Results by Design: UX Insights for Business Leaders

Description: In this episode, Craig sits down with Andrew Walsh, CEO of Applicate Commerce, to discuss the pivotal moments and strategies that have driven the company’s successful transition into the digital age. From embracing e-commerce to integrating AI into their core processes, Andrew shares invaluable insights on how businesses can stay ahead of the curve in an ever-evolving industry.

What You’ll Learn:

• Strategies for winning both physical and digital carts
• The impact of AI on distribution and digital business
• Building strong relationships with stakeholders for a successful digital transformation
• Aligning vision and strategy to drive business success
• Fostering optimism and excitement in the face of change

Interview Participants:

• Andrew Walsh, President and CEO @ Applicate Commerce
• Craig Nishizaki, Head of Business @ UpTop

Transcript

Intro:
Welcome to Results by Design UX Insights for business leaders, the podcast that dives deep into the world of UX design, strategy and insights. Tune in, take action, and design your way to success.

Craig Nishizaki:
Hi everyone. I’m Craig, your host for the Results by Design podcast. Joining me today is Andrew Walsh, president and CEO of Applicate Commerce. Welcome to the show, Andrew.

Andrew Walsh:
Good morning Craig. Good to see you. Thanks for having me this morning.

Craig Nishizaki:
Yeah, how are you doing? It’s great to see you.

Andrew Walsh:
I’m doing well. I’m doing well. We’re in the Pacific Northwest here. We’re excited for the sun to come out in the weeks and months ahead. So no, we’re doing pretty well. Thanks for asking. How about you?

Craig Nishizaki:
I’m doing well. Yeah. It’s nice to finally be in summertime.

Andrew Walsh:
Yes, indeed.

Craig Nishizaki:
So, well, I’m excited to have you join us today so we can learn more about yourself, your company, and the digital transformation that you’ve been leading your company through. I thought we’d get started by asking you about applicate commerce. Could you tell us about your company?

Andrew Walsh:
I’d enjoyed that. Yeah. Applicate Commerce is a privately held organization. We’ve been in business for a little over 65 years. Our headquarters are in the Seattle area, and we operate in an industry that would be described as wholesale distribution of construction and building materials. And then specifically our category is applied architectural products. So it’s things like paint and waterproofing and sealants and roof products and such. And so we buy from 200 or so of the finest brands or manufacturers in that space. And we sell to a few thousand customers around the country and we serve them from our regional distribution centers around the United States. And our corporate office is here, is in Kirkland, Washington, and that’s where I hang my hat.

Craig Nishizaki:
That’s great. You are the president and CEO. Would you share a bit of your origin story and the path you took to get to the role that you have today?

Andrew Walsh:
Yeah, I had, I have one of those funny stories of how I began with the business. When I was a teenager, like a lot of folks my age, I had a paper route in my neighborhood where I grew up. And so after schools, I would get on my bicycle and deliver papers in the afternoon or on Sunday mornings. And I did that for a couple of years. And when I was 15, one of the folks on my paper route, a gentleman, he approached me and I’d become friends with him and he’d said, Hey, what are you going to do when you turn 16? And I think I had some kind of throwaway comment like, I’m going to play baseball or something, and I didn’t have any idea, of course. And he says, well, would you like to come and work in my warehouse and in between sports seasons and so forth?

So I accepted that and literally on my 16th birthday I got my driver’s license and drove to his warehouse and I began doing janitorial tasks, cleaning and crushing cardboard and things that you do in a distribution center. And was fortunate enough to learn the business a bit, even through school. Ultimately, I put myself through college, working in our distribution centers, got a couple of leadership opportunities, which is exciting for a young person like myself. I left for a few years to go to graduate school, but then returned and continued to grow within the business. And all these years later, I literally drive to that same distribution center in our offices there today. And my role has shifted a little bit over the years, and I spend my time a little differently, but super fortunate, grateful to be a member of the same team and to be part of this organization that we’re awfully, awfully excited about.

Craig Nishizaki:
And what an amazing story. You don’t hear very many stories like that where someone started in the warehouse as a young person and then worked their way up into leading the organization. That’s amazing.

