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EPISODE 45

Subscriptions, the Rise of the Prosumer, and Forecasting the Future

With Christoph Schell, Chief Commercial Officer at HP

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The COVID-19 pandemic has turned the world upside down, and there is a lot of talk about when things will go “back to normal,” or whether this is the “new normal.” 

Christoph Schell, the Chief Commercial Officer at HP, is spending a lot of time thinking about what this new world will look like. He’s responsible for setting the company’s path and making sure HP is ready to go-to-market in the best ways possible. How he does that is by looking at emerging consumer behaviors and combining that information with hard data, which leads him to design strategies and solutions that, recently, have needed to be deployed faster than anticipated. 

The pace of change is quicker than ever before, and the five-year roadmap that companies had previously planned for are now taking place in a matter of months. On this episode of Up Next in Commerce, Christoph explains how this acceleration has forced a change in HP’s roadmap and sales model, and discusses why the new plan is so focused on subscription-based services, supply chain resiliency, and data.

 

Main Takeaways:

  • The Rise of the Prosumer: A new customer segment has emerged in recent months — the prosumer, who is a professional who is now working from home but requires enterprise-level capabilities and technology. Companies like HP have had to pivot to meet the needs of this new group, who are being guided by CIOs investing heavily in workflows and increased security for new work environments.   
  • Everybody is an Inside Sales Rep: With much of the world forced to work from home, how business gets done needed to change. This was especially true for sales, which now had to be done fully remote through digital interactions. But working with many retail partners and revamping an entire sales model is no easy task. 
  • All About Supply Chains: Creating a resilient supply chain is one of the biggest challenges companies face today. For global companies, that challenge is made trickier by things like tariffs and other cultural and legal issues that may arise. To become antifragile in the supply chain means to have the ability to assess all your partners from every angle in order to see where roadblocks may occur and if they are surmountable.

 

Key Quotes:

“What we’ve seen now happening in five months is what our plan, our roadmap, had scheduled to happen in five years. This move to digital has been accelerated, the move from transactional engagements to subscription-based engagements has accelerated. The request of customers to have more personalized experiences has increased. And that has a profound impact on how we design products.”

“COVID-19, to me, has created a new customer segment. I call this the prosumer segment. And what I mean by that is that you have employees that work from home and expect enterprise deliverables in their home. Their CIO’s want to make sure that they can work securely and in a compliant way from home. And that required us to think about how we can bring assets that we usually have in an enterprise go-to-market, how can you bring that into individual employee’s home? So that’s the first change in roadmap that you see. A lot of investment into workflow. A lot of investment into security.”

“We have learned how to optimize supply chain for cost. But we had to learn that you need to also optimize supply chains for resiliency. And that is a very complex topic to do that when you manage a global business.”

“We are a company that does close to 88% of our revenue through partners. And what our partners needed to do was to shift their engagement, very often from a physical engagement with a store or a demo room or a sales force to a more digital engagement, to a more call center driven engagement. In the past we talked about having feet on the street sales people and we have inside sales people. Today, everybody’s an inside sales rep. And sometimes they go out and meet a customer, but everything has cocooned back into our employees’ home and the way they engage had to change. So we had to learn how to virtually sell.”

“There are certain things that will stick and I think your talent, your skillset, the processes that you adapt to and the roadmaps of products that you sell, they have to cope. And so the bet that we’re talking about here is an informed bet and basically we’re just looking for what is going to stick.”

“[Subscription services are] like any product. If you just do it because you think you should or you can, that’s not a good enough reason. At the end of the day, it all starts with the customer. You need to hit a nerve. You need to solve for an outcome that a customer wants.”

“Let’s think what subscription’s all about. You are now in an outcome-based engagement with a customer. And I think that is probably a very traditional definition. I think what you need to add now to it is, okay, it’s an outcome, but the outcome needs to be personalized. And if you can do that, then the likelihood of getting and loyal customer engagement, I think is quite high, regardless of what you invest into.”

“The biggest topic is actually how to manage forecasts, how to manage supply chains, how to make sure that we have the right product at the right time in the right place. … We’ve learned a lot and the challenge that we have sometimes is that you cannot just turn on a dime here. We work in ecosystems, in proponent ecosystems and manufacturing ecosystems. And so reacting to that is not easy. You need to pull a big shift of an ecosystem with you. So we’re trying to be agile, trying to be as flexible as we can. We’re trying to communicate more with our customers, communicate more with our go-to-market partners. And basically, we are planning a lot more to be able to cope.”

“Maybe your endeavor for the forecast should not be to be accurate but to have a forecast that supports your game plan. And then you execute the game plan.”

“You cannot be a data-centric company and then have a process that allows for data-centricity to be overwritten.”

 

Mentions:

 

Bio:

Christoph Schell is the Chief Commercial Officer at HP. In this role, Christoph leads all aspects of this global business unit, which aims to drive the Fourth Industrial Revolution.

