#129: Jane Mustoe, Senior Technical Director and Head of Innovation Labs, Tesco: “AI will pop up everywhere, no area will be immune.”

0:00Then you've got robotics. I genuinely think that isn't that far away. I think five years ago it felt very different, but you can imagine whether it's a store environment and or a distribution environment, this sort of combined human-humanoid type relationship working alongside.

0:25We were keen to have someone on to talk about how retail is evolving and how AI and emerging technologies are likely to shape the sector in the years ahead. My guest today is Jane Musto, Senior Technology Director and Innovation Labs Lead at retail giant Tesco, sitting at the forefront of how one of Europe's largest supermarkets is exploring the future of technology, innovation, and of course, AI. Jane has had a fascinating career in senior transformation roles at Barclays, Accenture, and NatWest before joining Tesco, where her focus is on using technology and data to enhance customer experience, improve efficiency, and help minimize food waste, drawing on everything from digital twins, drones, and autonomous retail concepts, and much more, to achieve their ambitious goals and maintain Tesco's position as a market leader.

1:26In this conversation, we explore what innovation really looks like inside a complex business operating thousands of stores at enormous scale, where AI is already creating value, how Tesco approaches experimentation and risk, and what the future of retail may look like as intelligent systems become increasingly embedded in day-to-day operations. We also discussed the inevitable impact AI is going to have on jobs, how leaders should think about preparing for that change, and why innovation is often as much about culture and governance as it is about technology. This is a brilliant conversation about leadership experimentation and how large organizations can adapt in a period of profound technological change.

2:14I really hope you enjoy this one. I, for one, had an absolute blast. This is Jane Musto.

2:28Jane Musto, thank you so much for coming on the Tech Leaders Podcast. Fellow Welshie, I'm so happy to be chatting to you. I've been really looking forward to this one, actually. Firstly, thank you for inviting me along today. I'm also looking forward to it a lot. So, yeah, it's great to be here. So let's start off with a bang then. And what does good leadership mean to you, Jane? I think there's a couple of things that make for great leadership. One is making sure you've got your sort of, people call it your vision, your North Star, where you're looking to go, where you're trying to head to, what you want to be.

3:02And I think having clarity around that is super important. And I'm being able to paint that sort of picture for the people you work with to align behind. I think alignment is super important. And, you know, it's really key that people talk about that vision, but they all really understand what the essence of it is, that they understand what's involved in getting us from where we are to that vision. And that alignment is, again, key, especially in large organizations, but even smaller ones that you're all heading in the same direction. and then I think it's about really getting out of the way and allowing those who know what they're doing to do what they do and ideally I'm blocking things as you go so that that would be great leadership for me brilliant brilliant advice yeah I think alignment and getting out of people's way is easiest ever done isn't it I mean Richard Branson who said don't hire good people and tell them what to do get them to tell you what to do that's the whole part of hiring good people and I think that rings so true.

4:03So let's talk about what we've already established. We're fellow Swansea University alumni. You obviously left and got into the graduate scheme at NatWest. Talk us through that early part of your career. Why did you pursue that sort of banking IT direction? And how has that shaped you in terms of the direction of your career? Yeah, my degree was sort of maths, computer science, engineering based with a bit of management science on top. And it really sort of invited me into the world of technology and science in some ways and engineering and what was possible. So I think through the course that I did, I started to find an interest in how technology could really enable and influence the future and how we could get things done more quickly, more effectively, more efficiently, leveraging the technology, even all that time ago, to accelerate the outcomes that we all wanted to go after.

5:08And I still believe that's the case. And so I was always interested in trading. There was a book I read in my late teens called The Nest of Vipers. and I don't know, it really hit my imagination around trading, what it was like, the world, how fast it was. Sorry, Jane, can you say the name of that? What was it called? It was called The Nest of Vipers. Okay, I've not heard of that one. I'll have to put that on the show notes. It just made me want to join that world a little bit and my degree was such that actually in those days becoming a trader wasn't necessarily such an easy route or path to navigate but I could see a route where actually trading was changing, electronic trading was becoming much more of a thing.

5:54And so I decided to apply to their graduate scheme as a technology graduate and I was lucky enough to get a place. You obviously didn't come from a technical background, though, Jane, in your degree, it was more of a business management degree, yeah? So how did you adapt to IT and technology? Was that always in you? Was it always an interest there? or was it something that sort of happened in the moment when you were applying for that job? It was a bit of both because in my degree I did do computer science. Always used to make me laugh now looking back at the computers that we actually had to work on.

