695_Mike Feliton === Introduction --- Peter High: Welcome to Technovation, I'm your host, Peter High. My guest today is Mike Feliton. Mike is the Chief Information Officer of Crocs, a role he's held for more than three and a half years. Crocs is a leader in the casual footwear category and builds itself as a brand "of the people, for the people." During Mike's tenure, the company has grown from roughly a billion in revenue to nearly 4 billion. I look forward to hearing more about how IT has stayed ahead of this growth, supporting a company that is changing rapidly. I also look forward to understanding how he's managed through acquisitions, geographic expansion, and the like. Prior to his current role, Mike was the Chief Information Officer of David Yurman for nearly three and a half years. Mike, welcome to Technovation. It's great to speak with you today. Mike Feliton: Peter, thanks for taking the time to speak with me. Peter High: That's a great pleasure. Overview of Crocs's Business & Mike's Purview as CIO --- Peter High: Well, Mike, let's begin with Crocs. I'd imagine a lot of folks listening or watching right now would be familiar with the brand, perhaps have a pair of Crocs somewhere in their house or maybe on their feet right now. For those who are less familiar with the brand, take a moment to offer a bit of an overview of it if you would. Mike Feliton: Well, as you mentioned, Crocs is a world leader in *innovative casual footwear* and our icon is known by everybody. We stand out, we are the *market leader in the cloud category*. We also have a *diverse offering in footwear and sandals*, and that is a growing market for us as well. Recently, we *acquired the HEYDUDE* *business* which is also growing leaps and bounds over where it was, so all the *brands are exceeding expectations* and we have *got to be as agile* as we can possibly be to *stay ahead of this* *consumer demand*. Peter High: That really sounds like a very dynamic space to say the least. As I mentioned even in the introduction, a lot of change that's happened across your tenure as well. Talk a bit about your role as chief information officer, if you would, Mike. Mike Feliton: I am *responsible for all of the technology that runs our business from the accounting, warehouse management platforms, everything from with the exception of the digital team* which is run by our *Chief Digital Officer*, everything from HR, payroll, accounting, financial, order management. Basically, everything falls under my purview as well as *cybersecurity*. Role Technology Plays at a Tactile Company Like Crocs --- Peter High: Understood. Talk a bit about the role the technology plays in an organization like this. Obviously, as you mentioned, the iconic products that the organization has are themselves very tactile, you're producing shoes, sandals, for example. Talk a bit about the role that technology plays in order to bring all that we know to life. Mike Feliton: Well, it's been pretty interesting. I *joined in early 2019* and the year before, *Crocs was a 1.1 billion business*, which was very successful in and of itself and *growing at a modest rate*. Once 2019 hit, we went into the afterburners and this *business started exploding*. We went from *1.1 to 1.2 to 1.4 to 2.3, and then to 2.6 billion* so if you take our 2019 to 2020 growth, we almost grew a billion dollars. If you take a look at where we were in '18 to 2020, it was a different company. The business has grown, the *product portfolio was enhanced*, our markets and collaborations and our partners were growing, and the business became much more agile. *We were growing in China, we were growing in the US, we were growing in Europe*. We had to be *as agile on the IT side to support that business growth*. The traditional days of IT and managing an ERP system shifted pretty dramatically at that time. Coupled with the fact that COVID hit and the *shift from working in an office to working remote and managing your data became a huge change for us*. Over the past couple of years, Crocs has changed in the way that we work, in the *product offerings that we have, in the countries where we do business pretty dramatically*. Just looking at us as a 1 billion dollar company to now bumping up when you take a look at the Crocs and HEYDUDE companies together, bumping up against 4 billion. *With growth aspirations for the Crocs brand alone to grow to 5 billion by 2026 and the HEYDUDE brand to be equal to Crocs in size by 2026 is pretty astounding.* To enable that growth, you really need to *focus on agility* and not get bogged down in all of the different things that typically we get concerned within IT, and *taking risks along the way*. It's been quite a transformation, quite a journey and just being able to pivot quickly has been incredibly important to us. Facilitating Agility at Crocs --- Peter High: Talk about some of the levers at your disposal to facilitate and bring about that agility that you referenced, Mike. What are some of the practices that you instituted in order to bring life into that vision? Mike Feliton: *In 2019, we set a standard of everything that will be built on secure foundation*. From that, we *embraced the Cloud.