UK CIO of the Year, Ian Penny: Why Great Tech Strategies Start with Customer Problems

Speaker A: What's the biggest mistake that you've seen startups make when they're trying to pitch their solution to either you or a member of your team?

Speaker B: You get people who will promise you anything. It's not in my interest to change your company and twist it and buy a solution and make it do something that it's not designed to do. It's much better that you tell me. I'll have much more respect for you and will be much more likely to buy from you in future. If you say these are the things that we do, this is the customer problems that we're solving, this, these are the ones that we don't. Don't promise me that you're going to solve my problems if that's not what you're trying to do at present.

Speaker A: Hello everyone and welcome to Built Not Born, the Startup Go to Market podcast by Venture Guides. I'm Sage Nye and around here we believe that great companies are Built not born, one smart decision at a time. Each week we take you through real conversations with founders, investors and go to market experts on what it really takes to land customers and scale your startup. Now let's get to work. Hello and welcome to Built Not Born. I'm Sage Nye, venture partner at Venture Guides. Today's guest is a global technology and operations leader with more than two decades shaping digital strategy, cybersecurity and large scale transformation across the world's top financial institutions. He has served as COO of Luminor Group, CIO at Hiscox, where he was named UK CIO of the Year and has held senior leadership positions at firms like JP Morgan, Barclays, Bear Stearns, Pfizer and Goldman Sachs. He has guided multi billion dollar technology portfolios, modernized cloud and digital platforms, strengthened operational resilience, and played a strategic role in major M and A outcomes. He also brings a fresh academic perspective from King's College London where his postgraduate work examines how AI and semiconductor rivalry are reshaping geopolitics and global security. I will say on a personal note, Ian has known the Venture Guides team since all the way back in the turbonomic days and been a key member of our network and group and family ever since. So, uh, Ian, welcome to the show.

Speaker B: Thank you. It's great to be here.

Speaker A: I'd love to start with some background for our guests and a little bit of a personal story. Would you mind sharing some of your background and a bit about your career?

Speaker B: Sure. I'm a sort of first generation technologist, so I come from a very engineering background, but that's uh, railways and cars are very mechanical things. So um, I was one of the first in my family to head to university and straight out of university I was a government research scientist for the British government. So I designed and built a lot of sort of high performance low latency systems and that was kernel device drivers, event capture, uh, in the kernel and a lot of high performance modeling and that sort of stuff. And then I moved from that into life sciences. So how do you build systems for genome cracking? This was when Celera Genomics was commercially doing it and the human genome project was doing it from a sort of open source perspective. So really a different size and scale of sort of in silico drug discovery. And uh, I was quite happy doing that as you know, long term scientist and such. And I got a call from an organization I'd never heard of called Goldman Sachs, which obviously you might be the only person. I may have been one of the very few people on the planet who didn't know who they were. And I went to Goldman and my interview experience was a little bit atypical. So I popped into Goldman's offices in the UK about 10 o' clock in the morning and by 2 they were sort of printing a job offer and such for me, which was great. And I spent a couple of years there really concentrating on data protection, data systems and resilience and how the organization could do some of that. And that was obviously about the time then it was really disaster recovery and resilience becoming a really big thing. Spent my time doing that. But uh, ultimately the allure of sciences called me back and I went back to work for Pfizer, the big pharmaceutical company where I ended up being their director of strategy and architecture. So what is the architecture, the target architecture on which we're going to build all of the, both the clinical systems, the sales systems, the whole shooting match. And that was when we were first introducing virtualization platforms into the environment. So grid computing, virtualization and such was a big order of the day. Went on from there to uh, a now infamous financial service firm called Bear Stearns. So I was at Bear when it imploded in the financial crisis. Destruction of personal wealth and you know, for many, many people at that time was, you know, huge. So I became a J.P. morgan employee through acquisition and I ran their distributed engineering and architecture team. So my team built the internal cloud environment such there which hosted you know, hundreds of thousands of servers and similarly desktops. And we were adding storage to the environment and data and processing it and uh, working with FPGAs and GPUs in that environment. When I decided uh, that I should come back from the States, back to the uk. So I joined a UK bank called Barclays, which obviously a lot of people are aware of I think. And I was their CTO of infrastructure before leaving banking. Not for the last time, but leaving banking and heading over to specialty insurance. So I was the uh, CIO at Hiscox, uh, which is a specialist insurer. Uh, uh, they do a lot of work in sort uh, of Moyds of London catastrophe, hurricanes, floods and that sort of stuff. Great, great company, brilliant culture. And I was there for about five years and we re platformed a lot of the firm, built a whole bunch of new systems and such and that, which was great before some sort of structural changes and such there. Pushing technology teams out into the business lines and such meant that I sort of did myself out of a job. In many respects it's the right thing for the firm and that's a great thing to do. So I was going to take a career break and I was actually going to go and do uh, go back to academia and some of that sort of research science piece. But I got uh, intervened on the way there by Luminor, which is this ah, sort of Baltic Bank. It's owned by Black Blackstone. They were having quite severe problems in terms of stability and such. So I did a stint at Luminor to stabilize the systems, address some of the concerns that the European uh, central bank had before finally getting that sort of long promised or at least long promised to myself, break and going back into academia to actually uh, do some master's work.

