Winn-Dixie CIO: Bankruptcy Has Its Advantages

When the $10 billion 1,000-store Winn-Dixie grocery chain went Chapter 11 (bankruptcy reorganization) on Feb. 21, the initial employee reaction was shock.

But the chain’s CIO said the secondary reaction was a remarkable focus on core business issues, including the strategic use of technology.

“There is nothing like that kind of threat. It’s had a really remarkable impact on IT,” CIO Charlie Weston said. “What body of work should IT be doing to really drive getting the business out of Chapter 11?”

Weston is a veteran of The Home Depot’s IT operation, where he spearheaded EAI (enterprise application integration) deployments. He left The Home Depot in October 2004 to assume his current CIO post.

For the five months that he served as CIO of the 80,000-employee Winn-Dixie before it moved into Chapter 11, Weston said he found the 80-year-old company’s people to be wonderful to work with, but that the culture was much slower and more genteel than what he was used to.

It struck Weston as “not political enough, not driven enough, not enough of a sense of urgency.”

“Much of it was that old world sense of Southern culture. The South has much more of a veneer. ‘I don’t raise my voice. I’m respectful of the other person.’ That can impede organizational change.”

For example, in other corporations, frustrated managers might find themselves pounding on a desk to make a point, Weston said. Although ungracious, “it can get action and results.”

But once the stock price plummeted and bankruptcy court action was taken, employee attitudes shifted quickly and dramatically, he said. “It has really brought a sense of urgency to the table, a sense of focus.”

Weston has discovered—as have other CIOs and chief financial officers after they enter bankruptcy proceedings—that a lot of the political turf battles that Fortune 500 companies tend to have quickly stop once the company’s survival is threatened. Psychologically, this is similar to how communities—or even countries—quickly and temporarily put aside partisan issues during disasters.

This can be especially helpful for executives such as CIOs, whose power comes from serving other departments and business units, who may have very different agendas. But the ultimate responsibility for the technology working rests on the CIO, even if those departments disregard the CIO’s implementation instructions.

“One of the difficulties the CIO has is that you’re sort of [given] accountability for anything IT, but many of the actual results are in the hands of the business unit owner,” Weston said. “To that degree, Chapter 11 has helped tie more of the accountability to everyone.”

Right after the Chapter 11 filing, Weston was called into his CEO’s office and CEO Peter Lynch gave him new marching orders. He was to take the then-current caseload of IT projects—numbering about 70—and slash them down to about 16.

Lynch told the CIO to kill anything that didn’t directly support a very small handful of new corporate objectives. “I got our senior team together, and we locked ourselves in a room,” Weston said, and they reviewed all IT projects and proposals with an eye on “what would really drive sales, improve store operations or reduce expenses or improve compliance. Armed with that litmus test, we went through our giant list of projects.”

“Those 16 go to the core of pricing, merchandising and inventory,” he said.

Weston is slated to present that list to the CEO this week. “Chapter 11 has really turned everything around. I am getting absolute endorsements from other senior executives,” he said.

In many instances, Weston said, the killed projects were ones that IT had been opposing anyway, usually because the technology was too immature.

“Of those 70 projects, a couple had some major dollars set aside for some very sophisticated analytic tools. The business unit was all set to go ahead, but IT was saying, ‘No, you’re not ready for that yet,'” Weston said. The killing of those projects was a huge help to the company. “That was huge because they would have been a major distraction for us and possibly prevented us from fixing the core” IT problems involving pricing and inventory.

Next Page: Focus now on the immediate and real.

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