Christoph has been with HP for over 21 years in total and has held senior management roles across the globe, most recently as the President of HP Americas where he was responsible for HP’s North American and Latin American business across all products, services, and go-to-market.

Previously, Christoph was Executive Vice President of Growth Markets at Philips where he led the Lighting Business across Asia Pacific, Africa, Russia, India, Central Asia and the Middle East. Christoph started his career in his family’s distribution and industrial solutions company and also worked in brand management at Procter & Gamble. During his career, Christoph has worked in all global regions and moved 9 times internationally.

Christoph holds Bachelor’s degrees from ESB Reutlingen in Germany and École Supérieure de Commerce de Reims in France. He is fluent in German, English and French.

Christoph is based in Palo Alto, California.

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Transcript:

Stephanie:

Welcome back to another episode of Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Christoph Schell, the Chief Commercial Officer at HP Inc.

Stephanie:

Cristoph, welcome.

Christoph:

Thanks for having me.

Stephanie:

If it was any other time, I would have you in studio, I’d have you walk down the street to come here but here we are, on Zoom, even though we’re basically neighbors.

Christoph:

That’s true.

Stephanie:

So I want to hear a little bit about your journey. I saw that you have been at HP for more than 21 years which I was like, “Whoa.” That’s a long time. So I want to hear a little bit about how you came to HP and what that journey looked like to becoming a Chief Commercial Officer, which is where you are now.

Christoph:

Yeah. So look, you probably can hear this. I’m German. I started with HP in Germany, in ’95, as an intern. I did a six month internship in the business school that I went to and I worked with HP as a business analyst and then back for another year to school. And yeah, then actually graduated and I wanted a job at HP but HP had a hiring freeze back then and so I went to P&G in Germany as well. And then one a half years into it, went back to HP. Moved with HP to the middle east. I was eight years in Dubai and then Australia, Singapore, San Diego, back to Singapore. Then I left HP again. I went to a company called [Phillips] and I stayed there for close to two years. And then in 2014, came back to HP. This time, in Palo Alto. And yeah, since then I’ve been with HP here in Palo Alto.

Stephanie:

That’s amazing. So what does your current role look like now?

Christoph:

Look, it’s a new role. I mean for all these years that I was in HP, there was a lot of change. But actually, one thing that never changed, we always had the globe organized into three regions. These regions were the Americas, Europe, Middle East, and Africa, and Asia, Pacific, and Japan. And we decided last year that we will change that and we did away with the three regions and moved to ten markets. These ten markets are reporting now into a central structure that we call The Commercial Organization and I’m heading the team of The Commercial Organization.

Christoph:

And we’re basically responsible for all go-to-market, and from category management, we do the product management. We’re responsible for basically the revenue and the margin and positioning the products correctly to get with our marketing teams and global business units. So in a classic marketing term, you would say we manage the four P’s, the four P’s of marketing. And we do that globally.

Stephanie:

Got it. So tell me a little bit about behind the scenes of why you moved the org structure to the ten markets instead of the three regional one. Like what was the driving force behind that?

Christoph:

The driving force to me, and I was leading that project from the get-go when we designed this new structure, was a change that we saw in how our customers wanted to consume our technology and how they went shopping. And actually it’s interesting to see that COVID-19 has accelerated a lot of this.

Christoph:

So a lot of our go-to-market has moved online. Either to marketplaces or to online businesses, these can be partners or even our own store. And customers go back and forth between these. They get some of their information during the journey, on the marketplace, on HP, with the partners. Some of them go obviously to publications, they listen to podcasts. And they form an opinion. And when you want to be there with them all the way, you need to be very consistent. Very consistent in how you show up, very consistent in how you manage additional assets. And very consistent in how you get your value proposition across, globally, internationally. And we thought that the structure that we had of three independent regions resulted in too much decentralized decision taking when it came to four P management but also basically, basic definitions of value proposition.

Christoph:

And so, we centralized this a lot more. We took a lot more control in how we manage it. And that was the big, driving force behind the structural change. There is, hand-in-hand with this, a move to go more and more into subscription-based engagement with customers. And we can talk about this a little bit later. And that’s also a lot easier to do in a digital go-to-market, and digitally engage with customers.

Stephanie:

Got it. Yeah, that makes sense. So you mentioned COVID earlier and I’ve heard from quite a few guests that their tech or product roadmaps that were maybe for three years to come, that sped up into three months. So what kind of changes has HP seen when it comes to COVID?

Christoph:

Yeah, look, I will echo that. I really believe that what we’ve seen now happening in five months is what our plan, our roadmap had to schedule to happen in five years. So there was a huge acceleration. Basically, the way I would summarize it is this move to digital has been accelerated, the move from transactional engagements to subscription-based engagements has accelerated. The request of customers to have more personalized experiences has increased. And that has a profound impact on how we design products. It has a major impact on our roadmap that has clearly changed if I compare from February to now.