6:27So we had to do an element of programming, an element of architecture, technical architecture. We also had to leverage sort of statistical models to help plan with operational logistics in the degree. So the degree was quite a broad and rounded degree and it was quite mathematics heavy. So we were the early days, I think, of designing in computer science UX, UI, which is what we call it today. But really those digital interfaces, which are moving away from in those days, the mainframes and the green screens to a much more digital interface. So my degree absolutely touched on that. I think what was really nice about it as well is it gave me an insight into corporate world and coming from where I did.

7:12That wasn't something I really understood or had seen growing up where I did. So it was a good insight. And then, like I said, the graduate program threw you in and immersed you into the world of technology straight away. Yeah, sure. I just wanted to talk about transformation very quickly then. So you've obviously led transformation in super highly regulated environments, like financial services. What sort of habits or disciplines from banking have you taken into Tesco from a transformation and IT change standpoint? Look, when you are doing any form of transformation back to what are the outcomes and objectives that you've set to do that, I think being super clear is critical and getting scope really clear is critical.

8:00And I think industry agnostic, if you're not clear on what is in scope and what is not in scope, you end up drifting and you see it quite often and things get added and added. And before you know it, you're already double the size, double the complexity, double everything. And yet the timeframes around you aren't necessarily changing. So I think, look, good discipline around, the word governance is quite often deemed by some as like, heavy, shouldn't be there. Actually, good governance enables speed of decision making, enables risk to be mitigated and managed properly, enables transparency, which for me on any transformation is probably the one thing I think goes without saying has to be there.

8:47You know, our jobs are there to manage the risks. There are risks when you're changing something that's been in situ for 30, 40 years to something new that's actually not just about replacing it like for like, but reimagining it in a different way. you you've got to really think hard about how you're going to transition that how the risks are going to be mitigated and managed and minimizing those but without you know stopping the machine as well because these are typically much larger scale changes and therefore need to be managed in a way that like i said has the right governance rights control and right uh transparency around them so that's what i would say i took across for sure yeah oh fantastic that That makes total sense.

9:33So you lead now, going to the present day, you now lead Innovation Labs at Tesco. So what does that function actually look like in practice? How would you explain your role and what does innovation look like in an organization like Tesco? Yeah, so the labs part of my role, which is looking at, it's a small team. What it's looking at is across multiple horizons, the technology that's available at any point in time. So two years, five years, 10-year horizons. And we're looking across industry. We're not held up on, is it the manufacturing industries or retail, banking, financial services? It's really just saying, as interesting technology, is there an application or way that that could help us in the retail industry?

10:23And what do we think? And is it really doing what it says? Because as we know, with lots of new technologies when they arrive, they're not always as fit for purpose or robust as they need to be on day one, right? And so part of it is really testing, especially for scale organizations like Tesco, we need to make sure that anything we're putting in is safe, secure, of course, and can scale. So whether it's testing things like drones, which about three years ago, we were trialing, they're coming back again now, because again, they will have improved. When we trial those, you know you get loads of lessons you keep it on the radar because you think well it may be not right now and it wasn't right three years ago but maybe next iteration the things that we saw that weren't quite working they fixed or things have moved on um and really what then we do in labs is test that technology try and break it where possible or try and find the right application of it and then we work with the businesses to say look we think this could be something over the next two five years that you may want to adopt sometimes that's much quicker sometimes that's much slower um so it gives us a real place to experiment uh test and and learn fast yeah sorry jen i can't leave that i can't leave that one there you mentioned drones i've got to ask you about that how far away are we from drones delivering our shopping please tell me it's Yeah, it is.

11:50Look, it's already happening in China. When you go there, you can see chains of drones. Grocery shopping? Is that happening in China? Yeah, small deliveries of deliveries. We also, you know, we trialed robots delivery in Milton Keynes. They call Starship. We did a large experiment with that. People loved them. And they could take up to sort of two shopping bags worth of groceries. And like I said, the drones that we tried also, I think the bigger complexity won't be the technology itself. There'll be a couple of things, which will be airspace. Yeah. Who manages the airspace, regulates the airspace.

12:26Yeah, exactly. That's hard, isn't it? And then there's a customer angle. Some customers may love it. Some may not like the idea of things flying around the sky and things being delivered and where they're delivering to. I don't know. It'll be varied for different customers, I think. Yeah, because the airspace one, That's a big challenge, isn't it? Because you've got loads of competing companies with drones flying around. So you need to have a centralized air traffic control. Obviously at that altitude, which is obviously not going to be aeroplane or helicopter altitude. But there's like another layer, isn't it?