Andrew Walsh:
I’ll say this, Craig, too. One of the neatest things about our team is that there are a number of people in our company and specifically our leadership team who have a very similar story. It actually isn’t even that unique in our team, but I appreciate your comment and we’re certainly grateful to be members of a team that has a lot of experience like that, but pretty fortunate and grateful to work with the folks that we do.

Craig Nishizaki:
Yeah, that’s amazing. Well, so your business has been around, like you said, 65 years. So there was a traditional distribution component to the business, and I wanted to know if there was an aha moment when you realized that e-commerce was going to change your industry as well as your business?

Andrew Walsh:
Yeah, I don’t know that there was an aha moment, but it was not unclear. It was not unclear. There wasn’t just one thing. I think going back to the 2007, 2008 timeframe, what was crystallizing for me and our team and our ownership was that we’re developing a strong opinion. And our opinion was that our supply chain was forever changing, largely driven by the rise of e-commerce. And that sounds super obvious and super clear, and it is the most important thing though, was that we had a very deliberate intentional response to it, which was we were clear about working hard to help our business partners when both the physical cart, which we’ve been doing for the previous 55 years or so, but also the digital cart. And so that became our response to that change. How are we going to help our business partners win both carts, physical and digital?

And so then really over the next, say 15 years up to today, we invested our efforts and energy and resources really crystallizing around three areas. One was our efforts to help our retail partners, those we serve, two, continue to win the physical carts. Two, we were crystallizing our efforts around our ability to win the digital cart with our products. And then three, our efforts to help our business partners in nontraditional ways. And so investing our times and energies in those three areas. And then about four years ago, Craig, what we did is it became clear that we wanted to change our business identity. That’s when our business name became Applicate Commerce, and then that as a parent company have three business divisions, PSS, helping our retail partners win the physical carts, paint supply, helping our brand partners win the digital carts and then applicate services, helping our business partners with new and kind of non-traditional services. And then today what we’re working hard to ever do is just focusing our energies to leverage those three divisions to help our business partners win the physical and the digital carts in the ways that are right for them. And that’s what we’re doing.

Craig Nishizaki:
That’s great. And when you formed your opinion early on, what was the timeframe before you decided you need to make an investment or experiment with, let’s say, going after the e-commerce business or helping with the digital cart?

Andrew Walsh:
Yeah, so great question, and I think you hit on it there, is that it iterative. We didn’t know what we didn’t know, and it was super important for us to not look at this as a binary scenario where it was going to be either the physical cart or serving brick and mortar business partners or e-commerce. That was not part of anything that we wanted to pursue or were interested in. We wanted it to be both and mutual and symbiotic. And so that is a greater challenge in many ways, but it was absolutely at the center of all of our thoughts and conversations. And so we had to iterate and to do things the right way. And that’s where it became very clear that central to our strategies was the integrity of how we go to market and how we work with our partners. Thankfully, that’s a core value of our business and always has been, but it’s really about honoring our business partners, honoring the timeless value, for example, of physical retailers while also honoring the fact that the business environment and technology had changed sufficiently that we had to be good partners to our manufacturers and make sure we’re doing everything we could to be of service to them as well.

And so it took a lot of learning and a lot of testing and a lot of conversation and thoughtfulness, but in terms of how long did it take us to get from A to B, I think it’s a journey and we certainly accelerated early on, but achieving both of those goals is frankly something we still work on every single day.

Craig Nishizaki:
Yeah, that’s great. As you were going through this process of forming an opinion, creating a vision, did you have to get your exec team and your board on board with the vision or were they all seeing it at the same time?

Andrew Walsh:
I think it’s a yes and no, right, in terms of getting them on board. We did not have to convince anybody on our team or our ownership that our supply chain was changing. So there was no need to get them on board there. And at the same time, I don’t care what team you’re on, whatever you’re doing to be on the same page or to be on board together, that’s easily said but difficult to acheive, and you can skip a step pretty easily. But to me, that is the discipline, the diligence of ensuring you actually are. And so while there wasn’t, I wouldn’t say getting people on board was necessary, but that’s where really I think the interesting story begins for us in our work because it’s so much about alignment after that. And to be on board with each other on the same page, you have to literally be on the same page and literally be aligned.