Christoph:

But it also has a significant impact in how we think about talent, how we think about culture that we want to build within HP. It’s actually very exciting. The core of our business is around personal systems and printing. And there are categories within personal systems and printing that have become essential during COVID-19. You know, the good-old PC is very hip right now. A lot of people need it to work from home or to learn from home and even home printing which a lot of people stopped even looking at as a desirable purchase, has been coming back in attractiveness. And it’s essential, again, for people that work from home and that learn from home.

Christoph:

And so that helps us a lot to offset some of the headwinds that we see clearly in an office environment with people working from home. Obviously the office business is a little bit neutered right now. So those are the big changes.

Stephanie:

So how are you guys handling these big changes? Like what were some of the biggest pivots that you had to make over these past couple months and how are you aligning team members and everyone around a big cause like that that is probably shifting a lot of the plans, like you had mentioned, and condensing them into a very short time.

Christoph:

I’m going to answer this across a couple of headlines. So the first one is really, roadmap. So if you stay with these essential categories of working from home and learning from home, what is really interesting to see is that COVID-19, to me, has created a new customer segment. I call this the consumer segment. And what I mean by that is that you have employees that work from home and expect enterprise type of deliverables in their home. Their CIO’s want to make sure that they can work securely and in a compliant way from home. And that required us to think about how can we bring assets that we have usually in an enterprise go-to-market, how can you bring that into individual employee’s home? So that’s the first change in roadmap that you see. A lot of investment into workflow. A lot of investment into security.

Christoph:

The second notion under this headline is, when you run an employee’s home, you are also participating in how the family entertains itself. And that gives you a boost in how you think about your consumer value proposition and your consumer roadmap. And so, we saw these two things merging. We had to, in the past for example, a product called Instant Ink. It’s a replenishment service where your printer sits in the cloud and you pay $2.99 or $4.99 or $9.99 a month and you get a certain page amount based on the subscription that you pay. When your ink levels in your cartridges are at a certain level, we will replenish those and send them automatically to your home. So you don’t have to leave the home to go shopping for ink.

Christoph:

And that has, during COVID-19, really hit a nerve and we saw subscriptions going up. Now the cool thing about this is that you build a very loyal engagement with your customers. And the loyalty that we have on this product is really very impressive. We like the numbers and we have really thought about how can we take this and engage on it from an enterprise point of view and satisfying some of the CIO needs of having employees print from home? That’s number one. It requires a bit of infrastructure investments that we’re thinking about how can we take this program and scale it further globally from the countries that we’re in today to get a more complete coverage. So I think that’s one point.

Christoph:

The second point is, around the headline of supply chain. I think, my generation, we have learned how to optimize supply chain for cost. But we had to now learn that you need to also optimize supply chains for resiliency. And that is a very complex topic to do that when you manage a global business and when you produce some of the products that we have, some of the portfolio that we have, we own the manufacturing. Some others, we do that with equipment manufacturers. And so coordinating that, working on strategies and how to, on the one-hand side, still be cost-effective but on the other-hand side, be more resilient, is actually very interesting. And so that’s an ongoing project but clearly something that COVID-19 has required us to do.

Christoph:

And then the third element is how we manage customers and how we allow customers to really enjoy our technology and consume our technology and I said this before, COVID-19 has been for families, but also for businesses, a concern. A concern to their bottom line, a concern to their cashflow. And so moving from Capex investments to apex investments around subscription engagements and contractual engagements is something that is super important right now and we’re bringing those business models to the forefront of our offering. So those are the three headlines I would like to touch on.

Stephanie:

Cool. Yeah, maybe let’s start with the prosumer shift as you call it. I want to hear a bit about how … So you were focused B2B and on enterprises and maybe not as much on consumer prior to this. How did you shift your mindset and really understand what the consumers are looking for and what they need? How did you change that sales model to be more consumer-focused and at home and working at home and learning at home?

Christoph:

We very quickly saw an increasing need of customers to become productive working from home. And it started really with a lot of global accounts, enterprise accounts. Think about the financial service industry. Think about call centers that all of a sudden had to move thousands of people that they had in call centers to working from home. And to do that in a compliant way to the enterprise, in a secure way, with cyber attacks going through the roof during COVID-19 because home networks are not as well protected as our usually office networks. That created an immediate request from our customers to come back with solutions, how can we do that? How can you enable us doing that? And can you please do this in a way that we don’t have to transact with you but we in through a service [inaudible] engagement? That was the very first thing that happened.

Christoph:

The second thing that came right on the heel of that was, hey, we need the kids to go back to school and they need to do this online. How can we do that? What’s the best ecosystem? It’s not just a question of what device you buy but you have to actually think about with school districts, how is it best to move a curriculum online? What’s the best way to partner from a technology point of view, what solutions do we have in the ecosystem? If I think about Microsoft, if I think about Google, if I think about other service providers we have? And then again, how do you package that? In the beginning there was a lot of demand for mobility products. And right now, I actually start seeing a shift to a more desktop products because I think kids and their parents are learning the hard way that if you sit six, seven, eight hours a day in front of a small screen, it’s not very easy to stay focused and concentrate. So getting them the best possible setup to learn, to read from a large display, to maybe have the speaker set, to have a good microphone for voice. All of this becomes very important.

