spread throughout the country, and it’s retail. so technology,you’re the executive vice president and the chief information officer and presumablythere’s some role of technology in all of this, so tell us about that. sure, you know at kroger it literally is everythingfrom you know our distribution centers to all the technology in our stores, what wedo on kroger.com. you know accounting, other back office systems pretty much everythingand anything to do with technology falls into what my team and i work on.

so drill into that a little bit for us. sure, i think there are you know an enormousnumber of touch points and if you think about the retail world and how it works, and thosein retail will connect with this. but each of those convenient stores or supermarketsall in many ways are small data centers. and so we have you know, probably around 4,000if you include our jewelry stores of these small data centers with numerous you knowa couple of hundred thousand you know network pieces of technology over a couple of datacenters. and you know it’s something where we manage, you know i’m trying to rememberthe numbers, like 13 or 1,400 applications and you know, so there is a fairly large numberof devices as well as a large footprint of

applications that it takes to run this business.and from a team perspective, we’re around 1,500 associates that work in kroger technology,with several hundred that work for us in third party capacity, whether it’s onshore oroffshore. so you’re covering this range of technologyand what are some of the unique challenges you face, you mentioned that each one of yourstores is almost a data center in itself. so what are some of the challenges, both froma retail perspective because of the businesses you’re in but also from a size and scaleperspective? sure, yeah if you think about our businessjust from how do you make it work every day, our customers you know many of our storesare open seven days a week, 24 hours a day

and this you know always-on mindset is prettyimportant. so the quality of service for us is a pretty high expectation of everyone inthe company, but certainly our customers. how we manage all of those pieces of equipmentacross all of those locations. so you’ll think of things as a customer like our pointof sales system. point of sales systems kind of important; kind of needs to work. it’show customers check out. how we ultimately get paid. that’s a pretty important partof the equation. pharmacy systems, you know, it’s pretty important. you know it’s abig part of our business. almost two thirds of our stores have pharmacies in them andthat obviously is you know an important part with a lot of industry oversight and regulationwith hipaa.

you know, we have to manage all of that complexityand then you’ve got distribution centers, which are also 7 by 24 and you know minutesmatter in our business and frankly, seconds matter at checkout and many other places.there’s a fairly large network that connects all of these physical servers and you knowperipherals in our stores together, which we’ve spend a lot of time on over the pasti guess probably really the past seven or eight years, really making that resilientand making sure that we have not only a really stable backbone but also quite a bit moreredundancy than when i joined here 10 years ago.so the quality of service that we offer day in and day out on this is really fundamentalto i think the backing that 47 consecutive

quarters of positive same store sales growth.we wouldn’t have had it unless the team delivered. really what i believe is best inclass service. you take kind of that base piece, and thenit gets into this whole how do we continue to drive you know, better solutions for ourcustomers, necessary process improvements and solutions for our associates to deliverservice to our customers. and then how do we really package up innovation and each ofthose areas requires a lot of expertise, a lot of diligence, and ultimately a group ofsuper talented people that make it happen every day. to me that’s the fun part ofthe scale and [com]plexity. you’ve got to work across all of those aspects of our business.you know paying attention to today, but also

thinking about tomorrow and the future andbalancing that so that you can have a successful company today, but also position yourselffor success down the road. and then there’s the security dimensionand i know that kroger has to be a constant target, so that needs to be buttoned downespecially with your vast footprint. it’s a really good point michael, and forus you know the day i got here it was certainly on the top, you know couple of thoughts aboutwhat is most important for kroger and for our brand. and you know the folks out therethat are after our data, whether that’s credit card information or you know, personalinformation, you know they’re very persistent, they’re very talented, and you know, everyday it’s a priority for us and we are constantly

thinking about and prioritizing investments.and you know, to be honest with you it often causes a bit of a challenge internally; becausepeople will be you know pushing for certain capabilities. they want certain capabilitieson you know in the cloud or what they want to do on mobile.and you know, we’ll basically you know apply some constraints and tell people you know,hey you have got to work in a certain manner in order to safeguard you know, probably mostimportantly our customer data but also the other assets of the company. in fact gettinggetting ready for this you know show this afternoon, we spent a fair bit of time youknow working through a way to open things up a little so that you and i could have thisconversation with you know a high-quality

