How piloting new approaches Is growing Levi’s value stream mindset
Read on to see how Levi's company's advancements have had a direct impact on culture, from textile technology, and fashion design to supply chain management and digital operations.
Over the course of its 168-year history, Levi Strauss & Co. has aggressively invested in innovation. The company's advancements have had a direct impact on culture, and they encompass areas from textile technology and fashion design to supply chain management and digital operations.
When the COVID-19 pandemic gripped the planet, that innovative spirit was put into high gear. Global stressors encouraged the rapid acceleration of ongoing digital transformation initiatives. The company is now "reallocating resources to high ROI investment areas such as automation, AI and digitization," according to a Diginomica piece published in July 2020, during the height of pandemic panic.
In a moment when many long-staid brands would be tempted to back down from investment in advanced digital technologies, Levi Strauss & Co. instead encouraged itself to go farther. The company has pushed towards an agile corporate culture that relies even more upon lean, nimble, and flexible digital teams. Underpinning this transformation is a belief that value stream management (VSM) allows the company to better structure its operations, aligning all teams through a greater understanding of how value is created and maintained.
All of this change cannot happen overnight — but, given stressors like COVID-19, we've learned that they can happen in days. The key, according to Bret Piontek, Enterprise Agile Coach at Levi Strauss & Co. is to not impose sweeping, radical changes too quickly. Instead, focus your innovation efforts on teams with an appetite for trying new things. Use these teams to pilot cutting-edge techniques and technologies, and then spread the knowledge produced by these agile pilot programs across the company.
Pilot programs are never perfect, but they can be the perfect learning tool. Business leaders can measure their results, learn from them, refine them, and then develop a model framework to spread to other teams. This strategy allows new changes to gain a foothold while reducing the risks that can hamper ROI. It's a major component of how Levi's has found so much success in the modern era, both before the pandemic started and certainly once COVID-19 began to cause major, unexpected disruptions.
A legacy brand that continues the pioneer mindset
It's hard to think of a legacy brand with deeper roots in the modern consumer consciousness than Levi Strauss. The company's history extends across three centuries and touches upon every generation of American culture.
Levi's iconic image may, to some, seem at odds with the idea of innovation. But that would be ignoring over a century of new product design, development, and collaboration. Levi Strauss & Co. has, in fact, cultivated a reputation for innovation, from the 19th century to today. It was compelled to do so, in part, by a rapidly shifting dynamic in retail, wholesaling, and consumer products in general over the past 160 years. The most immediate example is that the company pioneered denim "blue jeans," giving rise to one of the most ubiquitous garments in the world. It also patented a rivet design to reinforce its jeans and make them work-ready. In the post WWII boom, Levi's became one of the first wholesale clothing manufacturers to begin retailing under its own brand name.
The latest innovations at Levi's, according to Senior Vice President Brady Stewart, include a major move towards Direct to Consumer (DTC) sales. Same-day pickup in-store and curbside have been bolstered by investment in the latest digital point of sale and supply chain management technologies. When many retail locations were closed to the public because of the pandemic, Levi's and other companies were using stores as miniature order picking and distribution centers. Over the course of a few years, overall DTC volume grew from just 26% of the business to over 50%, while wholesale (which has lower margins) is now around 30% of total revenues.
The company has also started Levi's SecondHand, an online sales portal allowing consumers to browse and purchase from thousands of different used fashion items. This type of system involves challenges with inventory management and an online point of sale involving hundreds of thousands of items that are each utterly unique.
Levi's looks to value stream management (VSM) to achieve better results through transformation
As the company's current programs evolve and expand, value streams play a huge role in the transformation. Levi's has leveraged VSM principles to reorganize IT teams and create new, more efficient digital pipelines. Currently, the company is engaged in ongoing efforts to reorganize teams from technology stacks to feature areas. They are also investing more heavily in automated CI/CD pipelines and adopting new tools to facilitate a more agile way to plan, build, test, launch, and monitor key business value streams.
Running proposed changes with an agile pilot group is a critical method for getting these innovations off the ground. Many teams will organically adopt the piloted changes based on the model of success the team creates and the demonstrated power to reduce business pain. This is similar to how knowledge and technology have worked throughout human history — but sped up and also made adaptable in near-real-time, responding nimbly to consumer or environmental demands.