Christoph:

And how did they learn this to life from a business modeling point of view, again, was very interesting. In the US, a lot of the education business is still transaction for us but we have other countries where we are letting kids and school districts consume on a subscription model. And so this is something I think that COVID will further.

Christoph:

So I think those are the two clear items I think that I have seen evolved here in COVID-19. If you then look at our go-to-market, we are a company that does close to 88% of our revenue through partners. And what our partners needed to do, they need to shift their engagement, very often from a physical engagement with a store or a demo room or a sales force, basically there was [inaudible] on feet on the street, to a more digital engagement, to a more call center driven engagement. In the past we talked about we have feet on the street sales people and we have inside sales people. Today, everybody’s an inside sales rep, okay? And sometimes they go out and meet a customer but everything has cocooned back into our employee’s home as well and the way they engage had to change. So we had to learn how to virtually sell. Which is not easy. I mean right now, I’m talking to you with our video off so I can’t read your facial expressions, I can’t read your body language, your [crosstalk] either.

Stephanie:

I’m happy, don’t worry.

Christoph:

It’s one thing to do that in a podcast but imagine you have to sell and you have to engage. So you need complete new skills on how to do that. And we’ve also, I think, had to learn how to become better. Each of our sales consultants become better in social media interactions prior to a call with a customer just to learn a little bit more and to get a little bit more in touch with decision makers of companies.

Christoph:

So just a couple of ideas but that is really playing out right now.

Stephanie:

Well that sounds like a ton. So when it comes to prioritizing things, I could see there being so many things. Like everyone’s popping up now. Like I need security, I need to be able to work from home but my kids also need to be able to be on. How do you think about what to invest in? Because it seems like some of this could go back to maybe a little bit of how it was before. Like kids might start going back to school eventually, people might start going back into the retail. How do you make sure you’re making an investment that’s for the long-haul? Like what are you guys betting on to make sure these are good investments?

Christoph:

That’s a great question. I actually think this is just the risk and the bet that we are taking here. We think that while things will correct in the future, a lot of things will stick, okay? And that is informing the priority that we have from a product, a roadmap point of view, and also from a sales force point of view.

Christoph:

The team and I, when we discussed about this, we think that travel will come back, but it will never come back to the same levels as prior to COVID-19. So that has an impact. It has an impact in how people communicate. It has an impact of how people meet. It has an impact how people design. And overall, how we engage. And so the skillset to invest into virtual selling, into social selling is probably a good investment. Not just during COVID, but it will stick, okay? That’s one.

Christoph:

Then a second one is, commercial real estate. Absolutely fascinating topic, and yes, people will go back to offices but I don’t think that all people will go back to offices. And I think that the people that will go back to offices maybe have learned that they don’t have to go back to offices five days a week. There are certain things that we will do in offices in the future, but there are also things that we will do from home because we’ve learned that, you know what? It’s easy to do. I don’t need to be in a traffic jam, I don’t need to rush to get the kids back from school. I’m at home, okay? I also think that some kids will continue to stay home. I could imagine that college students and more of them will move to online classes because it’s more convenient. In particular, for this generation.

Christoph:

So again, these are certain things that will stick and I think your talent, your skillset, the processes that you adapt to and the roadmaps of products that you sell, they have to cope. And so I think the bet that we’re talking about here is an informed bet and basically we’re just looking for, hey, what is going to stick. I also think that not all of it will happen globally. I think there’s going to be different degrees by markets of how travel will evolve, of how real estate will evolve, how working and learning from home will evolve. But overall, I think COVID-19 will have a cosmic, a really big impact, on some of these things and I think that’s opportunity for tech companies.

Stephanie:

Yeah, completely agree. So you just mentioned globally, and I’m pretty sure that you’re able to see a lot of consumer behaviors across the globe and I wanted to hear a little bit about what kind of trends that you’re seeing. Like what do you see in different areas that’s maybe different than the US?

Christoph:

Yeah. So for me, the most interesting actually when you heard from my intro in the beginning that I’ve spent a lot of time in the Middle East and Africa, in Asia, amazing to see how quickly customers have moved to online business engagement and to services like business engagements. That has happened a lot faster than it has happened in Western Europe or the US. And so that again is something that will stick and it will have an impact on retail structures. It will have an impact on financing of services like business models. Super exciting, but it’s also obviously requiring for certain infrastructure to be in place. I talked about the investment in infrastructure that we are making to bring some of our subscription models to life in those markets. So that is overall a very exciting thing that I see.

