Judges on Fire: Steve O’Donnell, CIO, Coventry Building Society

In our Judges on Fire series of podcasts, we aim to let you get to know our judges a little better. They also get the chance to share their wisdom and tips about entering the Tech Trailblazers Awards. For our ninth outing we are catching up with Steve O’Donnell, CIO at the Coventry Building Society. Steve is one of our most experienced judges and has had many roles in the past during his varied career.

In an enlightening conversation, Steve chats about the the value for startups in winning awards, and explains how the Tech Trailblazers Awards in particular are designed to help young firms to prepare themselves for investors and how it’s the most cost-effective way to stand out from the crowd.

Listen to discover his thoughts on what the upcoming trends are, plus the need for diversity and inclusion, and how to solve it. So, over to Rose Ross, Founder of the Tech Trailblazers Awards, as she interviews Steve O’Donnell in our ninth Judges on Fire podcast.

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Interview transcript

RR: Welcome everybody, welcome to this episode of Judges on Fire from the Tech Trailblazers. I’m Rose Ross and I’m the Chief Trailblazer and Founder at the Tech Trailblazers, and I’m delighted to welcome today one of our long-standing supporters, an ambassador for tech innovation and startups, Steve O’Donnell. Hello Steve.

SO: Hi, how are you doing Rose?

RR: I’m doing very well, how are you doing?

SO: Oh, fine. I mean lockdown can be a bit depressing but actually we’re getting on and getting stuff done, and I think the lockdown has actually really driven technology. The whole technology business has really enabled us to get safe and get away from having to work in cramped conditions, and then have the COVID problem actually be more of a problem than it currently is. Without Zoom, which is what we’re on right now, how would the world be. And I think a lot of tech companies have really benefitted from this, although some companies have found it quite a struggle.

RR: Yes, it’s definitely been a challenging time, but out of challenging times comes innovation, and certainly the movement of work from your dining table, or your home office, has had impacts for enterprises such as your own, and with that obviously for the startups themselves. So, it would be great to just go and do a little bit of a recap of your career, because you’ve sat in many different seats and worn different hats, we’ll be mixing up our metaphors a little bit.

When we first met which is (coughs) a few years ago, I know we sat and had a very lovely dinner at SNW, we went to a nice restaurant, we were with Greg and I believe with Heidi, and yeah that was our first introduction. It would be nice to be doing this over a cup of coffee, or a glass of wine, but Zoom is good too, it’s good to see your face. So, let’s have a look at some of the key things in your career, which particularly may be of interest to our listeners. Actually, you were the CEO of one of our very first winners, Greenbytes, the Virtualisation Trailblazer in 2012.

SO: That’s right.

RR: 10 years ago, now.

SO: Yes. So actually, Greenbytes won the award before I became the CEO, but they got on my radar and the venture capitalist who backed Greenbytes actually reached out to me and asked me to help them with their strategy, their go-to-market strategy. I started off as the Chairman and I used to commute from London to Providence in Rhode Island every month for board meetings, and eventually I was asked by the board to step-up and become the Chief Executive and lead the business through to a trade sale, to Oracle which was good, reasonably soon after I took over, which was fine.

But let’s go back to that original meeting and the discussion that we had. We talked about, how do we identify those trailblazers, those startups; how do we separate the wheat from the chaff, and really find the companies that have got an opportunity to be successful. I took a lot of my learning – because I guess I’m an engineer, that’s how I started my life, an engineer doing development work. I was involved in the design of the very first 3 ½ inch Winchester disk, this was before solid state disk, these are the small discs that people used to put in laptops, I was involved in that. Then later on I did a whole load of entrepreneurial sales stuff, worked as a consultant, ran the merger between Price Waterhouse and Coopers & Lybrand which was a big enterprise activity. Then moved on and started working as Chief Information Officer for a number of financial services, telecommunications, logistics, insurance. Right now I’m the CIO of the Coventry Building Society, the second biggest building society in the UK. No.1 in the buy-to-let space, and although quite an old mutual, 135 year old, is actually quite innovative in the way it deals with customers.