Adoption and reorganization towards VSM can encounter resistance, but Piontek says efforts are greatly lessened by having the ability to demonstrate performance and coordinate teams using pilot team results alongside platforms like Digital.ai Agility.
Infusing Agile within the corporate culture and structure
Starting from the arrival of computers in its corporate HQ, the digital revolution sparked profound changes within the corporate structure at Levi Strauss & Co. For a time, IT was seen as stewards of specific technologies meant to support the business areas. These business areas were responsible for the procurement of new technologies that promised improved operations. IT would then have to facilitate and support the solutions that were chosen.
Now, as digital technologies have become embedded in both the consumer and business world, IT is no longer kept separate. Levi's, like many companies, has realized that IT has the subject matter expertise and knowledge of daily operations to help guide strategy while building better processes.
In the words of Roland Paanakker, former Senior Vice-President and CIO at Levi Strauss & Co., in a 2017 Cognizant piece "the paradigm is shifting from 'business vs. IT' or 'business and IT' to 'business is IT, and IT is business.' There’s no distinction anymore."
Instead of being outside the room when major decisions are made, Paanakker asserted that "our business-savvy IT professionals are full partners with the business. They have a seat at the table and collaborate with their business counterparts. This allows IT to contribute and be recognized for the business value that’s created and closes the gap between what the business needs and what IT does."
Moving away from teams based on tech stacks to ones based on value streams, feature areas
The prevailing idea is now to reorganize the entire corporate structure so that IT and business efforts are entwined and can be co-coordinated. Reorganization infuses IT knowledge at all levels of the company, eliminating arbitrary silos that had grown up over the decades.
Paanakker explained that "while we used to organize IT by technology platform, we now organize by business process — for example, e-commerce, sales, and marketing. By making the technology lead part of the business leadership team, we ensure we surface the right priorities."
In the same vein, Levi's is further restructuring so that digital teams can support a specific value stream. Piontek has moved toward agile teams built around feature areas, which are in turn clustered around specific value streams. What was once multiple siloed teams, teams not intentionally structured to the business cycle, have now become teams built to support key aspects of value delivery.
The first task Piontek underwent was a project to sync teams to the same sprint cycles, eliminating delays and discoordination. While monitoring how progress was going in Digital.ai Agility, Piontek noticed that teams began breaking records in velocity before becoming stable and predictable. As an example, the team was able to predict a seasonal sales spike before the holiday season yet keep velocity constant. Now, with that rhythm established, the teams have more predictability and fewer dependencies. The new goal is to further reform the teams to be better banded together, basing them around feature areas.
To find success, Piontek has relied upon making incremental gains among specific teams and then scaling those successes to other teams. He says it's important to allow resistant teams to adopt the changes organically, once they see positive progress and elimination of pain areas. Being able to visualize a single data source to demonstrate metric performance is essential to this process.
Lessons learned: encourage teams to grow, and don't bend them so far that they break
When pivoting towards agile and VSM, it's not always about being prescriptive to teams or giving explicit advice to managers, says Piontek.
"If there's an area of the business or is a team that isn't ready for it, I'm like: 'here, I said my piece. This will help you.' Then what I do is I pivot, and I go focus on another team, and once [the other team] sees it working, the other team will be like 'Oh! We want that!' and it's like 'Now you can have it!'"
He acknowledges that people will resist certain changes based on experience and a feeling of "knowing how this all works." When encountering such resistance, his advice is to "pick and choose your battles." You must also acknowledge that change is, generally, hard. People have established their own motivations, their own ways of doing or thinking about things. Other people also have different experiences.
So, to avoid having inertia slow down progress, follow the vision that inspired the transformation, but be willing to somewhat go with the flow. Allow resistant teams to hang back while more eager teams run pilots. Then, when those pilots demonstrate positive results, you can appeal to other people's business pain to achieve buy-in.
Agile transformation is an ongoing process, marked by learning and adaptation
Leaders must also constantly look for opportunities to adapt and evolve as you learn, Piontek urges. Everyone needs to realize that we are constantly learning. There's no "right" answer, but data has to be gathered, and new approaches should be tried.
