Jason 0:00:00.5:

Welcome everybody to 'From Napkin to Next-Gen Planning at Toyota.' Joining us is Nick Kline from Toyota and Bill Howell from Anaplan.

Bill Howell 0:00:09.8:

Thank you, Jason. Hello everybody. Welcome. Glad to see you. Hopefully it's been a really productive day so far, and a lot more productivity ahead. Excited about this session with Nick. I'm Bill Howell. I'm the VP for Anaplan's strategic go-to-market motion. Dallas is home for me, so for those of you that are Dallasites or Texans, glad to have you here. For those of you from out of town, thrilled to have you in Dallas. Come on back. So, today I'd like to introduce Nick Kline. He's the National Manager of Business Operations, Finance for Toyota Motor Sales. He's responsible for ensuring that Toyota creates maximum value and revenue at the right margins to drive market share and profitability for what is the sixth-largest advertiser in the world. Nick heads up marketing and advertising in support of sales. So Nick, thanks for being here.

Nick Kline 0:00:57.2:

Thank you. Thanks for having me. Appreciate it. Is the mic okay? Can you all hear me? You all know Toyota. We make cars and stuff. Specifically, we design, build and sell and finance cars. Okay? So I've got to specify a couple things here. First, everything that I'm going to talk about is only related to the selling and marketing and advertising of cars. Okay? I know nothing about designing or building our cars, or distributing. When I talk about finance in this context, it is not financing your car. We do have a lease organization. TFS. This is not that. This is all about budgeting and planning of your advertising and selling of the vehicles. To give you some sense of scale, Toyota is the sixth-largest advertiser in the United States. We work with seven different agencies, creative agencies, on two different brands, and the other brand is… There you go. Correct. What was the third brand? Trivia question. Scion. Yes, Scion. Perfect. What makes our job particularly problematic or complicated is the fact that we are fully endorsing the franchise model, meaning we multi-tier advertise. We advertise in one part of the space, and then our dealer partners advertise in a different part of the space, and that's important for us to understand.

Nick Kline 0:02:28.3:

We also do other marketing initiatives like racing. We're in NASCAR. We do sponsorships. We sponsor the NFL, and then we other do we do other marketing programs too. All right. So let's continue on. We, our marketing finance organization - you'll see that at the bottom of these recycled slides - we support 45 teams that do this advertising across Toyota and Lexus. Of those, they manage 174 different cost centers, and that's four different expense types. Now, multiply that out and do that four times a year. That's how many times you're forecasting, and if you think about where we were in 2019, that's a lot of spreadsheets back and forth. Think about how many errors that occur. So there's our problem, right there. December 2019. I had just got this job in marketing finance, and it was our Christmas party. I'm sitting there at the table and our boss, our Chief Marketing Officer, comes over and he says, 'Hey, I think I've got another opportunity or another spot for a Super Bowl ad. Do we have it in our budget to get another Super Bowl ad?'

Nick Kline 0:03:48.4

Of course, it's our Christmas party, so I turn over a napkin and I start writing down, 'Well, let's see. Last forecast we had such and such in the budget. We had this much remaining. I know this department over here is going to have so much savings and this department over here is going to have so much overage. Put it all together and yes, I think we can afford it.' That's where our napkins started. We still use a report today called a napkin, by the way. I don't know if you ever heard that story, but that's how that came apart. So we keep using it… Beyond popular belief, it didn't start in a bar. It was a Christmas party. If anybody asks, it was a Christmas party. So that's how that napkin got started, and I'm sitting there going, 'This is terrible. There's got to be a better way to do this.' So we went to the Association of National Advertisers, who puts on a big conference, and I asked around who was doing what in this space, and the only answer I ever got was Anaplan. So that's how we started down this journey. All right. Let's keep going with slides.

Nick Kline 0:04:56.8:

Forty-five teams, 174 cost centers, four expense types, four annual forecasts. Oh, and by the way, we have to forecast… Every year we also forecast for the next two years, and then we also have to involve our agency partners. Half of our advertising spend…. Remember, we're the sixth largest advertiser in the country. We don't advertise in millions. It's more like billions. We work so closely with our advertising agency partners that they have to become part of the forecasting process. Half of everything we spend, they are coming up with a plan for us and then changing that plan as market conditions change. You can imagine that's quite frequent. Oh, by the way, what else is relevant about December of 2019? What happened three months later? Yes. Everybody's wearing fashionable items. We had to come up with scenarios like that. 'Hey, what would happen if you dropped $300 million, $500 million out of your budget?' 'Well, that's a big change.' 'What does it change?' 'I don't know. Let's go to the paper.' Then we had the dragon that always pervades marketing, which is our finance friends.