So, I’ve learned a lot about what is it that enterprises need in technology? What is it that really makes a difference, I learned how do technology companies actually get to market and execute, and how do they get into those customers and really drum up interest? And how do startups get funded, what are the really important things that you need to have on the plate before venture capitalists will take you seriously? We sat down and we talked about this, and I used my experience, if you like, to frame this set of questions, and the questions are…

RR: So, we’re referring now to the questions that entrants complete when they enter the awards.

SO: Exactly so. So, those questions are designed to be similar to the questions that venture capitalists ask themselves about you, about your business. They’re quite straightforward really. ‘Do you understand the problem that you’re trying to address?’ That’s the first question that they’ll ask.

Now most early stage companies are really excited about the product that they’ve developed, and they’ll go around talking about the product and how great it is, look at all the features and benefits, but quite often they don’t really understand the problem set that they’re addressing, and the market segment that they’re trying to go after. That’s what VCs are interested in, and actually by understanding the problem you’re much more likely to be successful than by having the very, very best product on the market, and the questions are designed to take you through that journey.

If you like it’s a practice discussion for your discussions with venture capitalists, because if you think about those questions, and answer those questions effectively, and you’re approached by a VC later, you’ve actually done it, you’ve done the work and thought about it. What is it?

• Why do we exist as a business?

• What market segment are we going after? Are we going after big enterprises, are we going after telecommunications companies, financial services companies?

• Who’s our audience, who’s likely to be advantaged by the problem that we’re solving, and the solution that we’re putting on the table?

Those questions are really important and sometimes when you’re reading through them you think, ‘Oh my goodness, this is a bit of work. I haven’t thought of this.’ Well let me tell you, if you haven’t thought of this, you’ll pay for it later, they’re the most important questions that you can ask yourself about your business.

RR: Well, yeah, they have helped shape – and I always think it’s really a narrative for your pitch deck at whatever stage of your business that you’re in.

SO: Absolutely.

RR: And that’s been really key, and that’s also the way that we developed the marking as well, that we put weight on each of the individual ones, and the it’s like a freeform part at the end where you and your colleagues mark each individual section, and then you give – I think there’s about 50 points – for your own personal view. This is a bit more the gut of the judge, the gut feeling about ‘is this a goer?’ Does this get your imagination going, do you see this potentially… not necessarily unicorn, but a very successful enterprise tech startup in whatever category you’re looking at?

SO: Absolutely so, that’s absolutely so. The question is not just ‘is the product good?’ but ‘is the market good?’ So is it a real problem that customers really need to have addressed? And that’s actually the critical question, because customers don’t have that problem and you’re putting a solution out that addresses a problem that customers don’t have, guess what? The business isn’t going to work. The critical thing is that you’ve really got to understand the problem and understand that there’s a crying demand from customers for that problem to be solved.

RR: And from your perspective, I mean obviously you’ve been leading startups, you’ve been part of acquisitions, IPOs, which is often the exit strategy for a lot of the startups. We look at successful IPOs from some of our winners, Zscaler (Zed-scaler) or should I say Zscaler (Zee-scaler), Nutanix, they were all IPO-ed. Many others have been acquired by the likes of Dropbox, Microsoft, HP. We’ve got really a nice stable there, if we look at the pedigree of the types of organisations who have been called out as winners over the years, and we’re approaching the decade now, so this will be an exciting time to look back over those winners and see how far they’ve come. But with your end-user hat on, what are you starting to see as the trends that are emerging, that you’d like to see people already addressing types of problems, or looking to address those types of problems?

