Pandora took the business world by storm this year as the renowned international jewelry retailer successfully drove digital transformation and innovation in the midst of COVID-19 and launched the much-talked-about Digital Hub.
To find out more about the Digital Hub and Pandora’s agile aspirations, Management Events interviewed Pandora’s CIO, Peter Cabello Holmberg, winner of CIO of the Year 2020, who shared the objectives of the ‘Hub’ and its importance in Pandora’s continued digital strategy.
THE DIGITAL HUB
The Digital Hub, also known as the Hub, opened its doors in Copenhagen in July 2020. But what exactly is the Digital Hub?
The Digital Hub is actually a place. It’s a physical location; a full floor in a building next to our global office, where we have room for some 200 headcounts. We initially called it ‘Global Office 2’, but as we wanted to create some hype around digital and our digital strategies, we decided on ‘Digital Hub’.
Also, we were running out of space in our global office, and we had pockets of digital talents – the IT, marketing, and e-commerce teams – sitting in different places globally. That wasn’t optimal so we wanted to consolidate our digital talents in Copenhagen.
We believe that having our digital talents in the same location would help our delivery speed, and our intention was to have a new layout of office space that could facilitate agile ways of working, where people can move around and sit in teams to exchange knowledge on a daily basis.
In the early phases, we discussed building it in New York or Amsterdam, but we decided to build it next to our global office in Copenhagen because there was a need for proximity with the rest of the senior executives there. We were super lucky that we could get the office space next to our global office.
How did the idea of the Hub come about?
We’ve been working with our thoughts and aspirations on digitizing across our value teams for a couple of years. And what we realized was that we had to orchestrate ourselves differently to deliver faster on our digital aspirations.
We’ve been relying on waterfall approaches, business cases, and other methods that were very slow for us to get things started and signed off, so we needed a different operating model and a different engine room.
It was that realization – for us to deliver on our digital aspirations, have more transactions on our online channels, and improve digital marketing, omnichannel, and in-store technology – that we felt the need to bring the technology, e-commerce, and marketing teams together and implement new, agile ways of working.
Projects like the Digital Hub are huge investments, and getting the stakeholders’ buy-in is always a challenge. How was the project presented for the executive buy-in?
I went to the CEO and the executive leadership teams a year and a half or 2 years ago and said that we needed to do an IT transformation. I said that I would save money for the company, build new career duties, and introduce agile working. And I got a sign-off on that.
The CEO bought into it because we – on top of the savings – also presented strong business cases for digitalization and data-driven consumer growth that were very attractive with significant incremental revenue.
AGILE WORKING AND CHANGE MANAGEMENT
After getting the sign off on introducing agile ways of working, how did you start its implementation?
We did a number of introduction sessions before we did anything else. We talked about what agile is, its meaning and principles, and the choice of methodology, and introduced the terminology. We also did a few proofs of concepts, small projects that we would normally put into an agile release train (ART), and applied agile ways of working, like scrum meetings.
Other than that, we had meticulous discussions about Spotify and SAFe, and supporting tools for agile ways of working. We initially made a decision to go with both models, which was a mess for us. Now we’re back to the principle of one model.
We made some decisions along the way that were just wrong. So when we went live, we went in knowing that we had to learn if the decisions and changes worked and asked everyone to give feedback so that we could adjust on areas that didn’t work.
Major organizational transformations can be difficult to execute smoothly. How did Pandora handle the change management?
This was a massive change management exercise, but we knew we had to shift our ways of working completely.
So we gave people a flavor of how this change would look. We started to talk about what an ART should be like and introduced new and different roles to both the business and organizations. We pieced it step by step, presenting increasingly more elements of agile working.
There was change management happening both bottom-up and top-down, but at some point, we came together and communicated to everyone involved that ‘This is how it’s going to look, and here are the members of the Arts’.
