Ep. 176 – Amazon & Northwestern Mutual’s Aaron Hawkins on Consumer Channel Disruption

Ep. 176 – Amazon & Northwestern Mutual’s Aaron Hawkins on Consumer Channel Disruption

In this episode, Brian Ardinger, Inside Outside Innovation Founder, talks with Aaron Hawkins, former Head of Global Prime, now Whole Foods and Fresh Last Mile Delivery Strategy, at Amazon. And currently the VP of Digital Product at Northwestern Mutual. They discuss eCommerce retail at Kohl’s and Amazon, drop shipping, customer experience, PR-FAQ, customer truisms, financial services at Northwestern Mutual, and Agile.

Interview Transcript

Aaron Hawkins, Amazon and Northwestern MutualBrian Ardinger: Inside Outside Innovation is the podcast that brings you the best and the brightest in the world of startups and innovation. I’m your host Brian Ardinger, founder of InsideOutside.IO, a provider of research events and consulting services that help innovators and entrepreneurs build better products, launch new ideas, and compete in a world of change and disruption.

Each week we’ll give you a front row seat to the latest thinking tools, tactics, and trends, and collaborative innovation. Let’s get started.

Welcome to another episode of Inside Outside Innovation. I’m your host Brian Ardinger, and as always, we have another amazing guest. Today we are recording live at the Fall Experiment conference here in Milwaukee, Wisconsin. And with me today is Aaron Hawkins. He is the former head of Global Prime now Whole Foods and Fresh Last Mile Delivery Strategy at Amazon. And he’s now currently the VP of Digital Product at Northwestern Mutual. Welcome to the show Aaron Hawkins.

Aaron Hawkins: Thanks for having me. I appreciate it.

Brian Ardinger: Hey, I’m super excited to have you on the show for a couple of different reasons.  One, you’ve been in this space of innovation, obviously working for Amazon in the retail space, and all the disruption that’s going on. Love to talk a little bit more about your experiences there, and then obviously you’re now to a new role, moving back to the Midwest, where you’re from. Let’s start the conversation with talking a little bit about your background and how did you get into innovation.

Aaron Hawkins’ Background

Aaron Hawkins: Yes, my background is that I really have been permanently in eCommerce retail my whole career. I started at Kohl’s working for their website, and when I joined Kohl’s, they were about a $15.5 billion retail business and that was primarily through their stores and their website was doing about $140 million at the time.  When I joined it, it was way under penetrated and they were looking to expand and I sort of just lucked out and got an opportunity to really start up in a scrappy kind of pilot mode, a drop ship program, which is a direct to consumer model where they leverage suppliers and manufacturers and distributors capabilities to ship in individual units to end consumers.

And it was a great opportunity for Kohl’s to expand because it was pretty low capital investment on their part. And so piloted a program there in 2007. And that really grew. I think by the time I left Kohl’s to go to Amazon, their website had grown to about $1.7 billion. And so it was basically doubling itself every two years, which was incredible growth.

That really afforded me the opportunity to go to Amazon and work for their North America drop ship program, which was really how they got started. They started drop shipping books way back in 1995 and so it was a pretty mature program, but it had gotten a little stale. And so they brought me in to think about ways to refresh it a little bit and also to start leveraging some of their fulfillment capabilities that they had developed over time and you know, two day prime shipping had been a pretty well established thing at that point. I think they had 55 fulfillment centers by the time I joined. And so my job was really to start integrating these programs together and then did that for a little bit, but had been doing drop ship for a long time and got an opportunity to work in the consumable space and grocery.

And that’s one of the kind of last great e-commerce frontiers, right, is grocery and the margins are super thin. And it’s just a tough business to get the customer experience. Right? And so I love that challenge and really wanted to jump at that. And so my last kind of four years at Amazon were really spent in trying to build out the model and perfecting not only the customer experience, but really lowering the cost structure through our delivery capabilities in our operations. And so. It’s a great opportunity. We grew Fresh and scale that pretty quickly, both domestically and international launches and Prime Now was born out of that model a little bit, but scaled up really fast as well. And then we acquired Whole Foods. That was another foray into brick and mortar, but gave us a big opportunity to do delivery operations and pickup operations out of that. And I think we launched 200 stores with delivery and pickup over the last year, year and a half. And then Midwest born and raised, so wanting to get back to Milwaukee at some point and Northwestern Mutual, where I’m working now, is the 160 year old company that’s trying to kind of reinvent themselves in the digital age.

And that’s another big challenge and I’m excited to tackle that. I’m about five  months in so just kind of getting my feet under me.

Amazon’s PRFAQ

Brian Ardinger: Let’s talk a little bit about your Amazon experiences. When people think of innovation, they oftentimes think of Amazon, and I think a lot of it has to do with obviously Jeff Bezos and how the culture around innovation and every day is day one.

You just gave a talk yesterday here at the conference about some of the processes that Amazon uses to think through a new product development in that, and part of the process is this PR FAQ kind of process. So let’s talk a little bit about that.