Speaker A: And then we convinced you to get on a plane and come on over to Boston.

Speaker B: Absolutely. Yeah, exactly. Yeah. I mean fortunately uh, I've spent quite a bit of time in the States anyway. I used to live in Westchester, New York.

Speaker A: You came up prepared with the parka.

Speaker B: I did indeed. So uh, well that's a holdover from working in the Baltics. So you know, when people say oh it's Baltic outside, you know, I've actually been to the Baltics and uh, I can report that it is actually very cold there.

Speaker A: And then actually your, your most recent experience at Lumina, I'd love to come back to that because one of the things that we've talked a lot about is you've experienced many, many platform shifts and evolutions in your career. Are there any patterns that you've seen in sort of enterprise behavior and the impacts that those have had over time, Yeah.

Speaker B: I mean, there's a lot of different lenses to look at this through. And often the technology organizations fall into this sort of trap almost of chasing a shiny new technology, uh, and a shiny new platform. And as an engineer myself, I love doing that. But equally I'm a highly pragmatic individual and I believe that this is about applied technology. So by articulating why things were important and alignment behind the customer, what customer problem were we actually solving rather than it's just a better mousetrap, you know, that's what I've seen the most successful companies do, is align behind that, that sort of focus on the customer. What problem are we solving? Why are we solving it? And to give you an example of that, when I was at Barclays, we were talking about how are we going to introduce cloud computing into that environment? It was clear that cloud computing was going to be, you know, was going to be the go forward kind of hosting platform and such. But to the engineers it was obvious. It's technically great. We can do this. They've got AWS and Google, GCP and such, they've got many, many more engineers than we can have internally. So it just makes sense. But there's a lot of questions about risk management, there's a lot of questions about data sovereignty and such. And just chasing a shiny platform wasn't going to get us over those problems. And so actually, in conjunction with, uh, a dear friend of mine, Pete Joss, who used to run the retail, uh, banking technology side of the house, we sort of reframe the problem on how do I actually resolve and handle peak customer load. So without carrying infrastructure for the whole year, how do I ensure that I've got peak transactions are not going to fail on Black Friday or Cyber Monday without sizing the entire environment for the whole year and carrying all of that cost and such. And by reframing the problem in that way, it became obvious that expandable cloud computing kind of approaches and that led to us looking much more. Okay, well how do we do this in a seamless way, which led us to Kubernetes and OpenShift and a whole bunch of those platforms. So reframing a problem sometimes and um, looking at what is that customer perspective is the one that really helps out an organization understand why platform shifts are important. Because it may seem obvious to an engineering organization, a technology organization, but your business counterparts, they just want to serve the customer.

Speaker A: It's funny, you bring up Black Friday and having worked now in tech, and it's a whole different perspective. On that day versus being a consumer. And there's a lot of people that I start to get worried about or feel bad for who are just trying to keep the systems running.

Speaker B: Absolutely. It's a key in of itself and I think infrastructure is a huge foundation for all of those things.

Speaker A: And that actually brings up a good point, which is, as a cio, you've had a firsthand view into the ways that infrastructure software can help organizations drive revenue and also how to articulate the value of that to a company. Do you have any advice for our listeners about how to think about the role of infrastructure software as they're trying to communicate to business people?