SO: Well, I guess software has already eaten the world. So it’s software businesses that really seem to do well, and those unicorns, predictable, that was going to be the case. If you looking at your business model, if you’re a consulting company then your P/E ratio (price to earnings) – that is the value you get for the revenues and profits that you make, is likely to be fairly low. Whilst if you’re a software company, that P/E ratio, the value that you can bring is very, very much higher, and the reason for that is very simple; it’s incredibly difficult to scale a professional services firm. Hardware firm, because the amount of cash that you need to build, as I was trying to do, a storage business, it’s just millions, and millions, and millions of dollars in flash modules and CPUs and all that sort of stuff. Whilst for a software company there is no cost of sale apart from the development effort that you put into the software. Acquisition targets see that, people who aim to IPO see that too, they see the ability to really scale a software business, but it’s much harder to scale another kind of business, not impossible and you can add real value there, but software – software is eating the world.

So, the things I’m seeing now that are really important, and they’ve been important for a while is, in financial services which I’ve been involved in a lot, in financial services there’s some really boring stuff, my goodness it’s such a big problem for people in financial services; it’s about regulation, it’s about being compliant. So, as the world moves away from the financial crises that we’ve had, and all the scandals that we’ve had, Enron and all that sort of stuff, the world’s regulators have been getting involved in making it difficult for large financial services companies to operate, making sure they’re doing their job properly. Some organisations have thousands of staff dealing with regulation, so regulation I think is a problem that many CIOs like me are facing and looking for ways to automate that. So, by being regulatory compliant by design, you can reduce the costs and improve the firm’s ability to survive. That’s one.

And then I think the other thing is, there are many legacy firms, firms that have been in business for a long time with lots of legacy stuff. How do we bridge between that legacy stuff and the modern digital front-end, mobile, working at the speed of the internet, type of activities? And then we see things like low code being really important, so can you develop code very fast? Can you change it very quickly, can you reduce the skills required to do that? Things like API-driven capabilities like payment gateways, lots of businesses now starting up, there’s one for example, Clear.Bank which is the first new clearing bank in the UK for, I don’t know, decades. It focusses on providing a payment gateway for customers, they’re not a bank, the bank branch is, so, they’re really an electronic service provider.

So, those are a couple of things that are close to my heart at the moment, but you know there’s still the old things that are going on, we still spend a fortune on storage, a fortune on networking, we still spend a fortune on security, cybersecurity, and these are all problems that still need to be addressed, highly competitive mind you, but they still need to be addressed. You really need to understand your competition in the market that you’re operating in.

RR: Definitely. Well we certainly have seen that in our entries. Last year in 2020 we saw an unprecedented increase in the number of entries, and I think that was partly because people were more aware of the fact that they needed to have the visibility. We were a very cost-efficient way of doing so, with a low barrier to entry through the entry fee, and as you say, that type of information that we’re asking for is stuff that should fall out of the executive office fairly easily, because it is part of the pitch deck that people will be, you know,that narrative. We saw also a great increase in certain sectors, AI particularly, that category went up considerably. Cybersecurity was still very strong and still I think the strongest and continue with Cloud.

So, bearing in mind what was happening in the world, that was no surprise, but it was good to see that we were seeing the startup and the innovation element mirroring what’s happening in the world. So the demand was being hopefully met by those innovative players.

So that’s good. Obviously our pillars are innovation, we’ve talked a little bit about that, but I know there’s some other things that we’re very passionate about, which are passions that you share as well, and one of those is diversity inclusion, and I know that’s something that you’re very, very committed to, and very much an advocate for. How are you seeing that? Because there were some shocking statistics that we talked about, that came up that 25 percent of the workforce is disappearing, and obviously this is across the board, not just technology, but I’m sure there’s an impact to that – was women for example. Perhaps that is home schooling, is having an impact on home life, and people’s ability to work and trying to weigh things up. For everybody this is going to be a challenging time, so embracing and nurturing an inclusive environment in technology is even harder now, because we don’t have those social interactions, we don’t have the water cooler moments, we don’t have the nurturing environments that we perhaps would like to have.