Aaron Hawkins: Yes, a PR-FAQ is a press release, and frequently asked questions. So it’s a one page narrative, a futuristic exercise where you’re putting yourselves in the shoes of the customer and you’re releasing a product to the customer in the form of a press release. And. It’s a really great exercise, and of course it’s sort of fictitious. The product doesn’t exist yet, but by doing this, it really allows you to think through sort of the customer value and really sprinkle in some testimonials from your customers, quote a business leader. Some of the products that you know and love at Amazon, a lot of them in fact, are sort of born out of that exercise. Alexa, prime shipping, anything around the Kindle has been born in that form. It’s a really great way to put down in a narrative format your product.

And then behind it are these frequently asked questions, which are really broken into really two kind of fundamental components. One is customer and those customer FAQ is are really about how your product works, why I should engage with it, and some of the details that you would expect a customer to ask. And you answer those questions. And then the other component are these stakeholder business questions. And these are meant to be more internal. And those internal questions are really also about the value, but they’ll sprinkle in some of the business value as well as the customer value questions. And so, it’s a really great way to get outside of the essence of the idea, which is really more what the PR is. It’s kinda more of the data and the details.  And, you know, it’s not uncommon to see a one-page press release followed by five pages of FAQs to really flush out the idea.

And then good ideas tend to always kind of rise to the surface. And it’s very common as a fast followup to get a small team together. It’s called a two pizza team.  Cause the idea is that you can feed this team with two pizzas and then they go and start to really flush out the idea. And a lot of times another narrative style paper will be born out of that, which kind of becomes more of a business case. And then people go pretty quick from there.

Understanding the Customer and MLPs

Brian Ardinger: So a question about the process.  I’ve heard other people trying to emulate this, but there’s not a lot written down about it, and I think a lot of people would probably get it wrong. How do you stop from writing your press release and having all your assumptions in there and then just executing on that versus testing in the marketplace and using it?  Like you said yesterday, it’s more of a living document within Amazon. How do you stop from falling into that pitfall?

Aaron Hawkins: I think Jeff Bezos has kind of famously said that, you know, he doesn’t pretend to know what customers are going to want 30 years from now, and I’m certainly paraphrasing this cold, but there are sort of truisms that he says will sort of always exist, right?  And they are things like I don’t expect a customer in 30 years to say, I don’t want ore convenience. I don’t want faster speeds. I don’t want less selection. Right. And so I think first and foremost, we kind of are grounded in those truisms. And you know, those are certainly relatively generic and, and a lot of things can kind of fit within those ideas. But by and large, I think that’s number one.

And then the second component of that is Amazon is very comfortable experimenting and learning sort of incrementally, right? You hear a lot of tech companies and product managers talking about MVP and Amazon has a concept called MLP or most lovable product, and so they really try and think in this press release exercise about what is going to be the most lovable thing that people really love.  What’s that feature going to be that we just have to nail. And that’s kind of where they start. Certainly Amazon’s press release and frequently asked questions if some of those exercises could be three years ahead of the idea actually being put out there. And what the end consumer doesn’t sort of see as all of those iterations.

I think that’s what’s important. I think people look at some of these great products or services that Amazon has developed and they say, wow, it’s amazing. You know, right out of the gate it has sort of hits the Mark. But the reality is, is that there has been a lot of experimentation, a lot of testing, a lot of going out to a small subset of consumers and getting feedback and a lot of data and underlying kind of analytics that go behind these decisions. And what the end consumer might not know is that there might’ve been a hundred revisions of that paper or a hundred revisions of that concept over time and always refining and always failing and failing forward. And so I think that’s the really, the spirit that, that drives it but those truisms are always sort of at the forefront of people’s minds when they’re developing.

Financial Services

Brian Ardinger: So what are some of the things that you’re seeing either in the retail space or now that you’re in financial services, what are some of the new trends, disruptions that you’re seeing that gets you excited about what’s going on in the world.

Aaron Hawkins: I’m new to the financial services game, but I think what’s exciting about, you can see it an Amazon too, is how they are building out very omni-channel, you know, universe. Right? And whether that’s an Amazon go store, which is the cashier lists, you just go in and pick out what you want and you walk out of it and it charges your card based on the sensors and the technology that’s in there. Or if it’s, you know, online grocery, or if it’s some of the Four Star stores that Amazon has now, which is their top rated items in a brick and mortar store.  There’s so many examples of this and what I think is really cool about not only having the eCommerce and a brick and mortar presence is what that allows in terms of some of the supply chain and logistics capabilities, right.

The world is going to be very rapidly approaching where the front end retail stores are also backend delivery operations and hubs. You know, whether it’s a Target or a Kohl’s or any of these brick and mortar kind of behemoth, I mean, they’re really starting to develop sophisticated capabilities and better inventory management systems. And so the world is rapidly approaching, is almost here where consumer really has so many different choices, but even the choice almost will become obsolete. Like they’ll just get the kind of fastest, most convenient service based on sort of the Ray of options that are out there. Right. And that’s really great. And they’ll have so much choice in so much convenience. And I think that’s kind of the spirit of what, based off just talking about what that quote is, that the world is evolving so quickly and it’s all about convenience and it’s all about choice and it’s all about meeting the customer at sort of whatever level they need to.