13:00Yes, exactly. It will come. It's not far away. We're really looking at it again. There are definitely companies that are investing. You always see it where the companies are investing more. But it has a real purpose in some of the more remote islands as well, where it's harder to get there by ship or airplane. It's sometimes in between. And look, there are also congestion. The roads are busy. It's tough on the roads. We want to take some of that stuff away. So I think it's single-digit years away, not a long, long time away now. What about staff, stores with no staff in them and you just walk out?

13:41Is that sort of on the horizon? What other type of innovations are you looking at? That's already there. So we have a store. Yeah, so about three years ago, now two or three years ago, we rolled out a store called GetGo. From a customer perspective, it's in Hoban. You scan your club card on arrival. You pick up your groceries, you go around the store, and you walk out the store. Right. And the payment's taken as you leave. so there's no need for you to interact with the till or payment it just gets done automatically we had a couple of those and interestingly they um well they have their operating model challenges right for customers some customers you know don't want to always scan a club card um but sometimes they there's something psycho the psychology of walking in picking up some grocery and walking out it's quite interesting some people don't really like it i feel like i've done it just doesn't feel right does it yeah um but i think i actually did it in one of the the amazon stores in london you obviously saw them yes um and it was just weird i didn't actually buy anything in the end but it was just i just felt bizarre but there we are but i'm sure it'll take a while to get used to yeah yeah and then we have something we call magic tills in tesco which is quite popular we have it on campus as well in our in our store in campus where you literally go in you pick up your groceries that you want when you walk to the till the till just lists out everything that you've got now that's quite nice no scanning straight to payment and out you go that yeah from a customer point of view we get you know super super positive feedback about things like that fantastic you've got to you've got to spill the beans on some other ones jane what other innovation are you guys working on at the moment that's going to have an impact on retail generally so no it wouldn't be podcast related to tech if we didn't mention ai um that's that's It's inevitable, and I'm sure we're going to come on to that a little bit more.

15:35But look, I think we've been using AI, machine learning and science for two decades, at least in Tesco, whether it's around forecasting, availability, waste management for our food products, mileage of our vans. You know, I was saying to someone a week before Christmas, we do something like 13 trips to the moon and back in that one week, just delivery mileage, right? So actually optimizing for that using what is good old fashioned machine learning data science really is really important for us, right? Because every mile matters. Yeah. But then you look at generative AI and where that's going. We've literally been lucky enough to work on a new digital assistance that we just literally launched on the 8th of April.

16:21We did some announcements. We're launching to colleagues first so that we can use them as our learning ecosystem. system because you know with all generative AI and the new digital world of digital assistance we don't actually know necessarily how customers are going to interact with it how it's going to evolve what's important to them how it's going to be used and it's not as black and you know it's not as binary as as before in a sense of you know you put something in you get an output you can put something in and get a different output because of the way the models work so testing for that and really using our 300 ,000 colleagues to help us design.

16:56We've already got a great product, but help it improve and design that further before we launch customers later this year is really important. And that's going to help customers with things like meal planning, using up food in their fridge, making sure that that helps with then waste reduction, help them budget with the food that they have, help them if they're a vegetarian in their family group or if they're a vegetarian come up with recipe ideas that allows them very quickly to add those ingredients into their basket so it's about helpful helpfulness for our customers to spend less time yeah and spend less time doing things that you know time is precious so the the easier we can make those moments the easier we can do things for them around their shopping around their meal planning around helping them with their everyday tasks, I think the real value will be seen.

17:51So new innovation and generative underway and loads of great stuff to come. This episode was brought to you by Be Digital. Be Digital support leadership teams to optimize cost and get more out of technology investments. Be Digital and the team have unrivaled expertise with technology license management and data remediation and are therefore perfectly positioned to help prepare organizations for AI technology capability. And on the last point, BDigital have developed a cutting edge AI readiness assessment, which provides tech leaders with a platform they need to make well-informed decisions about AI adoption strategy.

18:36Go to BDigitalUK.com to find out more and get in touch.

18:47so innovation is obviously central to what everything we're talking about and central to your daily role of course how do you cultivate a culture of innovation in your immediate team and also the wider how does the company go about it you know in the wider organization look it starts from the very top from the ceo and the exec who are ultimately super interested in innovation super interested in what's happening with the industry, but just generally technology and the world of the tech sort of titans around us and what's happening. I think the second part of that is customers, right? They've still got to be at the heart of everything we do and our colleagues.