And so I’ll kind of take your question and move it a little bit toward what I think we’re part of the strengths of our business community and our company and how I think we navigated through that well, to be on the same page or to be on board with each other because it is so much about change management when you are evolving from A to B or just trying to move your company forward. And for us, especially when it was complicated, the supply chain is one where going back in time, our supply chain was super linear. We would buy products, this is going back 30 years, 40 years. We’d buy products from a manufacturer in Ohio or in Michigan or what have you, and they ship US goods. We put it into one of our distribution centers, we add values and services around IT expertise, and we sell it to a customer.

With the rise of e-commerce, that all got very different. It became, I would call it. And so what we leaned on during that period, Craig was in working with our partners, was on our relationships that we had developed for decades that were built on trust. Because anytime you’re going through a change, it’s never easy. Whether it’s our families or it’s our businesses or our faith communities or what have you, you’re going through a change and it’s hard. And so for us, we were fortunate and are fortunate because we have a lot of business partners that we have trusted relationships with. And so that was critical to us to be able to start this evolution. And then really after that, I think the next thing was we developed a vision that we continue to refine to this day that is optimistic. It’s a future where we’re excited about where we’re going and in a future that we could look to that is prosperous and sustainable and healthy and all those things.

So we create that future where we’re going. The elements that you and I have talked about many times, Craig, which is about people and your values, it’s about your strategy, it’s about your processes, and it’s about the technology and bringing all of those things together in alignment. Frankly, that’s where a company, UpTop was a great partner for us, and specifically in some of those alignment of strategy, process and technology, how do those play in support our strategies and our people and our partnerships? So that to me was the sequence of moving through that period of change.

Craig Nishizaki:
I think that’s such a great point about change and alignment. It’s not just internally, which was my original question, but it’s really how you manage those relationships with customers, with your suppliers, with your supply chain, as well as other experts that we’re there to help you. And so it’s not a simple thing, it’s a really complicated thing, and it’s based on your values. So this is kind of an internal question, but did you have to break any silos down internally to get everyone moving in the same direction in terms of that alignment? Or once the leaders were on board and they saw what you were doing, did they all kind of just move along with you?

Andrew Walsh:
Yeah, so great question. And I know that is oftentimes a Herculean task. I’m sure we have those to a degree any organization does. I do think we’re pretty fortunate in our company because we have a lot of people in our leadership, our colleagues throughout our company who I would describe as being very service oriented. That’s hard to develop, but once you have it, it’s a real strength of your company. And so I think that while there is always a struggle with any kind of change, and all of us have our individual goals and responsibilities as part of the team, that we’re all doing our jobs to work hard to further those things and to achieve those things, I do think that because we tend to have a culture of folks who are of service, that it’s a little easier for us to put our egos, which we all have to put those second or third after what we believe collectively is best for the team or best for the company or best for the situation. So I don’t want to be so naive or arrogant to think that we don’t have silos. I think that’s just natural. I do think that we operate within a team and a culture where it’s less of an issue than elsewhere, largely because of the servant oriented nature of our team.

Craig Nishizaki:
Yeah, that’s a great insight. I mean, the culture where you’re focused on serving others or serving the customer definitely takes someone beyond their own motivations, which I think is what you’re saying. And I think that’s really important.

Andrew Walsh:
Yeah, I’ll tell you, just drilling into that further, you just have to have that trust. And I think that’s where having gone through chapters of our company’s story together with people who have a lot of experience here from our ownership all the way through our entire company, we do have trust. And you lean into that when you’re trying to, like you said, make sure you don’t have silos or make sure you’re trying to progress together. You lean into that trust, you count on it, and as long as that trust is honored and it’s not betrayed, you get to fight the next day and solve the next riddle together.