We communicated the incoming change to all parts of the organization with 50 to 70 lightning talks about agile working held for all the employees to participate. More than 1,200 people from the entire business signed up to learn about it.
Even when we went live with our first ART, we continued having lightning talks because more and more people wanted to know about it.”
We try to stay as open and transparent along the way so that everybody knows what was happening. It was a lot of communication on where we were, what was happening next, and what to expect.
HIRING AND TALENT MANAGEMENT
With all the transformation initiatives, what were the responses from the teams and employees?
The interesting thing is, as we implemented the agile ways of working, our churn rate of people in IT, marketing, and e-commerce leaving Pandora has gone down. Even though we did this massive transformation, the turnover rate has decreased.
From what I’ve seen and heard, people are actually quite excited to try agile working. They want to see how it works. Some have already tried it and are super happy with it. And those who have always worked in traditional waterfall approaches are keen to learn about agile ways of working because everyone’s talking about it.
With about 200 employees working on a collective digital strategy, how does the Hub ensure that decisions and responsibilities are delegated to the right people and teams?
We have a number of ARTs now, and the biggest and most mature one is our consumer ART.
Whatever the team does in this agile release train is tied to our business strategy, so there’s a link from the strategy to how we work with agile portfolio, lead portfolio management, and so on. So we can track from strategy to ARTs to APEX to features to use cases.
Since we have defined the ART with all the members and different roles, there’s full transparency on who’s responsible for what. Everyone knows what their role is in the whole process.
Furthermore, the tool that we use holds the overall description of the business strategy, and breaks down into the related ARTs and components, so that we’re constantly updated on the business timeline and deliveries. Hence, I would know exactly what’s going to be delivered and when. It’s pretty amazing.
It’s not news that Pandora has been actively hiring digital talents for the Hub. What talents are being seeked, and what hiring strategies are being used?
We’re hiring very different types of profiles into the Digital Hub from all over the world – Columbia, Argentina, the US, and Singapore. We want people who are creative, who have an opinion, who want to push things forward and make a difference. And because we also want to set them free with the business, we want them to be self-operating.
What we did with hiring was create hype around the Digital Hub. We had the CEO talk about the Hub when he was interviewed, and we sent out press releases and reached out to different media. We also talked to universities about what we were doing and trying to achieve and spread the word that we wanted to build a digital powerhouse in Pandora and be number 1 in our industry.
So we set the ambition level quite high, which is part of attracting talents while doing features and events and mobilizing all types of channels to spread the word.
What challenges did the Digital Hub encounter in terms of recruiting talents and managing the current workforce?
One of our bigger problems was that, when we got a ‘go’ for the Hub, it was the time when COVID-19 hit. So we had to hire these positions using Teams and Zoom since we couldn’t meet the candidates face-to-face.
We also had to go about the hiring processes in a different way because everybody was on lockdown globally, and we couldn’t fly them in and bring them to the Digital Hub. From Day One, they had to start from their home office. We sent PCs and laptops to them, and onboard them from their home and whichever country they were in.
Now that the Hub is completed, what initiatives is Pandora taking to ensure a functional communicative and collaborative culture?
The Hub initially was driven by the CDO, CIO, and our SVP for data analytics. Now that we have consolidated these functions under a CDTO then the Hub is anchored with the CDTO. We’re trying to create a community so that the Hub is seen as one team with one common purpose.
Now, the Digital Hub has its own dynamics, and there are social events, fireside chats, and town halls where people across different organizations can participate. We put these people together in one location, and what this has actually done is broken down the silos that we were experiencing previously.
We’ve been sitting on different floors, in different buildings, in different countries. Now that we have brought the teams together, they talk to each other every day – they literally sit next to each other – so it has broken down the silos between different functions. We’re much more aligned compared to before, and that is a huge improvement for us.
DATA AND DIGITALIZATION
In terms of technology and innovation, what challenges did you face with the Hub?
We didn’t have many challenges with our technologies and choice of technologies when we started the transformation.