19:28And I think there's this balance of where technology is helpful, useful, is driving value and innovation the same, whether that be food innovation, farming innovation, and or, you know, operational innovation in your organizations in store and distribution centers. It has to be sort of done with purpose and done with sort of, you know, a meaningful sort of direction. Otherwise, you're just trialing stuff for the sake of trialing cool tech if you're not careful. And I think we're very anchored in our customer. We're very anchored in doing the right thing by our customers. And that means that every bit of technology that we invest in, in a very tight margin business, it means that we really think hard about where we want to invest that to drive the best benefit we can.

20:21Look, and then culturally, we're all very curious. You know, we talk about curiosity a lot. And we've got some amazing colleagues across the business and technology. And our tech organization is, I think, you know, I've been there six years now. it's one of the most sort of driven to try things to learn to experiment to move quickly to not get hung up when things don't work as well as we may have hoped at that point and in some places stopping and starting again right when things haven't worked and I think that comes across the organization and we're always encouraging our teams to try something to to and then to share because whether it's worked or not worked, it's the sharing of that that we all learn together.

21:11So there is this real collective feeling of progress, testing, trying new things, but at the core, knowing what we are as a business and why we're doing that for our customers, right? And if you can anchor to that, then most of the things you try and test for, even if it's one out of 10 that are successful, that's great. Yeah, for sure. So I know obviously online purchasing for groceries is becoming increasingly popular. And I know you guys have seeped to the moon and back. I never heard that before. That's interesting. But it's obviously, you know, on that digital journey, you can essentially trace the steps of the customer.

21:52And then obviously you've got a feedback loop. When someone's walking around a store, it's less so. I mean, do you know what I mean? In terms of like shelf space and stuff like that. I know it's a wall going on for shelf space with all these brands, isn't it, in Tesco? But how do you track customer behavior then in physical environments like stores? Have you got any other, like how would you go about customer profiling and trying to improve the customer experience? Look, I mean, it's really important. We never sort of would track customers without them knowing, firstly. So we're not sort of got weird cameras everywhere trying to see what's going on.

22:32But we do know how the flow through of a store, the design of the store, the layout of the store affects purchasing behavior because we've got enough stores and enough different types of stores to understand how we see the fluctuation when you put fresh at the front or baking at the back as you move products and shelves around. And there's enough science and history that tells us, You know, when you put a front, prominent front shelf edge or advertising, that it does drive people to those places. And of course, deals, promotions and things like that. I think where it gets really interesting, though, is that more and more the sort of combined digital and physical of a shopping experience and online is going to become really important.

23:20And so one of the things that we are absolutely looking at and using is things like simulation or digital twins. And we use synthetic customer data, right? So we, these days with AI, we can create hundreds of thousands of customers based on synthetic data that mock up how a customer could behave, would behave. And then you can run lots of different scenarios in the mock-up of a shop or store that shows the flow through the sort of patterns that we think based on the shopping history that we have of lots of our customers knowing what they buy, when they buy it. and we also do the good old-fashioned what we call time and motion studies to sit in a store to see how long people spend in an aisle to spend how much time browsing in an aisle to see if products are being replaced in different parts right someone picks one up and then puts it back somewhere else it tells you actually quite a lot also the queuing at tills you know we you know that's a big area for us because you never really want any length of queue at a till so from an experience we're very clear around how long our customers spending their time and therefore what how would you design and sort of the best way so digital simulation digital twins definitely going to be something i think and and more synthetic customer testing um never beats the real thing but gives you a really good proxy for for what um is happening so when you say digital twins you you obviously have have a digital environment to test certain products strategies behaviors etc It basically mocks up the physical.

24:59So you have this visual of a physical store in digital form. And so then you can see digital humans flowing through the stores. And like I said, you run a number of what-if scenarios. So what if you put confectionery all in this aisle, in this layout? What happens to that behavior when you run millions of customers through? Do we see an uplift in confectionery sales or do we see a decrease in something or decrease in those sales? So you're testing lots and lots of different scenarios based on the layout of those stores, the range that you have on those shelves. And that simulation then gives you sort of an indication of how you think if you change something like the shelf layout that you're talking about or the range within those shelving, how that might impact the customer experience, how it might impact the sales.