Christoph:

I also see that in our partner landscape, there’s consolidation going on. And the consolidation is going on for two reasons, I guess. One is, the overall health of business. And also, the second reason being, that different partners need to get access to different capabilities. Partners that in the past, prior to COVID-19, were focused on value-add reselling for example in the enterprise segment. They have an opportunity to learn how to be involved in consumer business. And the opposite is true as well. Retailers have an opportunity now to be involved in working from home and learning from home and to thinking about a consumerization of IT in the professional world. And both is happening. And it’s super exciting to see. Super exciting to see how different partners are taking different strategies and running with it. We see significant impact on our business lead by global system integrators. These are companies that help the large companies, enterprise companies, with outsourcing projects and outsourcing in certain [inaudible] and certain geographies has become very … Has been increasing quite a lot from a customer demand point of view. And so we see more and more of our funnel and more and more of our business going through global system integrators.

Christoph:

So there’s a lot of movement in the overall go-to-market structure of HP and of the IT industry in general.

Stephanie:

Got it, that makes sense. So move over to your second point about subscription-based services. Everyone wants to create a subscription service because obviously that’s very good for revenue prediction and just good for a business. But not everyone can do it. So what kind of lessons do you have or have you learned around this is how you create a good one, like people actually want this versus we tried this and this is not good. Any lessons there or advice?

Christoph:

I think it’s like any product, you know? If you just do it because you think you should or you can, that’s not a good enough reason, okay? So at the end of the day, it all starts with the customer. So you need to hit a nerve. You need to solve for an outcome that a customer wants.

Christoph:

Let’s think what subscription’s all about. You are now in an outcome-based engagement with a customer. And I think that is probably a very traditional definition. I think what you need to add now to it is, okay, it’s an outcome but the outcome needs to be personalized. And if you can do that, then the likelihood of getting and loyal customer engagement, I think is quite high, regardless of what you invest into. That’s number one.

Christoph:

In order to do that, you need to … We needed to think differently about how we approach our categories. So what I mean by that is, it’s less about the hardware engagement, the hardware sale that we traditionally have in printing and personal systems, but it’s more about, okay, here’s the outcome. It requires this workflow. It requires this software engagement, if you want, and sometimes the capability of the hardware, they take a bit of a backseat because you’re really trying to get involved into a workflow. You’re trying to get involved into some productivity element or an entertainment element that your customer is seeking. So I think that shift in mindset as you design the value proposition is very important.

Christoph:

And then thirdly, I guess you need to adapt the value proposition culturally and by market. So what I described earlier on around Instant Ink. I gave you the US example because we’re both here in California in Palo Alto. If I would talk to you and you were in Germany or you were in France or in Singapore, the value proposition would actually look different. And I think that’s important that you have the understanding but also the technical means to adjust to a cultural environment and to a specific market environment.

Christoph:

Yeah, I’ll stop there. But I think this is very general answer but I think this is kind of the A-B-C of … Yeah.

Stephanie:

Yeah, I completely –

Christoph:

Having a successful shift to a subscription-based business.

Stephanie:

Yeah, I agree. I think COVID-19 definitely helped with that because before all this, even myself thinking about entering into a subscription I’m like, I’m going to forget. Is it going to be worthwhile? But I think now, because a lot of people are at home and they’re trying to make things easier, there’s a lot more things on your plate when you’re at home with your kids and you’re working and all that, it seems like people are more willing and as long as you deliver on that value proposition, golden.

Christoph:

I agree.

Stephanie:

How are you staying on top of, like you were talking about the cultural trends whereas places in Europe, it’s very different there versus in the US, maybe people are more eager to get into a subscription. How do you stay on top of what different cultures want and what’s valuable to them and what maybe is a little bit too far? Maybe like you mentioned in Germany, they might not maybe their [inaudible] information in there or something. I know privacy there is a very big thing whereas here it’s like, okay, charge my credit card and if something happens, credit card company will take care of it. How do you stay on top of that?

Christoph:

That’s actually a very important topic. In particular, when you talk about personalized experiences where we look into customer’s data in order to project what the outcomes are, do they want in the future, and to offer, we call it a second of one value proposition. And we are taking a … When it comes to data, we’re taking a very informed decision, understanding local contacts and local laws. We want for our customers to opt in. If they don’t opt in, of course, we will not be able to give a personalized experience but we will respect the data privacy concern that they have.

Christoph:

It does help to have local teams and local setups in key markets so you have your finger on the pulse. We obviously have as well very capable teams that think about trends, design our global business units. And it also helps if you have the ability to not always go and launch a program globally at the first instance but if you start in one market and have a pilot, pause, fine tune a little bit, and then go for a rollout, that can actually be quite beneficial. So I have quite good experiences with that.

Christoph:

But you are absolutely right. Understanding the local context, understanding the local laws, understanding what is culturally acceptable, beyond laws even, is very important.

Stephanie:

Yeah. I think having people on the ground who can kind of guide you on that, definitely the only way to go about that. So how are you approaching holiday season? Like what kind of things are you changing that maybe you had a plan six months ago but now is completely different? What are you guys doing around that? Or what trends do you see happening around the holidays this year?

