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Chuck: So Darren, welcome. And thank you for joining me on innovators on tap. It's good to be with you check. I want to start with a story, something that Mike McDonald, who was the CEO of Carson, Pirie, Scott as it went through bankruptcy in the early 90s. And I know you worked with him. He said, he thinks you're about 26 at the time, and you were sitting in front of an auditorium full of creditors telling them that they wouldn't be getting paid. And his quote was, Darren dealt with the situation with ease. We walked out of there with the creditors not liking things, but they understood it. And they respected our position. And as I read that, I was just struck by what it must have been like to be in that situation as a 26 year old and my guess is it probably it had some effect on who you are and how you thought about things. So can you give us some perspective on that?
Darren: Yeah, well, I was brave enough to say that because I was the closest one to the door, and I could get out alive when I look back on that is that failure is your friend. And what I mean by that is that so many people fear failure, that they are come up to the boundaries of failure without going over. And it's until you can kind of get through the boundaries of failure and realize the sun's coming up the next day, you're going to have another opportunity. Most of that anxiety is anxiety, creating your own head. I mean, it was real at 26. we owed people, a billion dollars and 14,000 jobs. But what was the reality is that if we could get through that day, and actually start a new, we would have a chance to do something different and potentially save 14,000 jobs and pay some people some money back and have a better life. But my learning for sure is that a lot of times you get up to the boundary of failure and you back away until you push through failure and make sure that you understand failure is your friend. It is not your enemy, because then you'll actually pursue different things and have an open mindedness for yourself and others.
Chuck: So it reminds To me of an interview I heard that President Obama had done near the end of his time. And he had mentioned that if he was going to run again or be president, again, he would have been far better prepared, because he finally realized that failure happens and you get through it. And it's really not all that bad and that it really empower him to think about things and do things amazingly in it. And it led me to this concept that I stumbled across which is somewhere it was said that failure is the fuel of innovation. I think people think of it as a bad thing, but it's really learning. And if you realize it's a learning experience, it's it's a powerful tool to do something else.
Darren: You jumped on it before I did is that it's the fuel for learning. And it's really important to be able to separate yourself from it. A lot of times people get stuck in their own tracks because they assign failure to themselves, versus recognizing failure and many times it's just part of a process. And so when you D, personalize it and stare at it For what it is, you didn't set out to do something to fail, you set out to actually achieve an outcome failure is just a step in the process.
Chuck: So one of the things I learned when I work with Dr. Jerry Bell, who's a psychologist and a pretty well renowned leadership coach and was my personal coach is that you can tell a lot about someone if you understand how they grew up, those those experiences tend to shape them in really unique ways. And so can you give us an example of kind of some of the early influences that you think shaped you and maybe helped you think about failure the way you do now?
Darren: I would say, probably a few things in the early days, I'd say role models are super important in your life, the role models I had to best I had were my parents and what they had to overcome. My dad was raised by his grandparents, so he was orphaned, and my mom was raised by a single mom, and somehow they found their way together. And we're married for 50 years before they passed. And you know, they just had simple goals in life. They had three boys and they wanted to all go to college. But underneath that was this determination. I mean, that's what I took away from them is determination, just really important in life focus in terms of have some goals. And there was a level of work ethic that I just admired about both of them. And those were just ingredients. You know, they weren't technical ingredients at all. They were ingredients about the person. And so my parents, his role models, overcoming things was critical determination was critical. focus and simple was part of it as well. Probably the last thing that sticks out for me because I was an accountant. accountants are not innovators by nature, at least perceived Mike McDonald, who you mentioned was probably one of my top two mentors in life. And what he really taught me is not to get positioned in life positions. In a role, you aren't your role, you know, you are, who you are and what you bring to a role in life. And Mike was extraordinarily successful. But what he's magnificent at was to be able to draw out of people, what their strengths are not necessarily just cast them in terms of who they are.
Chuck: You brought up the fact that you were an accountant. And I think I've mentioned to you in the past, I don't normally associate accountants with innovation. How did you go from debits and credits to being someone who's good at looking for new problems and finding ways to solve when people ask me? Why did you go into accounting?