interaction. yes, and i spoke with some of your tech teamand they were so deeply concerned saying, okay, which ports do we need to have open,what are the time frames that we need to have these open, where’s the data going. i meanit was obvious that they have a very very very intensely rigorous set of governanceand policies related to security that they need to comply with. yeah, and like i said, we take it very seriouslyand we set a fairly high bar internally and we knock on wood had a good track record,but it’s that everyday diligence and the commitment of every one of our associates,and including our associates in our stores,

at our fuel centers, at our jewelry stores.i mean it really is 400,000 plus people making it a priority, and have to make it a priorityevery day. okay, so you’re overseeing this really vasttechnology network and set and many different systems and somewhere and somehow these needto intersect and support the business priorities and the business strategies and the businessgoals. how do you ensure that there is alignment between technology and the business goalsof the organization? i would say that’s constant pursuit of perfection.it’s not easy. i think first of all it’s having a seat at the table and it’s beingpart of you know developing the strategy for the company. and the cio role you know hashad a seat at the table before me, but certainly

while i’ve been at kroger.i think that the next piece of the puzzle that you have to kind of get in place is tomake sure that that strategy manifests itself you know down into departments of the organisation.now, we ultimately are the broker or the person [that] has to manage dependencies and resourceconstraints across the entire organisation. but we really need to get that clarity ofyou know “yeh, we get the macro strategy of the company, but how does that translateinto merchandising or logistics, or marketing. “and once we have that clarity, we put in a process a few years ago to manage that portfolio,and to really look at you know getting a group of senior business leaders together to helpus prioritize you know that set of projects

across business domains. so where does jewelrystack up against point of sale or kroger personal finance business. in fact, i was talking tothe ceo of kroger personal finance today, and he was advocating or lobbying for morebandwidth out of our digital and point-of-sale teams, because they want to introduce somenew features. now, if you look at the relative scale oftheir business, its small compared to you know what we think about with loyalty in ourmerchandising organisation. but at the same time you do have to think about, how do youmanage a growing part of our business and allow them the bandwidth, so that they cancontinue to grow and someday be a much larger share of this company.so we built that process to try and you know

create that level of governance for a lotof the projects that take place, and then there is always that strategic conversationthat has to happen for the big bets. if somebody says they want to go and spend you know xmillions of dollars on a new loyalty system, or somebody says “hey, i need to put inyou know, a new order management system for our digital world.”those are bigger bets that require you know, often getting an executive level group together.they can look at the dependencies and trade-offs, so whether that’s capital or expense, talent,or even just operational capacity, what is the capacity within our supermarket worldto take on change. so were very thoughtful to try and make surethat when we do prioritize and make a commitment

to getting something done that we’ve alignedthe resources across the organisation to the best of our ability to ensure its success,not just with what we have to do on the technology side. but it’s the whole change and successfuladoption and deployment whether it’s internally for our associates, or at times includingour customers. so you mentioned change, so clearly the notionof change is a key part of your thinking when you’re considering innovation activitiesfor example. yeah, change is something we think about alot, obviously in our world and i’m sure every industry feels the same way. but changeis doing nothing but accelerate from a pace perspective. for us in retail, and predominantlyfood retail and we’ve got other forms of

retailing as well, the competitors are gettingbetter every day. and there are also new competitors entering the market, and those new competitorsthat enter the market you know, often don’t have the same constraints that we have. butalso they don’t have the size and the scale and you know the number of customers, youknow the loyal customers that kroger has. and so we often look at that as “yeh, absolutelywe need to think about new forms of the competition,” but at the same time how do we leverage thegreat you know assets that we have as a company and make sure that we think about and leveragethose to maintain a sustainable competitive advantage when we think about areas of investment.innovations is a great case and point. if you go back a couple of years ago, one ofthe early investments that we made on the

innovation front was a system that we referto as queue vision, but in the day it was built it was very novel, today a lot of peoplehave copied it. but at the time it basically used a combination of infrared technologyto kind of count the people, both coming in our stores as well as at our check [out] lanesand predictive analytics, so the time of day, day of week, you know and some other factorsto estimate when someone was going to get to the front end of our store.so to make sure that we had enough folks to check out our customers, and enough baggersto bag groceries, and that technology allowed us to really take an average wait time ofaround four minutes, down to an average wait time of roughly 30 seconds.and while that was a fairly significant capital