Christoph:

The holiday season is super interesting because I think it is flavored by how COVID is actually being managed by certain countries and by certain markets. We have a very different playbook by markets because we see in some markets COVID coming back in the second wave and some maybe even a third wave, you could argue. And by the time Black Friday and holiday approaches, that will definitely be the case. And so how do you manage holiday in that context where supply chains can be disrupted. Where you might have another lockdown. Where also then, whenever that happens, all of a sudden the essential categories I’ve talked to you about earlier, they will come again, even more top of mind from an essential point of view because kids understand, okay, this is going to last longer. We’re going to be at home. Parents understand, okay, the office is not going to open up in my city, in my country, I have to have better equipment.

Christoph:

And so you see this constant, very fluid situation, on demand. And so for us, the biggest topic is actually how to manage forecasts, how to manage supply chains, how to make sure that we have the right product at the right time in the right place and of course, I could have said that before COVID but all the historic data that we had on this, is kind of obsolete. All of that is up in the air because of COVID. We’ve learned a lot and the challenge that we have sometimes is that you cannot just turn on a dime here. We work in ecosystems, in proponent ecosystems and manufacturing ecosystems. And so reacting to that is not easy. You need to pull a big shift of an ecosystem with you.

Christoph:

And so we’re trying to be agile, trying to be as flexible as we can. We’re trying to communicate more with our customers, communicate more with our go-to-market partners. And basically, are planning a lot more to be able to cope. But ask me that question again in January, after this over because clearly, I don’t have a crystal ball either on how all of this is going to play out. So it’s all about being agile.

Stephanie:

Yeah, completely agree. Well how are you guys going about forecasting? Because we did have an earlier episode where the guest kind of mentioned don’t even try to forecast certain scenarios because you don’t know what’s going to happen. You can either just … I don’t know. It’s different ways of thinking around forecasting where he just said don’t try and place it on those scenarios. Like if this happens with the election, this will happen. He said all of that doesn’t really matter. What are your guys’ viewpoints on creating a forecast that can at least guide you in the right direction, even if it’s not right?

Christoph:

Yeah. Very good point. So maybe that’s exactly the point. Maybe your endeavor for the forecast should not be to be accurate but to have a forecast that supports your game plan. And then you execute the game plan. And I actually think that’s at least how I think about it. That’s number one.

Christoph:

Number two, we are … We did do scenarios for Black Friday and for holiday. We have to. Just to come to an agreement of what products we will sell and what go-to-market in what country, what does this mean from a component point of view. What does it mean from a factory point of view. What does it mean from an ocean shipment and airplane capacity point of view? So we need to have scenarios. We cannot just leave that open. But interestingly enough, we tried not to boil the ocean. And when it came to how many different criteria do we use in coming up with this forecast? We centered very much around COVID and how COVID might play out in different markets from a timing point of view and from a consequence management point of view. We are going to be more lock downs or not. The kids go to school or go to school from home. Scenarios like that.

Christoph:

We also learned that from a component point of view, different countries have been impacted in different ways during COVID. Manufacturing capacity went up and down in different manufacturing countries of ours based on how COVID rolled out. So trying to anticipate that is very important too. I hope that answers it but unfortunately, we did have scenarios. There’s only three but we had three scenarios.

Stephanie:

Yeah. I think that the way you guys are going about it is really smart. Not getting too much in the lead and having higher level themes around the scenarios because I can just think about the number of models that I built back in my finance and product phase and it’s like one person could question one little variable like oh that shouldn’t be 10%, that should be 15. And it got too much in the weeds and the conversation would always go astray and sort of like you said, kind of keeping it at higher level things that you can influence, would actually give you some kind of scenarios that could be semi-correct. So seems really smart.

Christoph:

You said this much better than I did, yes, thank you.

Stephanie:

The third thing I want to touch on, because I can tell, you are so excited about supply chains. So I wanted to touch on that a bit about making your supply chain anti-fragile. Like how are you guys … Like how were you before COVID-19 and what does your supply chain look like now? Where are some of the big changes you made that are making you more resilient?

Christoph:

It’s actually interesting because already prior to COVID, we had to think about our supply chain strategies because of tariffs. And so that was actually quite a good preparation for COVID because we kind of learned about different options from a supply chain point of view and moving to different cities, moving to different countries, using different logistic strategies, not just ocean and trucking and airplanes but also looking at railway. It’s really interesting, interesting scenarios.

Christoph:

And what COVID then did is kind of play a filter over this possibilities that you have from a resiliency point of view, okay? Which countries and which geographical setups have been coping with the pandemic better than others? And that actually had a material impact on supply chains. It still has material impact on supply chains.

Christoph:

And so now we’re looking at all of this, we’ve made some moves already, but I think if this project is just started really, it’s something that we have to continue to work. It’s also not easy just to move from one factory to another. It takes deliberate planning. But I really believe that in a weird way, the whole tariff discussion gave us a bit of a headstart in thinking about how to disrupt our own supply chain for print.