Darren: It's hard to imagine somebody having a love for a debit and a credit. what it was for me was, it was storytelling. A lot of times what financials do is they just tell you the story of a business and if you like good stories, what you do is you try to understand the plots the characters, the opportunities, And so I was drawn to that more out of learning a language, understanding a story and where things could go, the greatest innovations that I've experienced, have really been those around understanding the story of customers.
Chuck: So we talked about you, and I think you start to allude this a little bit about what is innovation in, I think in the past you described, there's two different types. And the first one you said is that there's kind of an innovation where people who can see around corners, they can see something people can imagine. And when you describe it that way, it felt like a lot of the innovators I was around in my time at CRI. But then you described a second one, which I thought was really interesting. It was someone who had the ability to see really hard problems and go out in the world and find someone who can help you solve that.
Darren: There were three examples that come to mind. And maybe I'll use the one that's most current is remember I was at Best Buy and I was with a young man Sean Skelly we're looking out the window and there's these beetle bugs whipping by and i said i i don't know what They do. But Shawn, can we go have lunch with whoever runs that little business? And it was a young man named Robert Stevens. And Robert came and had lunch with us had lunch again with us. And then he walked us through a Best Buy store. And he said, Do you feel that? Do I feel what he said? Do you feel all of that anks and pain and frustration that is happening right there. And he pointed to our service center. I said, I certainly feel the cost. He goes, No, there's pain in that part of the business. And he said, you're fixing the wrong problem. You are trying to fix a software problem with a hardware solution. And the software was human software. Back in the day when we had a problem with your notebook. What do we do? We said, Well, thanks, Chuck for bringing it in. We're just going to pack it up and send it over to Sony for 30 days, and then you're going to get back and he goes I guarantee 90% of the time, it's a software problem, and we can probably fix it here in the next 30 days. minutes. And I said, well, Robert, I don't know about that. But why don't you let me buy your business and you could come teach us how to do it. He goes, I'll let you know, when I want to take over BestBuy. So we paid $3 million for seven beetle bugs and 10 employees. It's hard to justify at the time, but what Robert could see is where the future was going. If you think about a geek back in the day, and this is circa 15 years ago, he said, You know what, you're going to have to have a whimsical character, because he had the vision that women were going to take over that space. He said, they have to be a customer service agent, first friendly, easy to get to, because ultimately, you're going to want them to let the service agents into their home. You know, ultimately, they're going to make the decisions about technology in the future. And you want the agents to guide them. I think they have 20,000 geeks today. his point was he could see and feel and it's not a small point. There's a level Have EQ empathy in the innovation process, it can actually fit into that first category check that people can experience and feel the pain of others in order to begin to fix the problem. So he could fix that problem. And really great innovation comes from having microphones on the edges. If you can't hear it, and feel it, you can't change it.
Chuck: Darren, that is just a great story about the origins of the Geek Squad. You know, as I as I think about that Best Buy business, you guys overcame one challenge. And then you were faced with an even bigger challenge, which was Amazon. So how did you guys deal with the Amazon threat?
Darren: So it's hard to be number one and get knocked off your perch. And that's really what BestBuy was they grew to $45 billion and just had this foothold on the industry of electronics. And then when Amazon came through and essentially through pricing, and I would say through convenience in their catalogue began to rewrite The rules of customer experience, you had a business that you get set in your ways you have a level of ego you believe just working harder is a solution. And for a period of time, you're in denial. You know, there was a period back in the late 90s, people thought Amazon was going to go out of business.
Chuck: So Darren, I'm really curious, can you tell us about the first time that you met Jeff Bezos?
Darren: We had a meeting and there was this young man who came to BestBuy. And he said, we're really good at this electronic commerce and you're really good at electronics and selling products. So why don't I make you a deal, I will be your back end for all your internet business and you can be the front end expertise as to products and together we can reach whole new customer segments. And you know, it was tantalizing because what he could do at that point in time for the cost, he could do it. He said, this might be a good idea and then he left us and he went to Target and told In the same story, and I remember being in that meeting with Deke scholtes, or founder and said, except this is pretty interesting. And I said it is. But I said, Nick, I don't think he's thinking about just selling books. And if we do this, we will essentially be teaching him the business. So we didn't, and target did. And then five years later target figured out how to get out of that relationship. What you could see even back then, is that in Best Buy, we made a decision because we could just do it better than anybody else. And we had run out of that track. And now what we found is that when he rewrote the rules on customer experience and price, once we got past denial, I would say it took massive change at the top, and they brought in Hugh bear. And what Hugh bear recognized is that he had to do a cultural reset on the organization. I would say the rules are going to continue to change. I'm not smart enough to know what the next Next tectonic plate shift is if they don't move with it, they'll go away. And ultimately, I think we're all grappling with the role of brick and mortar in the future.