investment from a labor perspective in ourstores, and there were some extra effort during the implementation. but you know on a kindof apples to apples basis, it’s with that dramatic improvement of service was done withvery little to no incremental labor. to me, that is the kind of transformational changethat you know moves the needle that customers care about, that you know we really droveand built a lot of that internally, that you know to me that’s how we stay ahead. sothat’s kind of where our heads are at, it’s where are the big things that matter mostto our customers that we can kind of change the retail world. so you spend a lot of time thinking aboutthe relationship of the customer to the kroger

stores, and obviously there’s a businesscomponent to that and there’s a technology component as well, so maybe elaborate on thatfor us please. sure, our customers have quite a few touchpointswith us. they obviously start today with many of them start with a very successful mobileapplication or on kroger.com. the key things on there, you know are often you know what’sfor dinner-- so recipe ideas. but a lot of content that helps customers think about “hey,what should i be planning for from a meal perspective.” but that translates then intomy shopping list and you know what offers are out there on the market. you know, digitalcoupons have been something that we’ve played heavily in and you know are the largest retailerworking with digital coupons and our customers

love it.and so they’re engaging on our website, they’re engaging on our mobile app, andwe obviously had to make that easy in store. so we automatically you know applied digitalcoupons at point of sale that makes the customer’s lives easier.we’re working today really hard on lists, to help customers think about you know what’sfor dinner, what they want to have on their shopping list to make sure they don’t forgetsomething when they come to the store. in fact, we just launched and i think we haveit in maybe 12 stores now, but it’s an order online and pick up in store. but it’s justnot a basic order online pick up in store. we’ve really been trying to be thoughtfulabout you know, what are the regular things

customers order. and you know how can we helpthe customer build a very fast and right shopping list and allow them to you know, get the benefitsof you know, not having to get the little kids out of the car, or whatever their needsare to have really an incredibly fast experience with kroger.now you take a kind of that piece of the world, which is kind of may be the digital side in,and then when they’re in the store we’ve done a lot to try and simplify their shoppingexperience in the store. and i mentioned automatically applying digital coupons, one of the othertechnologies which we’ve recently deployed as a prototype store would be a digital shelfedge, so the entire shelf edge, think of it as a digital display.on that digital display, not only are we able

to put additional content out there abouta product that somebody wants to you know, scan the qr code and show me some additionalinformation about that product. but also you know imagine that customer shopping and ushighlighting on the shelf because of some locationing technology, what’s next on theshopping list. so i mean they are almost really doing a “pick to light” shopping experienceinside of the supermarket. so we think about associate productivity,we think about customer engagement, and this whole digitization of the store to me is somethingthat we’ve been on this journey for several years. and we’ve been building out thisinfrastructure that allows us, you know if you kind of use the internet of everythingof this iot world, we’re building, we’ve

built out and are deploying an infrastructurethat will allow us to kind of really add features and functions to this digitization of thestore, that our associates are really enjoying and getting a lot of value out of. and wethink we are just scratching the surface on what happens for the customer.but that thoughtfulness, and kind of thinking ahead about you know making those strategicinvestments that will stand for many years, i think of what a lot of companies and youknow, it departments frankly struggle to get approved and struggle to get out there. peoplethink about it, but it’s like how do we go and make it happen. well this is a very interesting point, soat kroger what is the process that you go

through to ensure that there is both an itvoice and a business voice coming together on these strategic projects. i would say it kind of depends on the project,but is in a general sense we have you know team vertical alignment, where we think ofit as development of it teams that are aligned with different groups. so we have a groupaligned with retail, so that’s point of sale or merchandising, they work togetheron strategic projects. or whether its supply chain and back-office systems they work together,or whether it’s on the digital side. so we have these relationships in many organizations.we have people; we call them customer relationship managers, whose specific role is to work withthe senior business leaders. they sit at their

strategy sessions, they sit in their staffmeetings and they actually help build these business cases around change, around innovation.now, the hard part is when you want to or you need to go put out a major infrastructure,that may be has to start with one piece of functionality. and to me that’s where itgets hard. that’s where it becomes a bigger bet, because you have to get a cross functionalgroup of senior leaders together to say, “hey are we willing to invest x? you know, thisone project in and of itself might not have a high return that would pass our normal approvalrate, but once this is in we can add multiple other systems on top of it with little tono incremental infrastructure, and those will have great returns.”and i think that’s where the you know, senior