Craig Nishizaki:
Yeah, that’s great. And your team has deep expertise in your industry and logistics and distribution, but this whole new world of digital business and digital transformation, how did you bring the team along and grow the digital dexterity of the team so that you could launch and grow the digital business and all that comes with that? Yeah,

Andrew Walsh:
Really good point. And you’re right, the DNA of our company is in operations, right? Going back to the very beginning, we’ve had a lot of really bright, really talented people in this company that came before, those of us that are serving today, who developed an organization that was trustworthy, that had operational excellence that our partners could count on. And we have been an or a dependable source of product in our supply chain, and that’s in our DNA. And it’s really both important and tangible within our team. So to your question, now, we’re entering a season of innovation and demand for innovation, which is unclear as to where that innovation is going to take us, which in and of itself isn’t part of our company’s history in terms of the predictable nature of supply chains. So we needed to grow in our ability to innovate, to think about innovation, to iterate and learn, and then right to, I think the heart of your question is, okay, so you have all these great folks who have these skills and abilities in these areas, and you’re starting to crystallize around a vision that requires them plus something else.

And I think it’s super common and super easy to say, well, I’ve got this lady or this gentleman who I trust and I care deeply about, and I think they can get it done. But the challenging part is maybe because of their lack of experience or education or something that won’t be good enough. And I think, again, kind of going back to our core values of, in this case integrity, I think that we were fortunate enough to have the individual and collective humility to say, you know what? In this area, whether it’s process or it’s a technology or it’s a strategy development or what have you, we need help. Not because we’re bad people or we’re not smart people, it’s just because we don’t have that internal skillset or competency or expertise that to do this future well that we’re excited about. We need some help.

And especially for a mid-market company where we’re not going to go out and just hire legions of people. We reached out to companies like UpTop, or another company that I’ll speak to is a company like The Storied Future with Chris Hare and his team over there and others that helped supplement our team where we knew we had a gap and we found folks who can help us bridge it. And then the really cool thing is, is that when you bring in people who have real strength in areas, is that your teams then learn and grow and evolve. And so we become better tomorrow than we were yesterday. And you start stacking a few of those days together and your company starts to move forward. But I think that Craig, and answering your question, we importantly have the humility to say, whether it’s Andrew or it’s one of my colleagues, that’s a pitch we can’t hit, so we need to get somebody in here who can hit that pitch. And fortunately, we’ve developed partnerships with a number of smart folks who’ve helped us over the years to become stronger and take us to where we need to go.

Craig Nishizaki:
Yeah, that’s great. Thank you very much for saying that. As you talk about innovation iteration, the future, how are you thinking about the impact of AI on distribution in your digital business? Are you seeing practical applications and changes related to AI in your industry or in your business?

Andrew Walsh:
Yeah. Well, the quick answer is yes. I will say for I would call us a mid-market company, candidly, at this point, I would describe it generally as around the edges of some of the things that we’re doing. We fully anticipate that AI will make its way deeper and deeper into some of our core processes and things that we do, and that’s happening faster and faster. So that’s part of our expectation. And once it becomes part of our processes and technologies, then it necessarily needs to become part of our strategies and our narrative about how we talk about our business and so that we know is part of our future. We’re excited about it. We’re looking for ways to build our competencies and our knowledge in that area, and we’re excited for what that means for our business and for our business partners in the future. But I think we’re early in that journey, but it’s a journey we’re eager to begin.

Craig Nishizaki:
Yeah, I think the story will unfold over the next months and year if where starts gaining these practical applications in your business, what advice would you give to business leaders about gaining alignment on the vision and change that’s necessary for business transformation, digital transformation to be successful? Anything that you may not have already talked about that’s top of mind with you?

Andrew Walsh:
As I found I’ve mentioned a few times today, I think that for us, because transformation isn’t just contained within the walls of your company, transformation touches all of your stakeholders. Making sure you have the relationships in place is really important. And importantly, knowing where those are stronger and where those need to be strengthened, I think that is an area that I would start with. I would then say that after that it’s about alignment with everything else that you have going on. Because I’ll start with the strategy, not because it’s necessarily the most important, but because once you have clarity of strategy, you can hang other things on it. And one of the things that I think gets missed sometimes when you jump right to a process or right to a technology or right to even a strategy is I think there needs to be optimism.