Nick Kline 0:06:18.8:

The relationship between finance and marketing is always weird and tenuous. Why is that? Here's my answer. My answer is simply this, one hundred years of working on production line. People in finance and accounting can walk out into a production floor and they can see how that works. They can see the material costs. They can see the labor. In fact, all of their language relating to finance and accounting relates to everything that happens on a production line. What does the production line look like for advertising? Anybody? This is not the production line for advertising. In fact, the reality is that every company that sells something and markets something does it in a different way, so there isn't one production line, right? This is a rough sketch of the production line we use for Toyota. Not production line production line, but advertising line. It basically starts with overall brand awareness. 'Who is Toyota? What do they mean to you as a marque?' Then it goes down to consideration. 'We've got a new Tacoma for you. It's a fantastic car.' I've never sold a used car before. Then it drives intention and it drives purchase.

Nick Kline 0:07:40.6:

The next box that comes up is not a box we play in. This is the franchise. This is the dealership, and you do that. Then we have to manage the relationship all the way around so that we can ensure that you come back to us. This is not a proprietary special thing. A lot of advertisers do it this way. This is the way that we think that we operate, so our financials and fundamentals have to be organized this way. So again, this is why we need to come up with a tool that works for us, and not just some spreadsheet or some financial report, a P&L or by account. That doesn't really work that way for us. All right. Tactical and practical challenges. In terms of timing, we always had stale forecasts that were done quarterly. We had stale actuals that were monthly. If you're trying to balance your budget, know how much money you need within the day, within the week, you weren't going to have it from the information that we were getting from our existing systems. It was always very labor intensive, and hence my creating the napkin, and then we also did manual online JV processing, which becomes relevant later on. It was not flexible and it was not scalable. So these were our problems that we specifically tried to challenge and tackle ourselves with. I've got a bunch of recycled graphics in here that'll give you a landscape of how we built this.

Nick Kline 0:09:13.9: I stripped off some of the names, but you get the idea. A, B, C through E, those are all various systems like your expense system, your PO system, your manual accruals, all of your transactions that then filter down through accounts payable, that then filter down through your core data repository - for us it was SAP - and then they go through your budget planning process. Ultimately, what we were having to do - a half step after 2019 - was to come up with a dashboard that at least gave our teams visibility once a month to what was happening in their budgets, and that's how we communicated with them. Obviously, the first problem that you can see there is, you've got a dashboard and you say, 'Oh, I've definitely got a problem. I need to make some adjustments,' but you can't do it in a Tableau dashboard. So we had to use the spreadsheets, but the spreadsheets, we could only load those once a quarter. Pretty simple solution. Replace them with Anaplan. For us that was fantastic, because it was also remote and separate from the core systems. That kept all the confidential information within the organization of marketing and marketing alone.

Nick Kline 0:10:31.3:

All right. This is what we built. I think this is wonderful, by the way. All right. So first thing, right in the dead center is the main budgeting tool. Why does it look the way that it does? It looks that way because that's similar to the spreadsheets that our clients first got. They're used to seeing that. Lists of projects, lists of values per month. 'How am I going to spend it?' and then totaling up. On the old dashboards, we had a tree, or we had a color coding. Red is, 'You're over budget.' Red is bad. Green is good. Our simple philosophy here was forest, trees, leaves. Is my forest on fire? If so, which tree and which leaves? It allows them to drill down, down, down, figure out exactly where their problems are and how to solve them and who to solve them. What are some other elements on here? Other elements are, you see the different colors here? Green, yellow, red and gold. So I told you, just after December of '19, we hit COVID and we had to go to emergency scenario planning. So we intentionally built this tool so that you could flip between scenarios and go, 'Okay, everything's fine. Everything is green. That's our normal budget, but if another tsunami hit Japan, if we had another COVID, if something was to happen, I can immediately plan a scenario, copy and paste, plan a scenario, and this would be my yellow scenario, my red scenario or, if we found extra money, my gold scenario.'

Nick Kline 0:12:14.6:

All that stuff on the left. I told you before that our agencies are half of our planners. We have one budget owner, which is the senior manager over that cost center, but then they get to select who else can access that cost center and do planning in it. So literally, our agency partners and all of their people can go into their particular cost center, and they have various tools to plan their budgets. They have a planning tool for media. They have one for asset production, and a completely different tool for agency fees. All of that information then flows into one of these pages where one of our Toyota people can see their particular budget, and they can modify and plan their budget. Oh, by the way, we spent a lot of time making sure that manipulatable information was colored in a particular way. In this case, it was purple. It seemed to be an easy, convenient color. So because we're dealing with marketing people, Crayola is relevant. Me too. All right. So that's what we were looking for, is we were looking to manage their brain. Anything that's black is black. It's solidified. It's done. It's past. It's history. I don't know what you want to call it, but if you need to change a number, it must be purple. That theme we carried throughout the whole tool and it's really resonated, really resonated quite well.