it leaders and frankly my time is spent makingsure the company understands you know what’s possible. and this is what’s possible froma business perspective, and you know it obviously has a technology bent to it. but this is reallymore about the customer and about how we drive you know value to our associates and helpingthem improve productivity. but we have to kind of be the voice of youknow what’s possible, and then when it comes down to it, helping build that business casethat is tangible. it’s real, and it allows the company with confidence and say we’regoing to make these strategic bets. so this is a very far cry from organizationsthat view it as a cost center right, your mandate – i’m not meaning to put wordsin your mouth, but it seems your mandate is

not, hay chris, reduce it costs that’s yourmandate. your mandate is hey chris, you know help improve customer loyalty, help improvebetter customer experience, help improve efficiency for our associates. it’s not about costreduction for most part of it is is? you know michael i think that’s a reallygood point. we think about you know what’s you know, the future of the company and wethink about the strategy of the business and we have a customer first strategy that we’vebeen on for quite a few years, well over 10 now. but you know it starts off with you know,our prices are good our people are great. you get the products in store you want plusa little, and the shopping experience makes you want to return.so you know we kind of start with those four

general principles and we’ve really beenfocusing even more on hospitality and how do we create a friendly environment, whichmeans we have to allow associates to more efficiently complete their other tasks thathave to get done so that they can spend more time with customers.and we need to continue to improve the freshness of what we offer in our stores. so we havethese macro-priorities and that it the most important set of initiatives for the company.now, one of our strategic objectives is absolutely to continue to optimize how we run the businessevery day to help fund those initiatives. and within kroger technology we have clearobjectives about how do we continue to make what we do every day. think about you know,those buckets of work that i talked about

earlier, but you know, how do we run thosecore services every day so the we can serve you know the 8 million customers a day effectively.we can support our 400,000 associates with highly reliable systems and response times.those are the kind of, if you will, the ante just to get into the game. but we put pressureon ourselves to continue to do those more cost effectively, so that we can help investmore of our it spend on the things that we believe create long-term sustainable competitiveadvantage. but that’s on us, because look, most ofour business partners don’t understand what we do every day. you know, if i can talk tothem about virtualization and they’re going to think about you know, google glass or somethingversus you know some virtualization technology

in the data center. they don’t understandthe nuances of our world and nor should they. but i do think they put you know, a heavyexpectation on us to run a very lean, cost effective set of core services, and we aspireto do that better every year so we can do more.with that said, our company’s invested a lot, pretty much every year since i’ve beenhere. we’ve had incremental spend on kroger technology and a lot of that and our goalis to increasingly invest those dollars in areas that we think that are transformationalfor us for our company. so how do your folks in it gain enough nuanceknowledge about what different parts of the business are doing, so that you can add businessand strategic value to these other parts of

the business as opposed to merely being asupplier of either services or infrastructure. that is one of the harder parts of i thinkour job. we often have a pretty full plate. i know all the folks in my organization arepretty busy every day. you have to get out in the business. now one of the beauties ofkroger, and i tell every new hire group the same message, and in fact interns that workhere. my point to them is, show me a business where you get to as a customer and interactwith it every day. you may not be in a manufacturing plant everyday, or you might not be you know, in our logistic center you know, building palletsof product, but you can certainly go and see those if that’s your domain of expertiseor systems that you work on.

but you can get in our stores as a customer,and engage with our business every single day. and i think that’s part of what wereally encourage our associates to do. it’s get out there, experience the business, goon trips with our business partners out to stores. walk our stores with people that thinkabout them differently. walk with the store where the person is thinking about the nextgeneration fresh food experience in our prepared food areas, in our deli’s. what are theythinking about and what’s that going to look like? and we try and paint a pretty concisepicture at a strategy level. or you know what are those areas of our business that we wantmatter most which we want associates to care about.but ultimately, the responsibility sits with

me and the rest of our it team to get outand experience the business and to really embrace and understand what it is that wecan do. and i always tell; you know, when you get into this business it’s amazinghow many of your friends and family have an opinion about your stores. and i love it andi always tell people, bring it on. we want any and all feedback, because thatfeedback is directly coming from the people that we care about, which are the customersthat shop our stores. and i do think that’s a unique perspective that associates at krogerhave the opportunity to grasp. but to be honest with you, we do have folks on our team thatmaybe do not get out into our stores very often.to me there’s no excuse for that. it’s

like you’ve got to get out there and bepart of our business. to me, when we do that well, the other piece that we try and do iswe try and have quite few forums where we’ll share. so we’ll have a technology expo everycouple of years. we have a big kroger leadership summit next week here in cincinnati, wherewe bring a lot of our store leaders from across the country and from our corporate officesacross the country. you know, over 5,000 people will be here in cincinnati.we will have a tech expo at that leadership summit and when i get any and every chanceto spread the word, i tell everyone you have to go see it. you have to go understand it.so it goes both ways. it’s our associates, making sure that they understand what’sgoing on with technology and what’s possible.

