48. Catch the Tornado with Gordon Lucas

‍Piotr Karwatka

Hello, everyone, I'm super happy to present to you Gordon Lucas, Global Head of digital engineering at Costa Coffee. And we're talking all things digital transformation, how to innovate and keep innovating, even during the pandemic of COVID-19. That's a funny story because Gordon's professional career started at Embarcadero/Borland. Not sure if all of you are aware of that, those companies built the best development tools ever, which is Delphi and C++ builder, the tools I started my career with. So I will surely ask him about those days. Hello, Gordon. It's super, super nice to have you up there.

Gordon Lucas 

Thanks for having me. I'm very excited to talk to you.

Piotr Karwatka

Let's start with this Borland story. I mean, you know, I started my developer’s career in 1999. So end of the last century and beginning of the new century, it was actually Delphi and then C++ builder. And I was a huge fan of this. The set of tools right now, I'm not sure if, if anyone is still using it, I guess. They are still using it. And you worked there somewhere around these times, right? How was it? How was it to be there?

Gordon Lucas 

It was a long time ago, I don't know if many people are still using them. I actually got my first job in Toronto, where I'm from at Embarcadero. So it was a database tools company based in San Francisco. Yeah, after a few years, they bought Borland. So at that point, there was still a fairly big community of Delphi and C++ builder users. And we sort of packaged the coding tools with our database tools to create a kind of complete cross platform offering. Yes, I got to go to the Borland offices a couple times, but it was a fairly separate stack in terms of the technology. And a lot of the work we did was to sort of bring management together licensing together and sort of create some bundles. We did build Firebase, the open source database that worked with Borland out of our database tool. So that was quite fun. And we got engaged with the community there.

Piotr Karwatka 

That's really awesome. And do you agree with me that today, we are somehow getting back to this way of building software? I mean, you know, low code, no code movements? For me, it's very similar to how it was in early 2000, with Delphi for Windows.

Gordon Lucas  

Yeah, absolutely. And that cluster right now we're, we're like a lot of people looking at the power platform and zero, which is sort of the cloud version of that, isn't it? And, yeah, if you look at things like AWS amplify, they're starting to go that way, although a little messier. Now, I always think back to access, which is sort of Microsoft's answer to that. But of course, yes, code of Orland and Delphi is very similar. You drag and drop, and there's not a lot of code in there. There's a lot of code under the hood, of course,

Piotr Karwatka

Absolutely. They saw how it got to the internet with the Turing's? I think it was too early. I mean, there was something like Delphi for PHP, or you could build Delphi apps for the web. But it wasn't that popular, like Ruby on Rails to go over, and then JavaScript, and then you have all those tools, like, like you said, amplify, or maybe retool. This is something that popped up for me a few weeks ago, return is totally like, like Visual Basic, but it's in JavaScript. And it's, you know, headless, and micro services. But actually, the value is the same.

Gordon Lucas

At Embarcadero. We did look at J TV, and we tried to sort of get our tools in the cloud, but it's difficult with those big code bases and the databases we worked with like the Apple server and Oracle. The whole worlds are shifted in the mid 2000s, then

Piotr Karwatka

absolutely. So yeah, that paradigm has shifted. Okay, so what have you been in charge of between Embarcadero and Caster, because in a couple of minutes, we will get into Costco digital transformation, but just you know, maybe say a few words on your own new way to this position.

Gordon Lucas 

Yeah, of course, after Embarcadero, I work for Novateur, an e-commerce platform. So it was sort of a software shop or the Enterprise E commerce platform. I worked for an agency out of Toronto for a while supporting clients with digital. We launched them sort of commerce and mobile, and automotive experiences within Canada, US and the world. That was quite fun. And that's what took me to the UK where ultimately I landed at Whitbread which was the previous owner of Costa so about five years ago. Hotels and coffee shops and their in house digital so we were working to sort of build a new function to own all the digital experiences which is where I got my first my first London job in the UK.

Piotr Karwatka 

Awesome. So yeah, already, you know, a few years in the business. Do you agree with me that any business at some point becomes a software business software company?

Gordon Lucas 

Yes, of course, I guess I guess there's two lenses, that one is sort of the automation and the data, right, and, you know, moving to word processors and excel sheets and just tools, which is, of course, using software. But then there's building your own software, which is managing your own data, which is big right now and becoming more and more critical. But I guess before data became bigger was the digital experience, right? The consumers’ expectation of, you know, the brand showing up on their phone or creating a window into the experience, but the brand, which before that it was websites, but more and more absolutely mobile first, at first and trying to build a relationship with consumers, I think the two probably are starting to connect. And some brands are further ahead than others. But everybody's trying to catch up to connect the two to create that magic.

Piotr Karwatka 

Yeah. And for Costa specifically, how started the journey into digital landscape and digital experience. I mean, was it like web first or mobile first, loyalty first? Because, you know, there's a lot of different ways to just get started. And how was it in your case?