We already had a roadmap on what to do with data. We had our online platform, our salesforce, e-commerce, and cloud. Our biggest challenges are with integrations, master data, and a scattered point of sales landscape. But overall, we are in fairly good shape.
What stage is the digital transformation of Pandora at the current moment? What other processes are underway to boost the brand’s digital experience?
What we have now is a pretty solid digital strategy that has been shaping up over the last 8 months or so.
We’re going all in on our user data for tips on marketing and personalization. We’re also considering communities for people who are interested in our type of jewelry, and planning to introduce a global loyalty program that will hopefully further drive brand loyalty.
The consumer ART is working with data, and working with the marketing team on digital marketing and personalization. In regards to data-driven consumer growth, we also set the teams free to use data to drive sales. By combining the different data sources that we have, such as our transactions and customer browsing data, the ART teams are free to make decisions on their own to allow faster decision-making.
What are the biggest differences between the company’s past and present data utilization?
It’s two different worlds before the Hub and after the Hub is live. The incremental revenue that is delivered from our data-driven consumer efforts is just outstanding.
We’ve built the integration between different sources in our stack, applied new technologies, and hired Ph.D.-titled profiles to work with data so that we can learn more about our consumers.
We didn’t have that data focus a year and a half ago. I think we had one person in Pandora working with data, but now we have 60+ people working only on advanced data analytics and the use of data.
SUCCESS AND THE FUTURE
What do you consider to be the key achievements of the Hub?
What’s interesting is that the agile way of working that we implemented has really proven its value when the pandemic hit.
Our stock prices have gone up some 100% during 2020 when COVID-19 hit, and that’s quite amazing. It’s actually all down to our technology readiness and the shifts from physical stores to taking advantage of our online channels and digital initiatives.
We were able to step back and look at our priorities and completely change our focus, and now the rest of the business – HR, finance, and other parts of our commercial organization – want to embrace agile working because they see its value. This is just the start and we want to do even more.
Additionally, we see that we can move much faster now. Because the teams are dedicated to the agile release trains (ARTs), they’ve become very efficient and knowledgeable about their role, purpose, and responsibilities. So we’re able to come up with solutions to business strategies at a faster rate.
There are always expected ROIs for major projects. What is the anticipated ROI in 2021 due to the Hub?
When we first started, my focus, and marketing’s focus, was on revenue-generating and return on investment. It was clear when we went to our CEO that what we proposed was very attractive and that data-driven consumer growth, meaning advanced data analytics alone, would pay for our Digital Hub. And we still have many other initiatives that we’re driving.
In some cases, in terms of ROI, we’re talking about a factor of 10 of the investment. Also, our stock prices have gone up significantly because we took advantage of our online channels and digital initiatives. I think that alone shows the impact of getting digital right.
What are the upcoming plans and strategies for the Digital Hub and Pandora?
We are in the middle of finalizing our digital strategy for the next 3 to 5 years. We never had a digital strategy before, but now we have it, and it sets the direction for our technology investments across our value chain – where we want to invest our bodies and resources.
Also, we’re focusing on how we can take agile working and our technology operating model to the next level. Yes, we started out with Agile but we’ve only been live for a year or so. Now, how do we bring this further? What do we need to invest in? What kind of profiles, like what agile coaches or release train engineers, do we need to bring on board to further mature our agile ways of working?
What commercial goals does Pandora seek to achieve in 2021? What role does the Hub play in achieving these goals?
Our key focus right now, and into the next 3 to 5 years, will be on revenue-generating initiatives. We want to drive even more revenue through our online channels.
Aside from that, we’re also focusing on creating an even more seamless customer journey across our different channels. We want to engage with our consumers in a more meaningful way – be more precise in what and when we communicate so that we become more relevant.
Of course, we do all of these to drive revenue, and the Digital Hub is instrumental for us to proceed with the plans.