they have to communicate that back out withan informed view because of their using and experiencing the kroger services, but at thesame time, we really, i try and take some of the senior leaders out to silicon valleywith me and we spend time with startup companies. i’ll make sure and take them out to ourlabs so that they can see this technology and experience it first hand, so that theycan be evangelist for change as well. so i really try and make sure that it’sa kind of a two-way street, that i play a little bit of their role as business leaderand evangelist for change operationally. but at the same time they are being the evangelistfor what’s possible and what technology can do the change at kroger.

so a while ago i met one of your folks whoworks in it shashank saxena, and to say that he just works in it is underplaying his rolea lot. shashank is pretty amazing and he was on a panel that i moderated called cintrifuse,and he and i spent some time, and he has actually been a guest. shashank was a guest on cxotalk.and i came away speaking with him with a clear sense that you have a very rigorous processfor deciding which projects to actually embrace and which not to, and along the same lineswe just have a question from arsalan khan who is asking in how do you decide in whatis strategic and what is operational for it. so i guess this all gets to the filteringprocess that you use for deciding where are you going to invest your time and your money.

it’s a really good question and once againnot an easy answer, and shashank has done a great job, he’s been with us for goingon three years and he is a very innovative thinker, and he’s been knee deep in ourdigital transformation, and brought an enormous amount of talent and delivered a lot of reallygood stuff for kroger. he is very connected into the startup world,so we do spend time and energy both locally with organizations like cintrifuse, but alsoout on the west coast with some venture capital companies, so we stay pretty well connected.now back to how do we take and figure out what we’re going to work on, i’ll tellyou it happens probably three ways. one way is that the shashank’s of the world workwith their business partners to figure out

what matters most. and we do hackathons andyou know other things to come up with ideas. so we have a vote, you know we in in the itorganisation, kroger technology, we have a vote, and i expect our associates to voicetheir opinions and once again they have an informed opinion as customers and to me that’svery powerful. those priorities and debates and discussionhappen within how you can think of those as functional areas. then you’ve got on theinnovation side, about a year and a half ago we created a directed innovation group, andi will tell you in the past we kind of had an r&d steering committee and some exec’sthat would participate in that. but it wasn’t always the right folks to represent the keyareas of the business, and we kind of took

a different approach. and when my boss, roddymcmullan got to be the ceo he said let’s take a slightly different view of how we doinnovation and we created what we call directed innovation group.and we looked at the big levers in the company, in places where we think there’s opportunityto create you know sustainable, competitive advantage. and we specifically direct ourinnovation activities to those areas, and we also have put in – and i don’t thinkby the way we quite figured it all out, but we put in a set of objectives so we couldmeasure the success of these initiatives. and we had a lot of portfolio work that waskind of historical that we had to clean up. but we basically said, you know we want tohave two innovations a year, not you know

small innovation but have two material innovationsper year. and to be honest with you, that’s a pretty lofty objective because of the numberof touch points particularly when you’re putting in new infrastructure.that, i would say that you have got kind of the innovation bucket around like true researchand development, things that have never been done before. you’ve got innovation on thesoftware side, which we could obviously do on kroger.com and our mobile app and so wehad lots of degrees of freedom there. and then i think the other source of strategy,you know kind of trade-offs and that happens with a couple of the senior executives, andoccasionally the ceo you know casts a vote and says hey you know what, i want to go andget this one done. and in fact if you go back

to queue vision, that was the ceo saying youknow i want this rolled out in two years. we weren’t even quite done yet. you know,we haven’t properly baked that full solution, but we were rolling it out and finishing itas we went because we had decided that was you know a big priority.i would say another one that happened a little differently was our work and temperature monitoring,which was think of it as our foray in building the infrastructure in our stores to facilitatethe internet of things. so we have you know, digital monitoring now of frozen and refrigeratedcases. that system is i think probably by now well over close to 2/3 of the way rolledout, and this is a multi-year roll out because you are putting in a new infrastructure inthe store, hundreds of digital tags in the