* As much as possible and we've *moved all of our systems into the Cloud*, we have *nothing on premises* at this point. Then, as just a practice for the organization, the *focus on delivery*, the focus on making sure that you understand what the job is and getting it done on time, on budget, and those are things that everybody thinks about but they're just the fundamentals of running a shop. Whether it's IT, product, finance, meeting your goals on time is pretty much a requirement for running any kind of business. For us, *focusing on security, delivery, and then putting a portion of our jobs on innovation has helped us with the standards on how we move forward*. Couple of that, we *shifted from a view of everything being in a single ERP to now our state is looking at data as a real asset* for us, be it from a reporting perspective and an integration perspective. When we look at the systems that we're running, *we're not building everything into a single ERP system, we're looking at user experience of finding the best product for the user and the task at hand* and then *integrating that into our data link* that helps us with managing everything that we need to deal with. For instance, when we went through this HEYDUDE acquisition, we were able to *merge them into our overall corporate platforms* within a few months. I would say overall, we *started reporting within the first 30 days*. *We migrated all of their infrastructure into ours within 15* and we were closing the books for that first quarter, which was about 40 days away in our corporate platforms. *Leveraging data has been essential for us to be nimble, quick, and actually help the business grow where appropriate.* Peter High: Very interesting. I appreciate that overview. Scaling Teams as the Business Scales --- Peter High: I wanted to also ask you the scale of your team in an organization that is nearly quadrupled. Has the team also quadrupled? I'm curious also, what sorts of new skills have come about as a result of the need to think a little bit differently in an organization that's vastly different from the one you found? Mike Feliton: I will tell you I have one amazing group of professionals who work for me. They're all dedicated to Crocs and HEYDUDE as brands. They invest a lot of time, *but we have not necessarily grown our organization*. As a matter of fact, I think it's come down a couple of headcount and the way we're able to do that is *embracing our vendors*. *Having the vendors as part of your community, considering them as part of your team, including them in quarterly business reviews as opposed to separating yourself has helped us with scaling up, has given us the ability to tap into additional resources when needed* because every IT shop, we all bump up against that capacity of what you can deliver based upon who's free, what resources available. By extending my network and leveraging my vendors, I don't necessarily have that same limitation. My team, the *Crocs-badged employees, they manage the vendors* and they do a phenomenal job of it to make sure that we're delivering where appropriate. Now, we're able to run 10, 15, 20 projects that are huge in scale in any given year, where back in '18 and '19, we could only manage about 4 or 5. It was a pretty dramatic shift and it *empowering the team to take that leadership role* has facilitated us to make that shift as well. How Vender Relationships Facilitate International Growth --- Peter High: Has it also facilitated international growth? I know, for example, you're growing leaps and bounds and other geographies, Europe, for instance, you shared with me last time we spoke as well. Talk a bit about how that expansion and perhaps those very relationships with external parties have enabled you to support the growth geographically as well. Mike Feliton: Well, starting right up front from a *cybersecurity perspective*, *embracing a partner to help us with scaling out the business to have eyes 24/7 on our environment was absolutely essential for us to make sure we're protecting our data*. When you focus on that data, the integration, systems, and you think of it as an asset, partnering with somebody who can keep that data protected, in your organization and your special IP protected, becomes pretty important. Having a partner that can actually do that, as opposed to hiring a whole team of cybersecurity specialists, was a huge shift for us and the right one for us to make. Once we had success in that area, then taking a look at things like our *management of our ERP systems, management of our warehouse management platforms,* and putting them in the hands of professionals who have 24/7 support was pretty groundbreaking for us because we tried to do everything internally. *Shifting to that extended network and trusting those partners to make sure that our systems are running 24/7, 365 was a huge win for us. Our system availability went up over 10%, our cost, believe it or not, have come down*. Because it costs for not just the system itself, but the people that you employ. If you have to employ a ton of individuals to manage what you can just extend your maintenance agreement with your vendors, you actually end up in a better space. Additionally, it keeps you ahead with up-to-date on the latest security patches, latest patches for your innovations, and dealing things with like international trade and whatnot, it just becomes so much easier. *If you try to do it all internally, you don't necessarily have all the expertise*. Leaning on them helps making sure that you guide your direction the right way and make the right decisions for your organization. Integrating the HEYDUDE Acquisition Into Crocs --- Peter High: Very interesting. You talked a couple of different times in your responses about the HEYDUDE acquisition, sounds like a really fascinating one. As you noted, one that's growing very rapidly unto itself, but a division of it being an equal revenue-wise, to Crocs, generally speaking. I know from our past conversations that they had a very different IT landscape, a minimal infrastructure, smaller ERP, and other kinds of core technology. You mentioned the integration of that organization in which it sounds like it went very successfully. Talk a bit about that process in a bit more depth, if you don't mind, of how you thought about that integration, obviously, in some ways, perhaps less complicated. As much as they had not grown up complicated, complex infrastructure that you needed to weigh, which was going to win and which was not. Nevertheless, I'm sure there were still a lot of complications in terms of thinking how best to