Chuck: Yeah, you know, when we were trying to figure out how to sell the LED ball, we realized we needed to get in front of customers. And you know, what retail provided us was, we had done testing and if we could get someone to see and experience the product to actually touch it, we could get them to buy it. So I think it may not be brick and mortar as we see it today. But this ability to experience things it's the it's the it's the idea that you can't consumer test, something someone's never experienced before. And so the innovation really requires this ability to show people and I just wonder if brick and mortar doesn't still have at least some role they're going forward.
Darren: It'll be interesting Chuck. So when you buy a car today, I think what the numbers are is the Internet has stripped $2 billion of profitability out of the new car sales, the internet is effectively created transparency See? And the other thing that's happened with that transparency, it's really forced new car dealerships to ask themselves, where do we add value. And one of the things that I hold in my head is that, as a society, those that provide a frictionless customer experience will continue to gain share. And friction comes in many different ways. Think about Amazon. They say Amazon has existed before. It used to be the Sears catalog and Sears had the best distribution model. Amazon has the best catalog in the business. It has transparency, it has customer reviews, and it arguably has the best delivery model today. But deeper than that, I think those that reduce anxiety, in the experience will be the winners.
Chuck: So you start talking about cars and this is a great segue. into your hosts Best Buy experience and you go to work as the CEO of advanced autoparts. And can you tell us a little bit when you got there? What was the problem the day you showed up that you thought needed to be solved?
Darren: In simple terms, the problem that needed to be solved is that we were serving a group of customers that, quite frankly, were dissipating, and the smaller part of the market called DIY, and it was 80% of our business and the market that was growing and was growing, growing at five to 6%, in two thirds of the market called wholesale delivery, it was only 20% of our business. And when you got down to that, again, that expression of pain, again, the pain on the DIY side, you know, it happens as soon as you lift the hood and you go, where do I start? So just the number of humans that could work on cars that in some cases have eight to 10 onboard computers is is a dwindling group and those in the delivery business and the Firestones the good years. The Monroe's are the world, they have this backlog of business, which really means that they had a bunch of moms with kids sitting in the waiting area, that if you don't have your car, a lot of times your life shuts down. So in simple terms, I said, you know, what I 80% of our business is pointed in a way that just as not where the growth is, and isn't going to meet the need and sustain our business, we're going to have to reposition our business into the two thirds of the market where the future is.
Chuck: So you show up you're the CEO. And and I understand you realize that you're basically in the small shrinking market that first day, how did you go about figuring out the problem that needed to be solved,
Darren: so I wasn't smart enough to figure it out? For sure. What I found is that in order to move organizations, and at that point, we would have been maybe 2500 stores probably close to 4 billion in revenue, when which put us about 30,000 team members and literally before Before I started, I gathered 50, advanced auto part team members, and they were a cross section and team members. And I remember I hand wrote a note, I said, Well, here's, here's three or four questions where I just need your help. One of the questions is what is the largest opportunity that we have at advance auto parts that we're not pursuing today? And then what's in your way? And this goes to a little bit of putting the microphones, you know, in a place you can hear the 50 people that were there and answered the question. I don't know that it was unanimous, but it was darn close that the biggest opportunity we have is to be successful in this wholesale delivery business. What's in your way, we don't have the resources. I said, Well, what does that mean? So Well, you have to have a sales team. And if you failed out at in our business before, and we didn't want to get rid of you, we put you in sales. And so what that meant is we weren't putting our best and our brightest and we weren't focused on that. And And literally, you know, we went from From a team of college 50 people to I think when we left we had 500 and sales and they came from a host of different parts of the business and outside the business. But there were a series of things that again, to get change, you have to get buy in. And a lot of times to get buy in. The best ideas are already in an organization. They are there, but there is limits and boundaries. And unfortunately, there's hierarchy. In that day. I didn't know this was occurring, but I'm on fast Nell's board of directors and their founder Bob. Carolyn taught me this term that I've used ever since he taught it. He said you know what this business works for a lot of reasons but two of them chaotic communication and the other one is decentralized management. And underneath those was this thought that chaotic communication is create an organization that ever Anybody can talk to everybody, without fear, to create an organization that everybody feels like they're running their own business, a decentralized organization, underneath all of it, they create an environment that creates innovation.
