Cultivating a Culture of Cross-Functional Teaming and Learning at CarMax

One key to successful digital transformation: matching up the right people.

CarMax, the largest retailer of used cars in the United States, has always sought to transform how vehicles are bought and sold in America by making the experience transparent and stress free, according to chief information officer Shamim Mohammad. MIT Sloan Management Review guest editor Gerald C. Kane and contributor Anh Nguyen Phillips spoke with Mohammad about how CarMax is continuously evolving its culture of employee empowerment through digital transformation.

MIT Sloan Management Review: What does digital transformation mean or look like at CarMax?

Shamim Mohammad: With customer expectations evolving in a rapidly changing digital environment, CarMax’s digital transformation is revolutionizing car buying yet again. Our strategy is all about developing customer-facing and associate-enabling technologies, and leveraging rapid product innovation to deliver an exceptional customer experience.

MIT Sloan Management Review: How does CarMax’s digital strategy relate to the overall company strategy?

Shamim Mohammad: As an omnichannel retailer, our digital transformation isn’t solely driven by IT, or marketing, or product. It’s a CarMax strategy that requires all parts of the business to work together to deliver a simple and seamless customer experience. It’s been critical to break down the silos between departments to drive customer-centric innovation and business results.

Can you explain how your cross-functional team structure relates to digital transformation?

Mohammad: In a world that’s quickly evolving, it’s important to set up nimble, cross-functional product teams that can iterate quickly on ideas.

At CarMax, we run principles of agile development where product teams have shared business objectives. In our teams, there are three non-negotiable roles: One is the product manager, who is usually not from IT, and they operate like the CEO of the product team. Then you have a lead developer or engineer who is from IT, and a UX [user experience] designer.

They are empowered since the leadership team never tells them how to solve a problem, but what the problem is and the KPIs [key performance indicators] to work against. This approach allows for increased feedback, a significantly faster pace of development, and trial and error to ultimately arrive at a solution that is best for customers and associates. We’ve also found teams take smarter risks and are more creative in how they meet their objectives.

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