SO: Well you’ve just outlined a problem, haven’t you? The problem that startups could address, how do you get those water cooler moments, and actually help to make the culture of organisations survive through all this working from home. Because there’s no question about this, this is permanent, more people will be working from home more often now than in the past, because it’s a proven way of working, but there is less social interaction.

Let me go back to your D&I, your diversity and inclusion question. I am really passionate about this, because as a leader, as a manager, one of the things that’s most important is that you make good decisions, and if all of the colleagues around your leadership table are the same as you, all male, stale, and pale, like me I guess, you’re going to end up with groupthink. You’re going to end up not seeing the big picture, and seeing the big picture is critically important for making the right decisions. So you need to have ethnic and gender diversity, sexual orientation diversity, because the leadership decisions that you make need to reflect the customer base that you’re trying to address, and if it doesn’t you’ll fail. So, diversity inclusion is not just an emotional moral thing, it’s actually an economic imperative, you’ve got to get that, you’ve got to get that diversity of use, that’s what it’s about.

Now, in technology it’s actually quite difficult to achieve gender balance, ethnicity balance is much simpler, but gender balance is much more difficult and for societal reasons, psychological reasons, whatever, many women choose not to follow STEM type education. So, women check out of maths, physics, chemistry, and computer science at an early stage in their education, and we find as that happens and they come up the career pipeline that fewer women apply to an IT role. Then as you look through the different stages of career, from junior to senior engineers, to IT leadership candidates, there are fewer and fewer women, and in particular sectors, highly-technical sectors, the ratio is very low.

I think in the UK about 13 percent of IT population are female, I think that’s the right number. At the Coventry we’re at 17 percent so we’re punching above our weight, but it’s not good enough. So, how do you recruit more women at different levels? Well you could do positive discrimination, that tends to be fairly toxic mind you, I don’t think it works, and I don’t think women actually thank you for it.

RR: I certainly wouldn’t, no!

SO: Exactly. What you can do is you can make some of the non-salary barriers to joining your organisation go away. That means, I think, flexible working, and thinking carefully about part-time working, thinking about different ways that you can position your business as being more approachable. Then the other thing is, making sure you don’t have a lads culture, it’s very, very easy in an IT department for a lads culture, the only way you can get rid of that is by bringing in more women. If you can’t find senior women in a leadership team, bring up some of the middle management females and actually get a view from them too, and then you need to focus on the entry level. How do we get more apprentices joining the organisation, and how do we get more graduate trainees into the organisation as well? If you can’t compete at the higher levels because there’s just not enough women around to compete at the higher levels, you’ve got to grow your own… and I think this is a long march, this activity, we’ve really just got to get stuck into it, and make IT a more approachable place for women to work.

RR: Yeah, it’s not going to change, you’re not going to shift the needle greatly…

SO: Overnight.

RR: … from this year to next. But I think our aspirations need to be, by 2050 or even 2030, that we will have made more significant in-roads.

SO: Yes, IT is a phenomenal career. I’ve been in IT now for 40 years, which tells you something about how old I am!

RR: So, you started basically as a child protégé didn’t you?

SO: Yes, I started from the womb! Well perhaps, but no, I really have, I’ve been in the IT industry for 40 year and it’s been a fantastic career. My career has grown really well through things, it’s a reasonably well-paid career, interesting, and there’s always IT jobs. Demand for IT jobs has not diminished since day one when I joined as a career path.

RR: Yes, well we were talking about the skills gap as well, and about the fact of why are we still talking about the skills gap? It’s because the skills change, so you’re always going to have a gap.

SO: That’s it.

RR: You’ve got to keep people current, and the roles are changing. If you look at the roles that you now have in your team, that 5 years ago, 10 years ago, they’re totally different. Some of them are very similar, but some have changed considerably – are new, not just changed but are new.