Stephanie:

Yeah. It seems like it would be pretty tricky figuring out, is this partner going to be resilient and agile, especially if you’re starting from scratch with someone new, like building out some new partners. How would you think about finding a partner that you can trust if you haven’t worked with them before?

Christoph:

That’s a very good point, maybe even at a higher aggregated level countries. You can have a very good partner, somebody that is super resilient, but if the government in the country where they operate doesn’t allow them to manufacture, then that’s that. Okay? So it becomes very complex very quickly. You can have a country that wants to manufacture and a partner that is very capable but if the components can’t be shipped to the factory for whatever reason, you are head in the water again.

Christoph:

And so looking at this holistically, assessing country risk, secondary component supply risk and then forming a strategy is super important. Of course, when we do this, we have a very elaborate process to qualify suppliers and to qualify component suppliers as well. I think that COVID-19 has sharpened our senses a little more again.

Stephanie:

Mm-hmm (affirmative). Yeah it’s probably good to have a little bit of that. We’ll shake up every once in a while to make sure all the internal practices are good, right?

Christoph:

[inaudible 00:35:10], yes.

Stephanie:

Yeah. So what kind of … What do you think the future of online commerce looks like in the next year or in the next five years? What other things are you guys preparing for right now?

Christoph:

I’m super impressed by what I see marketplaces doing for our businesses. So it’s not just in a business to consumer environment but also be in the business to business environment. In the US, we all daily in touch with these marketplaces be it Walmart or [inaudible 00:35:44], anything with a [inaudible 00:35:45]. Or Amazon. But that’s a very US-centric viewpoint. When you look a little bit more globally, there are also other marketplaces. In Southeast Asia, there’s a marketplace called [inaudible] that I think is very interesting. In China, you have Alibaba or JD.com for us that are very interesting.

Christoph:

And at the end of the day, it’s super amazing to see how the idea of having tailor-made value propositions to your customers, how marketplaces are dealing with this, how they’re dealing with being very customer-centric, moving to a subscription-based business models, moving to outcome-based business models. Anticipating what the customer wants to experience next and what they want their outcome to be next. So I think that is setting the bar, I think, in our go-to-market and it is setting the bar on how close you can be to a customer. So what we require to do is, we obviously participate in these marketplace opportunities but we’re also keen to learn and think about how we can get to the sharp partners involved. And also get our own direct go-to-market [inaudible] involved. And basically think about how we think about the relationships that we have with customers but also with partners. And so, we recently launched a new channel partner program and said early on that we do close to 88% of our business through channel partners.

Christoph:

And in the past, we defined the relationship that we have with partners basically based on two pillars. One was your overall performance your overall size of the relationship that we have from a business point of view. And the second pillar was really around capability, think about certification for example. And we left those. They continue to be important. But we added a third one. And that third one is really collaboration. Collaboration on going to market together, going to market in services-lead models. Going to market by sharing important information, obviously with customers opted in. In order to be able to move to subscription and outcome-based services. And so that is a Herculean task to do that across the tens of thousands of partners that we have. Across the whole global coverage that we have. But it’s also super energizing to have discussions with partners and to see what their capabilities are. And as I said to you, I think prior to COVID, launching that third pillar would have been a very tough sell-in into my partner landscape. But with COVID-19, everybody gets it. So everybody understands why this is something that we need to evolve on together and why our customers are expecting from us.

Stephanie:

Yeah, yeah that makes sense. So with all these changes that you guys are experiencing, what kind of new metrics have you started to have to review that maybe you weren’t reviewing before?

Christoph:

Oh my God.

Stephanie:

Your favorite ones that you want. Doesn’t have to be every one.

Christoph:

It’s a great question. The biggest challenge is that yes, you have data from these digital footprints that your customers leave behind but which of these data are really important? How do you use the data? And let me maybe say this, the data is interesting, but what is fascinating is how you get to the data and how you treat the data. What I mean by that is, a lot of companies, they do A-B-C testing but then it’s some executives that can overrule the results of A-B-C testing.

Stephanie:

[crosstalk 00:39:41].

Christoph:

Exactly, based on the gut or user experience or whatever. But that’s actually a problem. So I think you cannot be a data-centric company and then have a process that allows for data-centricity to be overwritten. So that’s number one and that requires actually a huge cultural shift.

Christoph:

The second cultural shift is on and around data analytics. And I think we had to really double down on data analytics and capabilities within the company both from an employee skillset point of view, but also from a digital transformation point of view on the tools that we use and the infrastructure that we use. And I think nowhere is this more visible to me, the progress but also still what we’ve left to do than it is on pricing, one of the four P’s. We’ve come a long way, but more to be done here. So I think that has a significant impact and I think COVID-19 has explained this even more, informed us even more.

