Stanley Black & Decker CEO discusses company's A.I. journey
CEO Jim Loree highlights the digital transformation of his company beginning from 2015.
to start off jim I just want to ask you to kind of walk us through the ai journey, a family black and decker When you came into the ceo job and that was 2016 uh where would you say the company was as far as ai machine learning and you know, where did you hope to go? You know, I would start when I'm just starting with the digital transformation, if you think back to 2015, you know the world was talking about like every manufacturing company, you know, every non tech company was starting to understand that this was going to happen and we were either going to be conversant and proficient or we were going to be left in the dust and that's we felt that way about IOT, about aI machine learning and you know these things kind of came out so fast and became much more central to the mission, you know, and the sustainability of the company. So we kind of tackle digital as one big series of sub topics if you will, and Created a center of excellence with about 50 200 people at different times down in Atlanta and we had a segment for IOT and one for machine learning and data and analytics and that kind of grew over over the years and now we have hundreds of people working in these different areas, incorporating them into business models, but it's it's been a very progressive methodical effort over the last five or six years um and talk about some of you know what you have been tackling with, you know the ai that you were using machine learning, like what were some of the parts of the business that you were directing that towards? Well we we came upon 2017 and then 18 and 19 and we had some really significant headwinds from a business point of view that we're exogenous in nature, but we had tariffs, we had foreign exchange dollar strengthening and some early signs of inflation and those three things added up to a billion dollars Of margin impact, you know, in that in that time frame and we were going up against like 300 and 400 million a year of this, of this kind of headwind. And we were thinking well we've done all the traditional things from a value creation and the cost take out that we would normally have done over the years. And we got the idea that let's harness the energy of this digital transformation center and directed at all the value pools of the company and we said let's go find a billion dollars, you know, maybe like 100 250 a year to offset some of these things. And so we had a lot of practice during that time frame. And it turns out that those use cases and some of the applications that we developed would really, really successful in terms of making us more resilient, making our performance more resilient during that time frame, Nice timing for that to be happening in the in the run up to the pandemic definitely was a warm up for the for the big one, yep. Um and and the cash you you came on board last year um as the first ever chief Ai executive at the company. Um what was it that appealed to you about that opportunity? So basically I had a great conversation with Jim and with other executed leaders of the company and the amount of commitment that they displayed and understanding of AI and what it could do to transform the business was with them. And that basically clinched the deal for me. And you know, to that point, I guess how did the two of you work together? Like what's the relationship, like what level of detail are you talking about some of these, you know, technical issues with each other? Well, maybe I can start. So, you know, I think my job is largely directed at coming up with a strategy and in this case the strategy was we need to penetrate ai and advanced analytics and contemporary eyes the company if you will in that regard. Uh and so, you know, that's kind of an amorphous topic for somebody, you know, that's running a mechanical company at least what used to be a mechanical company. And so we said, look, we said to ourselves at the senior level, let's get some expertise in here and let's give them the mission to define our path, which they did. And then, you know, the of course the resources were allocated because that's another function of of my role and then, you know, the key is at that point empowerment, empower the folks that know what they're doing to go make it happen and there is where you came in. Yeah, so basically the amount of support and the empowerment that I'm getting from the execution chamber and others has been phenomenal. And basically we are taking A I data and advanced analytics and thinking about it holistically across the company and that's why it applies to every business unit and every functional unit. And that involves basically dealing with all the business leaders and there's a close involvement with all the business unit presidents as well as the functional unit leaders and then working with the students to see what is the value, How how can you financially characterized the value and how do you get to the billion dollar numbers that jim has uh set the vision for us. Um I want to open it up to questions because I see that we already have one um over here, if you could introduce yourself please. Hi, this is a bit of a gravel from Alix Partners. Great journey so far that you talked about in terms of in the last five years now that you are at a critical point, you have a chief AI officer and the team. What what is forward, what are the challenges you're expecting for this such large organization to move going forward? Well, you know, one of the things about AI and technology in general, but it is really there to augment human resources and so we started this uh and vice versa by the way And so we started this uh we refreshed our operating model at the beginning of 2020 and at the center of the operating model we had a simple concept which was people plus technology. And there was a time when I thought about this and I thought about you, maybe I'll just put AI in human resources and change the name of human resources to resources because when you think about it, you know, it really is the interaction between humans and the machine learning and so on. That is uh the key. So in the future and then you think about how how pervasive, you know, human resources and technological resources are in every facet of the organization, business models, products, functions, you know, and so we in the future we need to have the capability and the competence in this field both in the present and also as the future develops to make sure that we are leveraging it in every way possible to create value for the company. That's how I think about it. Yeah. And to add to that point where when I was hired, it was I was reporting to the chief HR officer and this is the first time I ever worked in the HR organization. Very strange. But to Jim's point, the goal is that you want a I and people to work together and now I'm out of the child organization. But I do see going in the future, this is going to be the most important thing and I would not be surprised if I'm back to their charge. Yeah, I think what they did with the people, you know, on my team, they're kind of like Jim is a little crazy putting that in HR So why don't we just take it out and not tell them?