Digital Transformation: Disrupting the World of Fitness

Podcast Transcript

Tania: So you've made a resolution, as we all do, to get to the gym more often, but you're tired of expensive memberships and paying for amenities that you don't use. Then, Planet Fitness might be the gym for you. There are no organic juice bars, no personal trainers or group classes. Just a clean facility and plenty of equipment for just $10 a month. It's the judgment- free zone. Sounds basic? It's a concept that works. Planet Fitness is the largest chain of fitness centers in the world, with more than 1600 locations and 12 million members and it's still growing. This no-frills business model disrupted the fitness industry once before. Now Planet Fitness has set out to do it again. This time, with a digital wellness program designed to expand the members' experience and connection with the brand beyond the walls of the gym.

Welcome to Pragmatism in Practice, a podcast from Thoughtworks, where we share stories of practical approaches to becoming a modern digital business. I'm Tania Salarvand, Global Head of Marketing for Thoughtworks, a global software consultancy. Craig Miller, Chief Digital and Information Officer of Planet Fitness shared his ambitious vision during ParadigmShift, our annual executive conference. He and I sat down to talk about how he's putting this exciting transformation plan into action.

Craig Miller: My role is a little bit unusual, historically. Typically they had an IT department but I came on to take on not only IT, but the digital strategy. My role encompasses all of the technical infrastructure and traditional IT, as well as partnering with each of the functions to really put together a strategic digital strategy. I oversee that thought leadership on that.

Tania: Why do you think it's important for a place like Planet Fitness, a brick and mortar, that people have to physically go to, why is it important for you to have a digital experience?

Craig Miller: That's a great, great question. Because I think the consumers and the members are expecting it, and as we've been seeing in all industries, this shift in the set of expectations that ultimately dictates what brands will win and what won't. If we didn't, we very often talk about if, we didn't do the digital strategy, we can continue to operate on this very successful model, but we will likely start to lose members to other experiences that they're looking for. Not only is the digital strategy really part of how do we continue to grow well into the future, but how do we protect our base given our size and scale? All, really driven by the consumer expectation.

Tania: Which makes perfect sense because there's a lot of diversity in your customer base, so how you meet those expectations I'm sure is, is quite critical. You mentioned that this is a newish role within the organization. What have been some of the challenges of introducing this thought process, this mindset shift amongst your peers?

Craig Miller: Some really engage, and get it. Some don't. Some, it feels a little bit threatening to change the way we did things. It's a little bit of a mixed bag and not too dissimilar from, I think, other companies and other industries that I've worked with. Sometimes they're still people and I've been there over a year, who still think of me as the tech guy, and so it's really rooted in the culture. But over time, like anything else, it usually takes probably a couple of years as the entire organization is morphing into the digital era, so to speak.

Tania: I think a lot of organizations, especially retail who are very traditionally brick and mortar, can very much empathize with this shift, what it means and how do we balance the in-person presence versus the digital presence. This is not your first rodeo. You've done digital platforms and digital experiences in your past, and I don't think it's something that maybe was as popular five, ten years ago. What do you think is happening now that's really bringing a lot of organizations into this fold of, we need to create these digital experiences?

Craig Miller: Yeah, that's a great question. I think companies like Amazon, like Uber, like Airbnb, I would tell you, beyond five, six, seven, eight years ago, many of these concepts, even Amazon, it was considered to be a fad. Retail thought that it would never amount to very much, and some would say that they were blindsided. Well, they really weren't. Amazon's been around for for 20 years. Seeing other businesses getting disrupted, what I've seen is, they've gone from almost an attitude that this is really not that important, to almost shifting to a fear of where is the next Amazon that's going to take me out? I think we've seen this hockey stick effect because of the significant disruption that has occurred in other industries.

Tania: That's an interesting point because I think some people react to these types of disruptions, and others are very proactive, knowing that it's coming. Where do you think Planet Fitness is today in comparison to the other competitors in your space?

Craig Miller: Yeah, the answer is two-fold. I was brought in because they had the vision that digital and technology was about to disrupt the fitness industry, and given the position, the leadership position that Planet has earned, they felt we're the ones who are going to disrupt with technology. So, I will say the mindset, they had the vision. They had the acknowledgement and the recognition that this was going to happen. They just didn't know how. Now that I've laid out the how, this is what it means, it is more than just a technology transformation. Literally we have to, every single function will be impacted to some extent. That's where then, there's resistance, what I call drag. Right? The cultural shifts are slower, but the actual acknowledgement and vision is, really came from the CEO and the board, and that that was the reason they brought me in.

Tania: Which brings up a really good point. I mean. I think senior leaders need to be on board. They need to understand. They need to have a common vision. You coming in, essentially as a change agent, a transformation leader, what have been some of the challenges for you in helping the rest of the organization come on board, and see the vision and get on the train?

Craig Miller: Change is never easy. For folks who were there, if they don't understand it, they don't like the change. For new folks that have come in from other businesses, typically have at least an acknowledgement. What I typically try to do is just try to understand in each of the functions, what's really important. First let's get aligned, at least at the top of the house, of what our ultimate goals are. I try to build credibility and trust and through that education. It's a methodical process, by being able to help each of the functions with a particular win, with whatever the new approach is. Then that starts the trust and the confidence to go beyond that.