Chuck: So if these ideas are already in the organization, and it's about removing the obstacles, why is it that so many companies then struggle to take what apparently the ideas are there? And to implement that? Now there's why before you got to advanced autoparts, or in any other situation, what is it you think that's getting in the way that stops these people from being able to go out and solve problems and create change and drive innovation?
Darren: Well, it's probably different in different organizations, but there's probably a common thread and it's called ego and it could be organizational ego or individual ego. I once had a different boss who was pretty smart. And when talking about becoming a CEO, remember the advice he gave to me is, he said, Those things that make a CEO successful are the very thing that will bring a CEO down because they have been rewarded for getting them to a certain spot, and they're not going to give it up. And so you've got to find a way in the individual leaving the company to be able to honestly suppress their ego at times, and let the better ideas get to the right place. And then the other thing is how the power structure works. I've been in essentially pretty large businesses my whole life and the reality is depending on how the power structures work in a business, the the pocket vetoes that can occur every step of the way, will wear out some of the best ideas practically how you demonstrated as the leader of an organization or leaders is that ability to suppress your ego.
Chuck: What am I observations is that you can't manage innovation, that it's actually a leadership problem and and management is is a All about trying to get people to control, you're trying to get them to control their behavior, right, do something that's pre determined because you want a pre determined or predictable outcome. And yet at the same time innovation is trying to get someone to do something new. That hasn't been done before. How did you go about either finding people within the organization that were good at that or retraining the ones you had to let go of these management principles and embrace these new ideas?
Darren: I think the great innovators are different in my mind than the great improvers. A lot of big businesses have the great improvers. They improve on a process, you know, they can improve on an experience but they don't transform their enjoyment is day in day out, making those improvements in the business. The ones that were the great innovators, entrepreneurs, their cause driven, it's it's just different. It's hard to describe and your job in the leadership is that You know, when they say, Okay, I'm going to create the innovation, you know, floor, and I'm going to put all the innovators over there. I can't tell you that I've ever seen that work. I can say we've gotten decent improvements out of that. But the transformational improvements were as if someone was curing cancer and to build that in a culture, what happens is that you begin to attract people into that culture too. So you get that type of transformation, because it's a social scientist identifying a cause driven person to go get it.
Chuck: I was working with the company one day, they basically tried your idea of let's create a floor full of this innovation. And they took, you know, they looked at their team, and they tried to find their most talented people, and they put them on there and and I asked, Well, how did you judge them? He said, Well, these are our highest performers. And as we talked about it, they were their highest performers in a system that was built around a bunch of management processes. So they were the best managers. I looked at him, I said, Well, why would you expect that to work? And they flipped it around. And what they said to me was is okay, well, where did you look from? I said it looked from on the edges. To me, Every company has, you know, they rank performance in many different ways. But you know, your performance process is typically built around what's most important. So most companies, it's around management, but I always noticed in organizations there was there was these two groups are calling the edges and one is these very talented people that could do the management stuff well enough, but really weren't all that interested. And they could tell they were eager and almost like they were getting ready to leave at any moment. They were frustrated on one side, and then there was this other group who actually wasn't good at the management stuff at all. But they were also pretty talented. And they were equally frustrated. They were kind of the the Misfits, but that if you took those two groups and put them on that floor, that's basically what we were doing at Crete is right we we built our innovation teams, not around the middle of what was good at running the company today. We built it around these people on the edge It's almost counter to what most organizations are comfortable with. Because you're saying, Okay, I'm going to trust all my innovation to the people that are the least bought in to my current success. But if you think about it, that that's exactly what you want to do, right? I mean, and so so so my guess though is there were you found at least a few of those people on the edges that you could start to build this idea around? Is that a fair way to think about it?
Darren: it is a fair way to think about it. And sometimes, like in my role, or in your role at Cree, knowing the people that are in your leadership team that can more clearly see those people and that's part of it as well for innovation to work. Sometimes hierarchy gets in the way, but it's our job to understand or Our job was to understand the people that could see the people in the.