weave them into the broader fabric of Crocs. Can you share a bit more about some of the approach there? Mike Feliton: There's a lot to unpack there. I'm going to simplify it as much as possible. Peter High: Thank you. Mike Feliton: I'm going to come back to data again. With the acquisition,* every business in the wholesale, fashion, footwear space has to deal with the same kind of customers*, we had an *overlap*, very *similar product*. We still make footwear, we have the same PLM, *Product Lifecycle Management* systems. As you start to think about the *strategic advantage for our company, it's not the systems on the back end, the strategic advantage for Crocs and HEYDUDE is our product*. It's the *innovative way* that we bring our footwear, the *injection molded comfort*. With HEYDUDE, it's the simplicity, in the upper, the simplicity in the sole, how comes together the ability to shift and *focus on our icons*. We have the Clog, we have the Wendy and the Wally, and focusing on them is our strategic advantage. Once we separate that out, then I can come back into the data and the process and booking an order, receiving it, allocating it, shipping it, billing it. That's not a strategic advantage for us. *We focused on the data*. Then, the *simplification of the processes to ensure that where appropriate, we consolidate that with the way Crocs runs its business*. As such, we have ground rules for how the business is going to run. We know the answers before we even start. Leveraging Mike's Experience as A Consumer to Enhance the Experience in IT --- Peter High: Very interesting. Yes, I also wanted to ask you, yours as a business and actually several of the businesses you've been a part of, you have the advantage of being able to be a customer. There's some esoteric business-to-business organizations where executives aren't themselves buyers of the products. I wonder if you've had a chance to reflect on that very fact that you have a presumably a personal relationship with the products themselves. You are, in fact, a customer and can relate, therefore, more strongly to many others who are also your customers and how that reflects into the way in which you think about what you do from an IT perspective to perhaps make that experience all the better, ultimately, for customers. Mike Feliton: I will say that's one of the things I love about the Crocs brand and the apparel footwear space in general. *When we talk about the customer experience, it becomes very tangible to us because we live it. We wear the product, we are consumers*. As such, when it comes to enhancing that customer experience, be it shopping on the web, or in our brick-and-mortar stores, I can put myself in my own shoes, and see what it's like to actually experience what's going on. Then, as I take a look at every experience that I go through, *figure out where to enhance it,* where are the opportunities to do things a little bit different, to raise the bar, and we bring that into our town halls, we bring that into our communications, and *we're constantly looking for ways to increase consumer engagement, increase that customer experience*, and just make it a little bit better every day. Peter High: That's really great. Maturing the Data Strategy at Crocs --- Peter High: You've mentioned understandably, in a couple of different points of our conversation, the sanctity of data, and the importance of it. Everything from the integration of HEYDUDE, to important ways in which you've organized your team. As you think about your own evolution and maturing of data processes, data strategy within Crocs, can you talk a bit about some of the ways in which that's happened, whether that's the means by which you are gathering data, master data management, sort of an overall sort of philosophy you're developing around data, the talent associated with it? What have been some of the key ingredients to ensure that you're getting that right? Mike Feliton: *The biggest thing was getting the team right*. There's a lot of technology you can select from and we feel that we've selected the best technology for us. *Getting the people who understand what the product is, where the systems of record systems of entry are, and then putting together governance process around it*. We're clearly all talking about the same thing. Interesting story is when we started putting together our data layer, we had a simple question that we thought we'd kick it off and just try to define *what is gross revenue*. I think that's a pretty simple, straightforward question. *It took us two months to clearly define gross revenue as a metric. *As you go through and start to decompose all of your data elements and where it resides and what system it's in, once you crack that code, then everything else becomes easier. Then, centralizing that data into one repository where people report on, which is our data layer. Makes everything else so much easier, *because now we're all talking the same language*. Once you're all talking the same language, and you're talking about geographies, and everybody knows the same break up with a geography. *When you're talking metrics, be it revenue, or cost of goods, and everybody has the same definitions*. We don't go into meetings anymore, where we're butting heads as to your number's wrong, my number's right. That's behind us. *We get right to the meat of the conversation*. Additionally, we're able to make *fact-based decisions* on where we're going to make our investments, which is incredibly important. With the way that we're growing and things are scaling, we've talked about different warehouses and different operations opening up and figuring out how to set priorities. Traditionally, it used to be asking the business, *what are the priorities and where are we moving for? Now, we can actually take a look at what is the revenue opportunity tied to this up, tied to this initiative*. That's helping