Gordon Lucas 

So Costa used to be owned by Whitbread, which is where I had my first line in job, as I mentioned, and probably Premier Inn, a sort of a multi-brand hospitality company. So Premier Inn was a little bit further ahead. That's where we started. And the power of Premier Inn is that a lot of their bookings are direct to the brands, they don't do a lot of work with the likes of, you know, hotels.com, or some of the other aggregators. So that digital website booking was really important. It was their main channel for bookings. And obviously, that you know, gets the traffic out of the call center, etc. So my team was building microservices, we in-housed our web technologies. So we're sort of web teams, microservices, teams in AWS. And then we had our back end sort of, not legacy, but sort of big behemoth reservation system that worked for all the hotels. So the Premier was a little bit further ahead. And then I suppose for Costa, it was a little bit of digitizing, because that was the Whitbread strategy. But the loyalty program for Costa was a mobile based card base, you have a physical card in our UK shops or a mobile mobile app, but it was all outsourced. So the map of the mobile codebase was probably a few years old. And it was just very expensive to get new features and get new things done. Premier Inn had sort of shown how if you in house engineering and had your own function, you could move a lot faster, and you could innovate and respond and be a lot closer to the brand and the needs. So Costa started with the app, we replatformed our loyalty program at the time, and we launched a new app that we built from scratch. And that's when I joined because we had, we had probably about a year of work to do to get all the features done and not very much time to do it. So that's where they parachuted me and a couple other people in to see how we could accelerate the transformation from a few mobile developers. It's about, I think, 30 engineers now working on the function. Every year we grow and grow. We started with mobile, mobile loyalty we added in mobile ordering, which I think I think you want to talk about a little bit which is sort of pre order in our stores. And then we've added websites, and somewhere along the line, we got bought by Coca Cola, which totally shifted our landscape. And of course COVID.

Piotr Karwatka 

What does it mean that Coca Cola shifted the landscape?

Gordon Lucas 

Yeah. I mean, under Whitbread, it was sort of UK and some stores through Europe and China and under Coca Cola it’'s yeah, you know, be number one, right? Coca Cola has I think they sell over a billion cold drinks a day in the world every day. Hot drinks, it's much smaller. And Costa is a big part of growing their business because they're their total beverage and coffee is a growth sector for them.

Piotr Karwatka 

Okay, so it was here, huge acceleration. The acquisition by Coca Cola. Okay, that's, that's super interesting. Before we get to this application you just mentioned, and how COVID impacted your business. This is a super interesting topic. But first, you already talked a little bit about the team. So 30 people. Wow, that's amazing. I mean, it grew a lot because we first met when was it like two years ago, three years ago, three years ago, I suppose?

Gordon Lucas 

I think so. We were looking to do something similar to the UK in our Poland stores where we launched our loyalty program.

Piotr Karwatka  

Yeah, I remember this. And mostly because of the way you approach the innovation process and I now wanted to talk a little bit about how you approach the innovation because it was...Let me tell you what I recall and maybe you're gonna add something but it was something like you can talk to them. Open Loyalty, saying something like, Hey, our folk during the hackathon did some POC, using your stuff, because we just found it on GitHub. It was so cool that now we want to roll it out to our Polish stores. So maybe you guys are gonna help us. So it was super cool that, you know, you did this hackathon. And try to get by with this hands-on approach. This is the way you typically address some business needs and you know, innovation? 

Gordon Lucas   

Yea I mean, I think that when you look at my team at the time, we had probably over 100 engineers across Premier Inn and and, and Costa Coffee, and then lots of sort of support teams around that, and operations and security and architecture and all the other functions. So the brains of all those people are much more powerful than my own or our CIOs. So, yeah, we needed an answer for Poland, the technology we have in the UK is brilliant, but it's scaled for, you know, 5000, stores in Poland had two to 200 stores and the number of consumers was different. So we weren't able to sort of get those tools out into the markets. And we were really keen to, I was really keen to, to have a story that we could take to other franchise partners and other markets where we've got sort of 10, 15, 100, 200 stores to because loyalty is critical, as we've talked about digital transformation. Loyalty and mobility with coffee, it's very habitual, giving people a free coffee every 8 coffees, it's simple, but it keeps them coming back. And it keeps them choosing Costa over another brand. And it lets us create that relationship with them. So we didn't answer the market, the market was talking to some local, local sort of outsource providers, which is that some of the loyalty programs in the UK are outsourced. And that's great. But I guess we wanted an answer that would scale beyond Poland. And I thought of it as an opportunity to prove something out and then scale it, which is why we had the hackathon. It was a little bit of we were looking for a reason to engage our teams and bring people together in a different creative way. And it was a little bit of we needed an answer for Poland. And yeah, there were lots of interesting ideas. Some of the some one teams presented blockchain and another team looked at sort of how we could cut parts of our UK . It was a really creative day. But we didn't actually build anything, it was more sort of a thinking exercise in the open loyalty team ultimately thought sort of made the most sense because we could use our UK app and the open loyalty platform and come up with an answer that would have enough scale that we could then take it elsewhere.