"There's not a silver bullet," Piontek admits. "There's no one-size-fits-all solution, too. I am constantly having to adapt the framework."
Derek Holt, our General Manager of Agile & DevOps at Digital.ai compares the change process to software: "It's never done. There are always ways to improve. It's very malleable in that regard because it's very different than a sort of assembly line where the car comes out completely on the other side."
Eventually, leaders pioneering changes will need buy-in at the executive level to get past a certain milestone. However, the organization as a whole has to have a willingness to test, pilot, learn and spread lessons learned to other teams. This is why Piontek has let eager teams run pilots on further entwining the value stream management approach within their existing agile framework.
Piloting automation and VSM With data at the helm
The current project for Piontek is to restructure teams to better reflect the value stream while increasing automation. His hope is that development is going to be spending less time, "manually moving things around," such as project tasks or approvals. Instead, they can spend more time monitoring, creating, experimenting, and "pushing buttons" for quick changes rather than having to move statuses manually — all thanks to automation
Piontek has seen that other teams can see progress in these areas and go, "oh I can make my teams go a lot easier." With new changes, they can more flexibly pivot from existing product builds, or they can feature branch to try new things.
Implementing transformative changes in small pilot groups provides not just predictability and reduced risk but also a better ability to adapt fast overall. Piontek has seen that other teams in the vertical — and beyond it — will observe the progress and be like "I want in on that".
During such transitions, the proof has to come from objective sources, not subjective anecdotes. Data plays a key role in not just facilitating transitions but improving to raise the bar on benchmarks consistently.
Teams can monitor and analyze data to determine when something like testing processes need to be changed and exactly where changes would be most beneficial. Analytics allows these teams to sense where something is going on in real-time, such as a decreasing trend in checkout conversions, without having to respond to an emergent problem or having to rely on a gut feeling. AI can feed into this monitoring, running models to automatically alert regarding worrisome trends or to identify teams with the most obvious bottlenecks.
Data visibility drives feedback loops, aligns objectives, and reveals opportunities for growth
In the realm of agile corporate culture, organizations often encounter difficulty when scaling from teams to organization-wide. What they need, asserts Piontek, is visibility into data to coordinate and see what's happening. With a single source of truth and metrics sourced directly from daily activities, leaders can see when further changes or testing are needed.
Leaders like Piontek need to be able to monitor people, as well as the portfolio, to manage teams encountering issues. The data created can be used not just for monitoring but to show key stakeholders what you are up against. Customer data sourced directly from production can also supply critical feedback to close the loop. Product managers and feature teams can then more concretely answer questions like: "Did the customer care about the changes? Did they use the product more? Is it easier for the customer to do something like click Check Out on their app?"
Technology capabilities and culture change can, therefore, go hand-in-hand as businesses take efforts to push themselves in a more agile, more efficient, and more profitable direction while giving customers even more to love.
DevOps tools that desilo and provide analytics makes each pilot easier
Retail grew up around the same time Levi's brand did, and then it underwent a profound transformation at the turn of the millennium. Levi's has been incentivized to adapt to new opportunities and respond to emerging challenges. This willingness to adapt is likely the main reason the brand has so much staying power.
When implementing agile corporate culture changes, approach matters but so does having the appropriate tools. Having a centralized place to monitor progress, control processes, monitor data, and report on metrics makes piloting agile changes internally much easier to facilitate, and it becomes much easier to broadcast wins and achieve pervasive buy-in.
Centralizing data and control of the DevOps pipeline is part of the overall process of merging digital technologies and core business areas to create cohesive value streams. Data helps with demonstrating wins, and it has the capability to smooth team performance while predicting possible disruptions or a need for change. With successes like these, IT further reveals it isn't a cost center but a strategic partner in creating and facilitating value streams. Gains then push companies like Levi Strauss & Co. further into the frontier of innovation — while never failing to look to their past for inspiration.
Hear from Piontek directly, and learn how his teams have found success through a combination of culture and technology in our recent webinar: "Changing Culture with Digital Transformation featuring Bret Piontek from Levi’s"