That’s why I think you see even on Amazon, so many different business models that looked somewhat similar. Like you have Amazon Fresh and Prime Now, and they both do consumables. And then you have the Amazon Go Store, which is convenience store style things and you have whole foods brick and mortar stores. And an outsider might look at that and be like. Why are you doing that? Why aren’t you kind of cannibalizing? Isn’t there some conflict there? And the answer is yes, maybe. But we’re giving our consumers what they want through choice, and it’s our job as a retail business to figure out how to make that work from a cost structure and figure out how to best monetize that.

Staying Fresh as an Innovator

Brian Ardinger: So let’s talk a little bit about, so now you’re moving into the financial services world. You said this is kind of new to you. How do you stay fresh as an innovator to understand and navigate a new world and then be effective in it?

Aaron Hawkins: Yeah, I mean, I think first and foremost, you always have to have sort of a curiosity and you know, some people are sort of born with that and an innate kind of capacity and, and others have to really work at it. But I think you, you’ve got to have that hunger and appetite to sort of learn new things. Just for me personally, it’s, it’s just a brand new industry that I have to go as deep as I can and talk to as many people and read as often as I can and experiment as often as I can. And so I think that’s super critical.  I think the financial services industry is one of those two that’s just ripe for disruption. I mean, it’s kind of been working the same way for a long time. And Northwestern Mutual is a great company. Probably one of the highest rated financial firms that is sort of out there in the industry, and they have been for a really long time. It’s 160 plus year old company and that we have this field force that really is the life blood of our company, that’s out there selling our products and our services out to the consumers. And it’s a huge asset, but it’s been working that way for a long time.

And now we’re kind of taking this entrepreneurial spirit that exists out with our independent field force at Northwestern Mutual. I’m trying to think about how we can strengthen that, and yet we’re doing it from kind of a corporate office, home office situation where we’re not sort of out there with them every single day. There’s again, no secret sauce to this. Like anything, you have to be able to understand who your customer is. Certainly our customer, Northwestern Mutual is the end client, right. The person who owns Northwestern Mutual insurance policies or investment accounts, but also, you know, customer is our field force that has to go out there and service our customers. And we have to ensure that we’re able to sort of assess that customer value, whoever that customer is, and do things for those customers that add value.

Then we have to also be able to think how do we translate or marry up that customer value to business value. And I think often in, in innovation, it’s very easy to kind of lose sight of that. And you really have to just ground yourself back to who is your customer and what do they want, what do they value, and what are those kind of key KPIs or metrics?

And then similarly, you have to think, okay, if I have identified that now, if I look at my business. What are the KPIs or metrics that govern business value? And you’ve got to kind of find that marriage. And I think as long as you’re doing that, it’s relatively easy to innovate. And I think the trap sometimes that people can fall into is they try and be so innovative or so 6, 12, 18 months out that they’re not able to kind of take that very scrappy iterative approach. And you know, sometimes the best technology is actually first started with a really scrappy process that gets improved and you learn and you figure out how to now kind of automate it or scale it. And, uh, and so I think, you know, sometimes people in technology will look at that end solution and try to drive towards that. Not sort of being willing to take those incremental steps to get there

Customer Value Props and Agile

Brian Ardinger: Yeah, and be okay with the fact that they may not actually get to the exact spot they wanted to or go a different path, I suppose, than what they originally thought they were going to go down.

Aaron Hawkins: Yeah, exactly. That’s how I think, you know, the agile framework is so important. But if you do agile without sort of being grounded in customer and business value, that agility really only marginally inches that ball down the field. And when you’re only making those marginal improvements, not really towards an end goal, cause you haven’t really grounded yourself in that value proposition, you’re end customers ultimately are are wanting for more, and that’s one of the drawbacks about Agile. I think people can get trapped in that I’m releasing all the  time, I’m running two weeks sprints, you know, I’ve released thousands of features over this last year, but those end features aren’t really tying back to that value that you should have established.  And so you’re on customer, even though you’ve released a ton of features, it’s sort of like, I’m not really benefiting from it, and it kind of falls flat.

Brian Ardinger: Absolutely. Well, Aaron, thanks very much for being on the Inside Outside Innovation. Really appreciate your insights into what’s going on in the retail space and we wish you the best luck in the financial services world as well.

Aaron Hawkins: Thank you. I really appreciate it.

For More Information

Brian Ardinger: If anybody wants to find out more about yourself or your company, what’s the best way to do that?

Aaron Hawkins: Certainly they can look me up on LinkedIn and also email me at aaronhawkins@northwesternmutual.com. You know, our company is always hiring. We’re always looking to get fresh talent in the Milwaukee area, so absolutely look me up, reach out to me.  I’m happy to talk to anybody.

Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content or services, check out Inside Outside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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Ep. 128 – Aaron Proietti, Author of Today’s Innovator & Transamerica Innovation Champion

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