Piotr Karwatka 

That does, that's awesome. So actually, me personally, I'm a fan of learning by doing and I, whatever I tried to figure something or innovate, I am trying to do some POC, code something. I try to get my hands dirty, because this way I feel the domain of the problem. So I think that's really engaging. That's cool. And did it help you with this COVID situation? I mean, first of all, how did COVID impact your business? We talked a little bit about this on our pre-call. And you told me the story that you one day needed to fully switch to drive thru and a different serving model.Can you tell us to start with because it was super informative. So interesting.

Gordon Lucas 

I mean, firstly, like anybody, it was a bit of a shock. I mean, I remember in January, I started starting to get a little bit concerned personally, and then in February getting my team together and saying, What are we going to do if doors closed in the UK, and we have to work from home, but when when in April, they they shut down all our stores, our business was ready, but obviously financially, that's a massive impact. Because, you know, we've got 5000 4000 stores in the UK 1500, our equity and then another 1500 franchises, some of those franchise partners are quite small. So that was a concern for the business. And then for my teams, it was what are we going to do because right away hiring budgets froze, because that impact is unknown, right? So we had to sort of take a look at our plans for the year in terms of what we're doing. Look at our contract ratio in our teams and our partners because we sort of maintain full time and flex in our functions. So we had to sort of go through the immediate response, which is how do we get control of spending and sort of reset the plan, which was disruptive. But then very quickly, the answer was digital, right? So when our stores started to open up, we kept open in hospitals to support the NHS and other staff, and then we kept some drive-throughs open when we could. And they were super busy when they opened, so there was one drive thru in a town where the queues were so long the first day it was open that the roundabout was blocked and the town shut down. So they put it together and they shut down the drive thru so they took an Android tablet from another store, plugged it in and then started serving mobile orders at the door so that the whole business in terms of retail was running on our mobile app, people were placing their orders and that was really motivating for us.

Piotr Karwatka   

In this case, you switch from Drive Thru to more curbside pickup right? Now they park the cars and get the coffee for takeaway. Something like this?

Gordon Lucas 

Yeah, It was kind of, walk up to the door and they'd give you your order. But that was hands free safe because you know, the barista didn’t have to take a payment or sort of traffic stuff. And then it was just sort of rapid firefighting and responses, one of the things we immediately saw was massive scale on mobile ordering, consumers were choosing it as they opened it. So whereas before COVID, it was sort of a growing segment of consumers that were regularly using it after, after the stores opened, it was a much bigger percentage. And in some cases, like in January, where in Scotland you weren't allowed to actually go into stores, it was all mobile ordering. So it's just been sort of scaling and incrementing the proposition, rolling it out to more stores and trying to get it live across the state last year. We had some new projects that we did really quickly like with 9000 Express machines, which were sort of in garages and food stores like Tesco and Sainsbury's and other places, where you can get a coffee while you shop at Costa. And so we built into our app that you could go up, scan, and then configure your water so that within eight weeks you weren't weren't required to touch the screen. So that was quite quick and a bit of an industry for so it was sort of finding opportunities being more risk open to deliver them as quickly as possible. I think we did about 18 months of work in six months across our Express and retail and all our teams, just keeping the app adding more features in and engaging consumers and keeping our stores and teams open and safe. And so it was just a very tiring year. Everybody was exhausted at the end of it. I can tell you that much.

Piotr Karwatka  

Do you think that those new habits, I mean, you said that when you open the shops. They were still using the app for ordering differently. It's gonna stay with us right after the COVID pandemic. And like, it's surely we'll end up one day, like with this vaccination program, probably this year is the end year of this, you know, mess. At least in Europe, so that's something promising. But did you think that those habits were gonna stay with us? And the customers?

Gordon Lucas 

Yeah, I mean, I guess you make a good point, right? We are fortunate to live in countries that have vaccines, and hopefully we'll get back to normal or some sort of normalcy. But yeah, absolutely. Those behaviors have changed forever, right, working from home is a good example. But in terms of mobility and engagement with our brand we've seen week on week increase in consumers using mobile. And as soon as they use mobile to order, they tend to be more sticky. And they tend to prefer it because it's an easier, quicker, more convenient way to get your order right. I suppose with the summer we'll see people sort of wanting to go back to some of those behaviors, like go into the office and go and sit down at a restaurant and things and there's a little bit of there'll be I think there'll be a bit of a bounce back to normalcy. But ultimately, the threat of those changes will absolutely continue. The world has moved on and those behaviors are driving. We did a campaign this week, 50 P for all hot coffees, if you use the mobile app, and that's just driven that again. So a lot of our strategy is finding ways to incent people to use mobile as well and get that that sort of habitual relationship Acosta

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