SO: Absolutely, I’m thinking about even things like project delivery, we’ve moved from a very waterfall approach to doing major projects to much more agile, the approach with Scrum teams and daily stand-ups, and retrospectives, backlogs and epics, and all that sort of stuff and very, very effective. But if you’re a project manager and you haven’t learned and you haven’t developed, guess what? Your job’s gone away because you’re becoming irrelevant. Equally, if you’re in the virtualisation space, or you’re doing server administration or you’re a developer, if your skills aren’t up-to-date, and you’ve got to do it deliberately, then your job starts going back downhill, your career goes backwards. So you’ve got to develop, develop or die. Actually, it’s quite an interesting career to choose, because you can be a doctor and never learn another thing for 10 years, and still be a doctor. But try being an IT guy with skills that are 10 years old, well you’re probably going to be challenged finding a job.

RR: Well here’s an interesting thing, did you know that February 2021 will be the 20^th anniversary of the Agile Manifesto?

SO: I didn’t know that, but that’s very interesting. It doesn’t surprise me because these things, it’s funny isn’t it, these things have a habit of taking longer to embed than you would expect. But then you look back and you think, “Well, it’s always been like this hasn’t it?” I think back to… because I’m an old guy, I think back to the introduction of the mobile phones. I remember dial-up modems which most people who are listening don’t even know what they’re about, the feeling that you used to get from the modem to connect to the internet, I was a very early adopter. And things that Generation Z and the Alpha generation that are coming up next, would think, ‘Well, hasn’t the internet always been here?’ Well, no it hasn’t.

If you look at what’s happening in the startup space and you’re smart about it, you can actually predict what’s going to happen in the future, and that’s the key that futurologists and venture capitalists actually use their skills to do that, to see, ‘Right, where are we going to invest to make sure that our money is going to grow really fast?’

RR: Absolutely. So, agile is important and I first came across agile when I went to Agile on the Beach, probably about eight years ago, and I remember the keynote was talking very much about it’s all very well being agile in IT, but what happens if you’re not in an agile organisation, because basically you then start to hit the walls around you. So you can have an impact on your development cycle, but in reality what you need to then do is you need to kind of let that flow through the organisation, and that’s starting to happen as well, I would imagine.

SO: Yeah it has. Lots of large enterprises are very directive. So that is that all the way from the board of directors downwards it’s like, ‘You’ll do it this way’, heavy governance. It’s all done in a very cumbersome step-by-step way. So, the accountability for getting stuff done sits with the board of directors, the executives, the senior management team, the programme directors that are delivering these major programmes of work. And what agile does is it turns it upside down. It moves the accountability for delivery away from the executive team down to the people on the coalface actually doing the work. What happens is, if you don’t commit one way or the other it’s like oil and water, you’re going to end up with something that just doesn’t work, you’re going to end up with conflicting cultures. I see that frequently, I see companies that are trying to adopt agile but actually their whole operational thinking is waterfall, and you end up with a train wreck.

So, you need to do deliberately, you need to – as you said – you need to bring the whole organisation with you. The whole organisation needs to be agile and start thinking digital and straight through, and just removing exceptions. We don’t need manual interventions to do stuff, it can all be straight through automatic, and repeatable, without having a workforce that grows with the size of the business.

RR: So, to wrap up because I know we’re getting towards the end of our time on this, what are the key takeaways that you would share with people? First of all, you talked a little bit about the importance – before we started recording – a little bit about the importance of awards like the Tech Trailblazers. Do you just want to share a little bit about that perhaps? From your standpoint of having worked for a company that had got recognition, or for a number of companies that have had recognition in awards like that.