Nick Kline 0:13:52.1:

All right. So our agency folks, we can put in targets into our media production and fee. We can build those into the tool. The agencies can then forecast against that. They can update those forecasts. That all flows into each one of the sheets. Now, instead of us going to our clients and saying, 'Hey, we're going to pull down your forecast for this quarter,' we don't even tell them. We don't even bother to tell them. We just go ahead and pull the data and say, 'This is where you're at. You don't have a problem. See you next…' Whenever, right? Why do we do it that way? We do it that way because our people sell cars. They market and advertise cars, and the less distracting we can be for them, the better off we are as a company. 'We'll take care of this part for you. You go market cars for us.' So all the data goes into the center. You'll notice that there's a red square there. This particular budget holder is over budget, so there's your forest for the trees, right? You've got your early warning signal, 'Are you over budget? Under budget?' and then those all go into summary reports, one of which is the napkin. It's pretty straightforward.

Nick Kline 0:15:03.1:

Here's the detail of that particular page, which ends up being the primary page that most of the people use. I've redacted a bunch of stuff on there, but you can see the expense type. In this case, it's a selling expense. Scenario is their green scenario. You've got purple numbers. You've got black numbers. It's pretty straightforward. FY26, so if you have a project that pushes into FY27, you can forecast that forward. I'm talking to mostly Anaplan users. You guys know how this stuff works, right? We've created some nice little graphics. We spent a lot of time worrying about how to make a graphic that makes sense to marketing people, and I don't mean that as a negative thing. I'm a marketing person myself, but it's relevant for how they think. They need to have, 'What's the most I can spend? What does it look like when I'm spending up to that number? What was my plan?' - the line in that case - versus, 'What are my actuals?' - the stacked bars. That's all pretty straightforward. That's how they think. They also want to know, 'Hey, did I overspend in a particular month?' - that's this graphic below - and, 'Did I underspend in another particular month?'

Nick Kline 0:16:10.9:

For management, and this goes to your point. What I really need to know is, unlike a production line where spending is very stable, very predictable, media spend in particular - or production - is very variable. With media you have… If a tornado comes in a particular area, you have make goods, which means you're not spending that money, which, 'Oh my gosh, I can't spend it again tomorrow. Monday does no good. I have to reallocate those funds.' So between the GM's in Toyota, they can all look through the fence and say, 'So-and-so's got excess funds. So-and-so is spending hot. I need to rebalance so that we all make sure that we land on our money, on our budget.' Why is that important? That's important because if budget at the end of the year goes unspent, it's potentially cars that we didn't sell. We look at things differently in marketing. In other parts of the P&L you may look at it like, 'Well, if you could save money on a steering wheel, that's profit,' and it's true, but if you save money on your advertising, is that a car you didn't sell? It's hard to draw that connection directly, but generally, yes. Generally, yes. This comes to your question.

Nick Kline 0:17:29.3:

There was a question that I knew I was going to get, which was, 'Who maintains the system? Who provides the leadership?' Our marketing finance organization, which has changed slightly in the last couple of months, leads and owns the tool. When we were designing and building it, business analytics was a team that we rely on, and what they had done in the past is, as each team had their own initiative, they were right behind them saying, 'Okay, you want to make this investment. Here's how we're going to measure the performance,' and they work with the agency. It's not so much the business owners. It's the agency. 'You think that's a good idea? You think we should spend this money on this kind of program? Here's how we're going to measure that.' So we have a whole team of people who do that, and they're great data scientists, which makes them perfect people to be a part of this project. Obviously, I'm not going to show how that works. That part's a secret sauce. We also used our fantastic friends at Akili. That's Alan and Tyler. They were instrumental in being patient with us and helping us understand how the tool works, teaching us how the tool works, and then helping to build the tool the way that it needed to be built.

Nick Kline 0:18:43.3:

Then we had very minimal input from Toyota IT, department because they were an SAP shop and they felt like the answer to every question was SAP. Steady state. Now, here we are. One of the reasons why we chose Anaplan is because when Angela and I… I won't call her out, but when Angela and I were shopping around for tools, Angela was… Angela and I came to the conclusion that we could probably modify this stuff ourselves. We don't need an IT department. We could probably affect how the numbers present, the graphics, the flow of the pages. We could probably do that ourselves, and in fact this has turned out to be true. Because we had the business analytics people involved, they're now tied into the data, so when they need the data for reporting and performance, they're right there with it. Anyway, I had a slide earlier that said all of our problems and all of our challenges. This basically says that it addressed them all. By the way, while we were building it, one of those things that we had to do was do a JV, journal voucher or… What is it? Yes, whatever, which is a very manual process for us, submitted through accounting, blah, blah, blah, boring. We thought, 'Hey, why not just build it into the tool,' and then we batch-processed it once a month. Time savings alone helps. Thank you everybody.

Jason 0:20:13.3:

All right. Great. Thanks everyone. Thanks, Nick.