25:51That's incredible, isn't it? Yeah, it is. It's amazing. It is amazing. It's going to be a massive unlock for lots of companies and industries and lots of industries already using them. Yeah, for sure. We actually had the CTO of Ocado on a number of years ago. He was talking about using digital twins then for various purposes, but it was lesser known back then. but I think it seems to be popping up everywhere now. And this is obviously a great environment, an industry for this type of thing, isn't it? So we've talked about digital twins, autonomous stores. I wanted to talk about other sort of manifestations of AI.

26:29How do you see AI popping up and improving Tesco in terms of customer experience, supply chain efficiency, whatever? What other use cases of AI are you excited about? So I think it will pop up everywhere, right? I don't think any area will be sort of immune to having some form of AI related activity happening, whether, like you said, it's in store, whether it's in the supply chain itself. And I think there's probably a couple of areas for me, which I think will get really interesting. If you take out the food science, food technologies, farming technologies, because I do think that's a phenomenal area of innovation that will hopefully put the best to change farming practices and environmental challenges that we have and fix for some of those areas.

27:19I think more operationally and from a customer perspective, you know, operationally supply chain, I think back to the digital twin simulation end to end, being able to see how when you change a price or a promotion and see what the effect has on your ordering, your forecasting, the ability to reduce your waste, but make sure your availability is great. the ability to then transport that into your depots into your cages out of your cages into the store right i think that effectiveness that's hugely complex and today we do it in a much more siloed nature being able to connect the science i think is going to change as well how we make decisions and and the roles then of the teams themselves right from doing lots of work and analysis to making decisions i think then you've got robotics i genuinely think that isn't that far away.

28:12I think five years ago, it felt very different when you go anywhere now, the talk of robotics, I think the software is already there. I think it's really now about the final bits of hardware. But you can imagine whether it's a store environment and or a distribution environment, this sort of combined human, humanoid type relationship working alongside, whether it's all sorts of roles picking serving you know and you're seeing it in in airports today where your food gets delivered by a machine that says this is your plate number help yourself take it away you know they've already started happening and then and then i think last but not least from a like from a customer perspective you've got everything like personalization um and really trying to get the experience for you and for me to be what we want it to be um now that's that's the art that's going to be the the ultimate goal is when you're getting the service you want in the way you want it in the form you want it that makes life easy and that's that's the probably utopia of where we want to get to but that will require lots of great data lots of real sort of test and learn around personalization and really lots of new technologies around how we interact because the app has been king for a long time.

29:32I think it will for time to come, but I think there'll be other channels and we're seeing it with already the LLMs. People are moving to more conversational, more voice-driven interactions. And I think, you know, we're multi-generational. So again, I always put that spin on, you know, we've got many generations working with us on our customer base so we're going to have to be thoughtful about how it shows up where it shows up and for for whom yeah sure so i've got to ask you about this there was something in the media recently about dynamic real-time pricing um that supermarkets were potentially looking at which would probably need um electronic labeling of products because everything is still printed out and put on there i can't see that lasting long so obviously if it's electronic pricing then And that enables you to change prices easily on a keyboard somewhere without having to obviously physically change prices sort of thing.

30:29So how far away is it? It's probably inevitable, Jane, isn't it? That that's going to happen at some point. It enables you to control margin better. How far away is that? Yeah, the pricing bit I'm not going to touch on because I think that's a whole realm of discussion, right, for customers, for policy, for all sorts of reasons. should you, would you, when, if you see what I mean. Of course. I don't want to get you in trouble, Jane. No, no. I don't want to get myself in trouble, Gary. But no, but it's a complex area, right? And there are reasons why changing price may make sense or not, right?

31:05But if you think about pricing and how important it is for our customers, that's quite a biggie. I think in terms of the application of it, though, we're already there. So you will have seen, we will have announced recently and some areas and certainly in the US and Australia that are retailers already using electronic shelf edge, it's called, which is really, to your point, it's allowing us to change all of those printed labels, which again, great that we're not having to print all of that paper in some ways and get it stuck. And it's quite an intensive sort of role to keep changing those prices.

31:39And they do change, you know, quite frequently to having that all digital and being able to be changed a touch of a button across all the estate. And look, I think that has real positives for both, again, us and the customers and keeps everything real time and make sure that we're not sort of missing out and people aren't missing out on good offers and good price. So I want to go back to something you mentioned just now, which is, you know, obviously, I think technology will improve as we go forward, which is wastage. Wastage in supermarkets is obviously a very well-documented issue. Yeah. Wastage is obviously something we want to minimize.