SO: Yes. So, how do venture capitalists separate the wheat from the chaff? There are thousands and thousands of startups, and some of them have got no hope whatsoever, and some of them are the pearls, real companies that are really going to make it, with a decent leadership team, and so-on. I think I said earlier that the key thing is, understand your problem, understand the market segment that you’re operating in, and be so familiar with the customers that are going to buy from you, familiar with their problems, talk to them. Test things out, experiment, don’t be disappointed if your experiment fails, it’s actually a step forward. You can do another experiment, and you keep experimenting and trying and trying until you get it right.

I don’t know how many times Edison had to do his development on his lightbulb, but it was thousands of times wasn’t it, thousands of times, and eventually he invented the incandescent lightbulb, and that’s the kind of thinking you’ve got to have; by experimenting, by really understanding the market and the need to solve that problem, you will win. Now, what Tech Trailblazers does, because of the questionnaire, because of the way that we’ve structured the award, it actually forces you to think through what it is that you are doing, and if you are lucky enough, or are good enough to win the award, you suddenly become the wheat amongst the chaff and the venture capitalists and the customers look at these awards and say, ‘Right, well why did this firm win this award in this particular category, there must be something interesting. I must go and talk to them’, and you’re ready, prepared to have those conversations and explain why you are a relevant entity, why you are something to talk about.

It is probably the most cost-effective way you can imagine to get that visibility, you can advertise, you can do search engine optimisation, it’s not going to matter too much, everybody else is doing the same thing. But winning through and being recognised by your industry peers that you have an exceptional business, you can’t buy that for money.

RR: Well we tick lots of boxes with you because you have been an analyst in the past, you’re a CIO now, and obviously you’ve also been a CEO of a startup, so yes, we can tick all sorts of boxes with your judging pedigree.

Just to wrap up, you’ve talked about the importance of identifying the problem, and the problem that people want to be able to solve, and obviously you as a startup solving that problem, then having awards and people being aware that one of the problems… because sometimes people take it as the status quo, that’s just the way we do things around here, and don’t even think about how we can re-engineer this, or sidestep this issue using technology, whether that’s automation or something else that is very effective for them. As a startup, the other pillar… for the awards we have the pillars of innovation, diversity and inclusion, agility, and also leadership. So obviously you’re a leader, you are a leader of a big tech team, what are your takeaways, what would you be sharing with people? If a CEO of a startup is listening now what would you be saying to them, what would be some of the advice you would want to share with them?

SO: Well, choosing your leadership team is the single most important thing that you’ve got to do. Everybody has weaknesses, everybody has strengths, and you need to build your leadership team that fits together like a jigsaw puzzle, cover each other’s weaknesses and enhance each other’s strengths, and so be really careful about who you’re working with and who you bring into you leadership team. You’ve got to make sure that they’re adaptable, they can deal with large amounts of uncertainty because that’s one of the critical things in a startup, you’re quite likely to pivot multiple times. Either experiments are successful or fail, the ideas – the fixed ideas that you had at the beginning are likely to change, so leading an adaptable, strong, emotionally-strong team that can punch through and actually then adapt to the new ways of working, and be successful.

Then they also need to be leaders themselves because they’re going to be leading the sales team, and marketing team, the development team, the engineering team, the finance team, and making sure… and they need to be credible. Everybody in the leadership team needs to be able to sell, be able to put across an idea and get it going, I can’t emphasise how important that leadership team is.

RR: Well, I’m very pleased that you’re on our team Steve, you bring an awful lot to the Tech Trailblazers, and have done for a very long time, so I very much appreciate that. I also appreciate your time today, it’s been incredibly insightful and always a pleasure to chat with you.

So, that was Steve O’Donnell who is the CIO of Coventry Building Society, and a judge with Tech Trailblazers, and you’ve been listening to the Judges on Fire podcast from the Tech Trailblazers. I’m Rose Ross and I encourage you to follow us on social media at Tech Trailblaze, or find us on LinkedIn, and if you’ve enjoyed the podcast please let us know, and if you’ve got ideas for future ones, also let us know.

Thank you very much and thank you Steve.

SO: You’re welcome Rose.