The second piece of it, I think, that's really important, that is the way in which companies measure performance has to change a little bit. Things like KPIs. We are a very simple business in the sense that we look at acquisition, retention and rate and then sometimes if there are things that aren't implemented that don't immediately show one of those three things, it's very difficult to get buy-in. But you've got to show these incremental KPIs that are important. So, we've got to think about ROI differently, and we have to think about how we measure, some of the business metrics of the business.

Tania: To that point, as you know, this is more of a journey so you have to get people on the journey and moving along the journey. How do you measure your success in this role? What are the progression points that you think, "Okay, yes. Now we're getting there."

Craig Miller: Again, two-fold. One is that we truly have measurable value by business standards. I'm either driving some level of membership, acquisition, retention rate. The second is that my key stakeholders would perceive it to be successful. I often coach my team is, we could drive the right outcome but we're not successful if our key stakeholders don't perceive it to be. I'm constantly looking to make sure that I understand what their measure of successes is, or success criteria and get them as advocates. That's probably one of the most important. Those are the two, the most important things up front to do.

Tania: It is interesting because I think in general, a CDO role is still quite new for a lot of organizations. Some don't even have it yet and some are just testing it out, but don't know how that role fits into the big picture. You having this combination of CD/CIO role, does that make it easier for you or does that create more complications?

Craig Miller: It makes it easier for me to probably execute or implement. It makes it more challenging because there isn't this clear delineation. Culturally, most companies still think of digital as technical. In some cases it creates confusion. If I were to bring on a CIO, and I just split those titles so to speak, it probably would be a little bit easier. But it's still, people have muscle memory and they tend to go back to, "You're the tech guy." Even if they recognize the title and title to me is not the important thing. But even the accountabilities and the role, the way in which they act or practice, very often is really what counts. As an example, if I'm laying out certain strategies that require changes, let's say in one of the functions, it could be operations, it could be marketing.

If I'm driving that change, and the function is really not embracing that. They say, "Listen, you take the tech. We're the ones who will define and own the business side." And create that chasm between the two, then it creates a problem. "You stay on the tech side. We'll stay on the business." Anyway, I think in some cases, separating the two would would make it, at least the perception of it, a lot easier. The execution of it, it is easier to have two together, because as you know, the technology is a key enabler of the strategy.

Tania: You've been in this role for a year

Craig Miller: A little over a year.

Tania: And, of course in in similar roles in your past. But if you reflect back to what you know now on this journey, when you were in your first 90 days in this role, what are some pieces of advice you'd give your yourself from 18 months ago?

Craig Miller: I would probably spend more time educating. There was this almost euphoria. They had the acknowledgement. Everyone had the acknowledgement right from Chris and the board, that technology and digital was going to be a key driver growth, and that it would continue to protect the base, and it would put us in a position to disrupt the industry once again. A lot of the excitement around it, I laid out a pretty comprehensive, as well as something very intuitive. They all bought into it. Then when we start getting into execution, then they start getting concerned. Well can we really keep this up? How are we going to continue to years three, four and five? I put us onto a pace that was commensurate with the demand upfront.

But then as you start getting into execution, all of a sudden the realities of the execution, what does it mean, the implications on the business function? How are we going to fund this? It's question, well, wait a minute. I don't know if the regs will support that as being CapEx or OpEx. You start hitting all these drag points along the way, and so it forces you to slow down a little bit, drive alignment before, that'll certainly gate the pace. I probably would have actually slowed us down a little bit upfront, instead of kind of really coming at it as aggressively as I did. It was all because, I mean, essentially, in my first 90 to 120 days everyone really felt this was phenomenal. This is what we wanted. But till you get to execution and the realities of that execution, then they start to have questions, which is fine. It just changes the pace

Tania: As you went on this journey and started with that education, it's interesting because I'm reflecting on something we heard earlier today. It's not always about the tech or the strategy, actually that might be the easy part. It's the people and the culture. It sounds like you had a similar experience, and it's probably the case in your past as well, as you come into an organization that does not fundamentally have a tech at core basis. Talk a little bit about how important that is, and as you're building your team, how much you try to build that into the DNA of your teams.

Craig Miller: Absolutely have to build this into the DNA of the team. I would say, I probably spend most of my time driving alignment, education and alignment. In a franchise operation it's double the work, right? Because you've got to drive it through the franchisees. You've got to drive it through headquarters. In our case, quite frankly through our key vendors, because we were so far ahead of where our vendors were, and every one of our vendors were really trying to implement their own digital strategy. We knew that that could become a constraint on us because we would likely be ahead of the curve with them. So, given our size and scale, we said, "Well, instead of you all plugging into, us plugging into you, the three, four vendors, you're going to plug into us. We'll create the standards. We'll create the platform and you'll plug into us.

If it wasn't for our size and scale, I would not have been able to do that. So we have to hit it on the vendor. We have to hit it on the HQ side, and we've got to hit it in the franchisee side. I spend most of my time trying to drive alignment, educating, bringing people along while we're delivering.

Tania: So it's a full ecosystem. It takes a village.

Craig Miller: It absolutely takes a village. As I said earlier, when I coach on leadership, they said, it's going to sound odd, but most believe that the actual results are the ultimate and the key. I said, "It's not. You could deliver the results and still fail. It's the perception of successful results. You have to have the results to have success. But if you just have that, it doesn't guarantee it." You've got to manage the perception of it. and both go together and that's not just a full-time job for me. I have to have my directs also out there doing the same thing.

Tania: Don't forget to check out Craig's entire Paradigm Shift talk, called Strengthening the Core, Bringing Tech to the Center of Planet Fitness, at thoughtworks.com/paradigmshift.

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