I think that people need to be excited about what you’re going toward, not fearful of something that’s coming or something that happened, but instead excited to work towards something. And for us, I think that has been helpful because we’ve been able to get people excited about the future we’re creating along the way. And then once you do that, there’s the real tight knit of your processes and your technologies, what your company has helped us with quite a bit. I also think something that doesn’t get talked enough about is your strategic narrative. And for us, that was really important because, and we worked with the story future to help us to develop that because so much of anything we do in our lives is storytelling right down to how you drive the user experience, which UpTop has helped us with. But everything that you’re doing needs to be something that you can share with each other. And I would emphasize the importance of that which brings all those things together, your people, your strategies, your process, your technologies, your narrative, the optimism that goes along with it. And yet even still with all of that aligned change is still difficult, but built upon strong core values. I think that that has given us an opportunity to keep solvent rentals. We’re certainly not done yet. We’re not a perfect organization by any stretch, but we’re making progress every day and we’re bullish about what lies ahead.

Craig Nishizaki:
Yeah, I love the notion of having optimism. Is that something that you feel comes natural to you and it gets permeated throughout the organization, or is it something that you have to work on?

Andrew Walsh:
Well, I appreciate you asking that question. I’m a person of faith, so it’s written in scripture that if things are excellent or praiseworthy, set your mind on those things. So I do lean on that. People are inclined to have relationships with those folks who they feel like help them to be more of who they are. And I think that in my experience, a real strength of our company is not only the relationships we have internally, but those with business partners. And I was told once that my whole career could probably be boiled down to just my ability to define good partners and good people and pull ’em in versus my own knowledge of any one thing. I think that’s probably really true, but I could even boil it down in that sense, right there is when you find people who are not only bright and talented, but more importantly are the same character and part of that character being optimistic.

I think that answering your question, it’s not just me being optimistic or why I’m an optimistic person. I think it’s the people I work with, both internal to our company and our partners. I think then they’re generally optimistic because we kind of flock together and it becomes symbiotic. You’ve introduced me, Craig, to a number of people over the years that you know, that have helped me and helped our company in different ways, maybe totally unrelated to the work you and I are doing together. I think it is good for business, it’s good for our souls, it’s good for our mood and our quality of life to be optimistic. And I think people, whether it’s a customer or a colleague, it fills them up and makes them encouraged and want to work harder for the collective goal. So yeah, I’m a believer in that.

Craig Nishizaki:
Yeah, that’s awesome. That’s great wisdom right there. Is there anything else you’d like to share about your experience or insights on gaining alignment, vision, any changes that you’ve led your company through or do you think we covered most of it?

Andrew Walsh:
Yeah, I think we’ve covered most of it. Ultimately, it’s super hard, right? It’s super hard to do these things. And so I think maybe if I was to add anything, it’s the importance of acknowledging that and to give yourself and your teams grace where it’s necessary, especially when so much of innovation is charting a course toward a future that is even unclear to you, and that sometimes you can feel an obligation or I can, I need to have every answer to things. And of course, that’s not ever the case, but acknowledging that that’s a difficult path, acknowledging that you have to give yourself grace, the people around you. Grace, I think is an additional point I would think is worth making.

Craig Nishizaki:
Yeah, I think that’s great. Innovation is inherently wasteful where you’re going to try some things and it’s not going to work, and you’re going to need to try some things and it’s not going to work, and it is hard. And having optimism and trust is going to take you a long way through the process. So I really appreciate you sharing your story and all your insights, the wisdom. I think our audience is going to get a lot out of this conversation today, and I really appreciate your time, Andrew, for being here.

Andrew Walsh:
Well, it’s been my pleasure, Craig. I appreciate the opportunity to with you this morning, talk about the things that you and I grapple with every day, and I sure appreciate everything you’ve done for our business over the years and wish you guys the very best moving forward.

Craig Nishizaki:
Yeah, thank you very much. Well, that’s it for today’s show. Join us again next time as we explore innovative approaches to enhance your products and services, optimize customer interactions, and ultimately drive success for your organization. Tune in, take action and design your way to success. We’ll see you next time.

Outro:
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