us make decisions as to where we invest our time and resource. Tech Trends --- Peter High: Also, a great overview, I appreciate you sharing that perspective, Mike. I wanted to ask you, as you look to the future, what are some trends that really excite you? What are some of the things that are beginning to make their way on your roadmap that you think are going to have that perhaps will be sort of difference makers for the organization? Mike Feliton: One of the key ones is *machine learning and RPA, robotic processing*. *Coupling that information together and having systems automatically do things for you, based on scenarios or metrics or key indicators are things that can really transform the way we work and enable the business to move faster*. Additionally, an area where those two technologies are a little more mature is in the *cybersecurity space*. A simple thing like noticing when a brute force attack is hitting your organization and being able to shut that down before any of your employees have to get engaged is essential because we can cut it off before anything starts to explode. Taking those same learnings on machine learning and then applying it to what's happening in the supply chain and taking actions with customer orders and commitments and proactive communication measures is something that we're looking at, we're already dipping our toes in the water to see ways that we can employ those technologies. There's a number of technologies to do it very well. I don't think there's any one solution that we're going to subscribe to wholeheartedly. We're probably going to take a couple of different things and see what works. In the end, there's probably *not going to be one set of end AI or RPA tools that we stick with*. We're probably going to have an *assortment of them* because they all seem to do different things slightly better than-- like some are better from the back end, some are better from the user experience side. Based upon the use case, you have to make your decision on that. *Staying so stuck in a one solution, and that's all we're going to use as an organization for us would be limiting*, opening up and saying, within reason obviously intolerance and putting some governance around it, opening it up gets everybody engaged, and it's not just the IT department making the decision on what technologies we're going to employ, then I'm getting ideas from everybody throughout the entire business to find ways to plug in and automate and make their job simpler, which as a result makes this company more efficient. Keys to Mike's Career Success --- Peter High: Very, very interesting points you raise there. I wanted to ask you here at the close also, Mike, I mentioned in the introduction, you're a chief information officer multiple times over have been in the tech world for quite some time. I wonder if there are any secrets to your success in your rise within the corporate structure to roles of executive responsibility now multiple times over. If you were to offer advice to your younger self or maybe to younger members of your team who might wish to walk in your footsteps to a chief information officer role or something like it, what are some of the things that have been the, as I say, the difference makers along the way for you? Mike Feliton: I really believe that *relationships are the most important thing in anybody's success*. As I reflect back on my career, there's a lot of *putting yourself in somebody else's shoes* to help make your decisions. When you're looking at things that may be difficult or seem like they're changing, or they're irrational decisions, try to put yourself in your own shoes and in their shoes and figure out what they're going through because then *once you look at it from their perspective, you bring different solutions and you have an understanding for what you're trying to solve*. A perfect instance for us is, we opened a distribution center in Ohio that we thought was going to service the business through '25. *We outgrew that distribution center in one year*, and then we opened another facility and we outgrew the two facilities together. Then, we expanded it to another, which is opening next month. *We've gone from 525,000 square feet in Ohio to north of 2.2 million in just three years*. If I were to look at this from a network architecture perspective, my team can start to get frustrated and they can think about it as to why aren't we planning what's happening, how do we not make good decisions upfront. If you have some compassion and look at it from the people in the distribution and logistics space, and sitting in their seat, and think about it from the standpoint of, "We were 1.1 billion. In two years, we grew to 2.3 billion and growing the 5 billion," *you start to just shift your context and think of the way that they're running their business slightly different*. If we're going to get to 5 billion, what we're running now might even double from here or probably should. *Their expanding network is just keeping up with the demand and these are all good problems to have*. But if you don't *take the time to look at it from somebody else's perspective and help them achieve their goals*, then you're going to lose as an organization and as an individual in your own career. When you can all get in the boat together and *everybody's all rowing in the same direction*, your corporation wins, your organization wins. Honestly, that's when I enjoy my job the most. Outro --- Peter High: Well, a great perspective, indeed, Mike. I really appreciate you sharing a bit about your career path, the exciting journey you've been on at Crocs, the remarkable growth that you've been a part of and helped drive, and some of the methods you're using in order to ensure that you and your team stay on top of that growth and ahead of it, in fact, it's been a great conversation. Thank you so much. Mike Feliton: Thank you, Peter.