store. that was one that we have been pushingmore internally with our research and development team. now with the direct innovation group,i think that kind of change would happen even faster than it did. we worked on that froma couple of years before we really finally got momentum.and so, our goal was to continue to work in smarter ways that allow innovation, do hackathons,allow r&d to experiment, but take the best ideas, get them in front of the right audienceand make more conscious strategic bets that align all the right resources in the organisation.and i would say we’ll be working on that for a long time, because that’s not easy.i would say we’ve already seen the benefits, and i think the big reason is the commitmentof the ceo and you know his direct participation

in those discussions and bets. so chris we have just a few minutes left andi must say this conversation has gone by very very quickly. so what advice do you have forit and for cios who come out of the more traditional technology oriented mindset ways of thinking,but who want to contribute more strategically to their company. what advice do you havefor these folks to begin that conversation, sustain that conversation and have a strategicengagement with their organizations? michael, that’s probably a multipart answer.i think the first thing you have to do is you have to earn the credibility as you knowa service provider that you know delivers every day. because if you don’t have thatcredibility you’re not going to be able

to take the next step in the relationship.so you have got to earn your stripes. the second thing is, go deep and really, reallyunderstand how your business work. and if that means more time in plants, if that meansmore time out in the stores. whatever it takes to really become an expert in the business,so you speak the language and you truly can understand from the other point of view. soyou are listening and having a dialogue that’s two-way with the leaders of a company.the third thing i think that’s super important, is you have i think you have to keep up withwhat’s possible in technology. look, none of us can know it all, but you have to youknow kind of divide and conquer with your team, and as the senior leader pick up thenuggets of you know insight that come from

your chief technology officer that is kneedeep in you know kind of infrastructure and servers, and networks.do the same thing with you know like your head of r&d or get somebody to be more onthe r&d front that’s looking at other industries, and what great things they’re doing. youhave to then become the pragmatic person that’s helping the rest of the organisation understandwhat’s possible. and that often is the hard part because you have to take a little risk,and look you know, this stuff is not easy. a lot of us you know we kind of often jokeabout the tenure of cios is often not more than a couple of years, and you know i thinkyou have to understand that in order to be successful, you’re going to have to takesome risk. and, but that risk reward i think

for the benefit of the company is somethingthat if they don’t ask you for it, i think you have to, again understanding why that’simportant and why they need it. so basically it’s the responsibility forthe cio to initiate that strategic conversation, is that what you’re saying? exactly, you cannot wait to be told what todo. that was something we went through you know 10 years ago when i got here. we hadvery much of a service mindset, and that’s important. we definitely need to provide agreat service, but at the same time we need to be thought leaders. look, we’re ownersof the business, and we have an opinion, and we have unique experiences and insights thatcan help the company, not only figure out

you know the right strategy. but also helpprioritize and drive initiatives that are going to make a difference.and to me, you kind of have to earn your stripes to be part of those conversations, and whenyou get a chance to sit at that table, and you get a chance to be part of those conversations,when you sign up for things you have got to get them done. and we all know that’s thehard part, especially for things that have never been done before. you know, true innovationhas the highest level of risk. to me, it’s the most fun, has the most reward and it doesmake a difference and you just have to be willing i think to personally take a littlebit of risk to be part of those conversations. and if you’re not been proactively askingto be part of the strategic conversations,

or to be making part of those decisions, youshould basically insert yourself and explain why your opinion counts. well that’s fantastic advice. unfortunatelywe’re out of time, but i know that your comments address concerns that many cios dohave who want to play a strategic role and sometimes they’re not really given the opportunityand they’re not sure what to do. so on behalf of many cios out there i say thank you foryour great advice. and thank you for taking the time to be part of episode number 135of cxotalk. thanks michael and i’m proud to be number135 and i’ve really enjoyed the conversation. well i hope you will come back another time.we have been talking with chris hjelm, who

is the cio and executive vice president atkroger, the kroger company, one of the largest retailers on the face of the planet. chris,thank you again for taking the time and really i hope that you will come back again. thanks michael. everybody, next week we are speaking withthe chief marketing officer for mozilla, so come back and hope you have a great week andtalk with you soon. bye bye.

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