Christoph:

And then the third piece is really this personalization and I think we’re starting to offer more personalized experiences. This is clear in the future of where we want to go. And doing that in a partner-based go-to-market where the partner owns the value proposition together with HP to a customer, doing that consistently requires a lot of collaboration. So this is why this third pillar in our HP amplified program is so very important.

Stephanie:

That seems really tricky –

Christoph:

Yes.

Stephanie:

… trying to make sure the partners are able to personalize the experience based on their platform and how they know their customers. Like how do you ensure there’s a level of quality and that they’re actually getting an experience that you guys want while also letting the partner influence it based on what they know about their customers?

Christoph:

Exactly. I think that last piece is very important and it’s a joint responsibility if you have an indirect go-to-market. And so we have some part of the information, they have some part of the information. We have a clear understanding about what our brand stands for on what value proposition we want to drive, but they need to … It needs to match their philosophy as well. So being in close contact, having good communications around that is super important.

Stephanie:

Very cool. All right. So let’s shift over to the lightning round, brought to you by Sales Force Commerce Club. This is where I’m going to ask a question and you have a minute or less to answer. Christoph, are you ready?

Christoph:

Wow, okay, yes.

Stephanie:

Yeah. I know it’s 5 o’clock but bring that energy, all right? I’ll start with the hard one first. What one thing will have the biggest impact on ecommerce in the next year?

Christoph:

What one thing would have the biggest impact on ecommerce in the next year?

Stephanie:

Yep, only one.

Christoph:

COVID-19.

Stephanie:

Yeah, I would think COVID-19. Everyone says COVID-19. So is there anything else that you want to say?

Christoph:

I guess probably the stickiness of what we’ve learned during COVID-19. So even when it’s over, how much of work from home, how much of learn from home will stay? And how much more blending will we see between consumer and professional lives into this prosumer segment. I think that will have a huge impact. And as I said truly before, I think this is here to stay.

Stephanie:

Okay. I like that. What’s up next on your Netflix queue?

Christoph:

My Netflix queue? That’s a very good question. I moved out of Netflix. I’m currently watching Succession on HBO. Quite entertaining.

Stephanie:

Okay, that works. I will have to … Is it good?

Christoph:

Yeah, it’s good in a weird way.

Stephanie:

Okay, I’ll have to check it out. What’s up next on your reading list?

Christoph:

On my reading list … So there’s a book that I really want to read. It’s in German. It’s about the Weimar Republic. So that’s a period in Germany between the two World Wars. And my wife just did a college course on that and it’s intriguing. So I’m going to read that book about the Weimar Republic. I’m not yet sure exactly what to expect but it’s something that I really focused on when I was in high school so I would like to go back to that.

Stephanie:

Very cool. If you were to have a podcast, what would it be about and who would your first guest be?

Christoph:

It would be about drumming, because I play the drums. And it would be a famous drummer. I mean maybe Ian Paice from Deep Purple or Jess Drummer, the [inaudible] maybe. I don’t know. One of those guys.

Stephanie:

Is it just maybe drumming the whole time? Like I can do that. I’ll do that for you. I got you.

Christoph:

Well then you can be on the show, that’s great. You can be my first guest.

Stephanie:

I don’t think many people would listen after that. They’re like this is what it is? Okay.

Christoph:

You never know. Maybe.

Stephanie:

Everyone likes something different I guess. What new ecommerce tool are you trying out right now that you are loving? Anything come to mind?

Christoph:

Well I’m trying to shed all that weight that I gained during COVID so I have this. Ecommerce tool is maybe too much to say but it’s a diet app and I take pictures of all the stuff I ear. So it’s actually quite entertaining to relate the calories to the pictures and doing so slows me down on my eating habits which is great. It’s all good.

Stephanie:

Oh my gosh. I mean, yeah that might not be an ecommerce tool but I like it. So it tells you you just lost … Or you’re eating this many calories and it looks like this and it shows you a piece of food like a bag of chips or [crosstalk] –

Christoph:

Exactly. You take a picture and then it suggests how many calories that might be in there and that in itself is such a negative experience that you stop eating.

Stephanie:

You’re like, ugh, maybe not. I like that.

Christoph:

I’m not hungry anymore.

Stephanie:

All right, now last one. When you can travel again, what’s up next in your travel destinations?

Christoph:

Oh my God. I would really need to show up at my parent’s place. That wouldn’t be too bad. And then Germany. So I would love to see family in Germany. I also wouldn’t mind going skiing in Canada, if possible.

Stephanie:

That sounds great. I need to get back to Germany too. I have a lot of family there, so …

Christoph:

Good.

Stephanie:

Very pretty place. All right Christoph. Well this has been such a great interview. Thank you for coming on the show. Where can people find out more about you and HP Ink?

Christoph:

All right so look, if you want to be in touch with me, please try and find me on LinkedIn. I spend a lot of time on that platform. And obviously, if you want to learn more about HP, please go to HP.com.

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