Speaker B: Yeah, I think, as I sort of just alluded to, infrastructure is the foundation. So in many respects it's like the foundations of your house or something like that. You want it to be stable, you want it to be secure, you want it to enable you to do the things you want to do. But often people don't think about it. And so getting the value of this across can be quite difficult. But equally, infrastructure and infrastructure software, it's the habitat in which an application environment and a business process runs. So without that secure habitat that enables those things to operate and provides stability, provides the ability to be fast and secure in your changes, then you're not going to get anywhere. And to bring that to life. When I went to Luminar, I, uh, went there predominantly to stabilize the customer experience. For months prior, the end of month payment runs were failing, outages were fairly common. There was a very active dialogue between the management team and the European Central bank, but also between the bank and its customer base on Twitter and a whole bunch of other social media platforms. And a lot of that was this instability was caused by really not understanding the capacity of the underlying infrastructure and the fact that they'd run beyond that capacity. So the directory systems, the queuing environments and things like that, you know, they were to blame. And when you've got the sort of mayor of a city ringing the commercial banking lead and saying, I'd really like to be able to pay my teachers and municipal workers and you're forc me to not be able to do that, that's really when you get the focus on, okay, this is really impacting people's lives. So infrastructure may seem that sort of silent partner in the background, but it's the substrate that allows all of these other things to run. So, uh, just to bring that sort of full circle, you know, when we stabilize those environments and such. Luminal went on that year to double its pre tax profits and got a 50% increase on return on equity and such a real business value. But the thing that still sticks in my mind is that sort of vision of a, uh, kindergarten teacher not being paid because of the infrastructure falling over. And that's a very powerful image to have in your head when you're thinking about, okay, what is the value of what I'm doing?

Speaker A: It is amazing. And I think when we think about roles of executives in these organizations as well, you so often have to cross multiple teams and try to pull people together, frankly, with it becoming increasingly central to that because as you said, infrastructure, software and it is enabling a lot of those teams and a lot of those functions. Do you have any strategies for how to drive alignment across organizations or advice that you could give on leadership?

Speaker B: Yeah, sure. We had a mantra at uh, Hiscox which was, you know, tagline of it was technology at the heart of the business. Take technology out of a business and you don't have a business, but take the business out of the technology and there's no reason for it to exist. So, you know, these are symbiotic things. And I think from my perspective on the leadership thing, I've got a very clear view on leadership, which is it starts and ends with people. So as a leader, uh, my role and the role of the leaders that I've always worked with and such is about hire the right people, create an ecosystem, a habitat in which they can really thrive, but above all provide the right direction, align, uh, behind a strategy that everybody understands. And I think you had Paul on in an earlier episode and he said, you know, communicate, communicate, communicate. No one you're going to meet from an executive perspective is ever going to say, you know, they under communicate. You know, you got to just keep communicating and articulating the why of these changes. What is the North Star? Uh, what's important to the customer? What business problem are we going to solve? And if you have a very clear objective which aligns to that customer and you have motivated people in an environment in which they succeed, magic happens. It really does. People who get excited about coming to work, working on these things and the strategy is just, how do I take the people and the resources that we have and meet the objective?

Speaker A: And that actually brings up a question that I have a lot, I think founders have a lot as well, which is when you have a great team and you're moving fast and you're trying to innovate quickly, there's all different types of challenges that you face. And sometimes you can do a quick fix, band aid type of challenge. Sometimes you need to slow down and think intentionally about it, come up with a long term solution. Figuring out how to frame every challenge and which bucket it falls into can be really hard. Do you have any strategies for how to think about how do you make those types of decisions?

Speaker B: So I have a sort of three horizons view of the world, which is problems that we're solving right now need to be solved today or this week. And you can often just solve that quickly. But equally, then there's the problems that we're going to solve for the next month, the next quarter, and then the final one is, you know, the long term, um, strategic things. I tend to use car analogies quite a bit because my father was a motor mechanic. And the quick fix, it's easy to put a quick fix in. It's like an aftermarket part that you put on your car. I just need something to do, bang, done. But there's a reason that BMW or Mercedes or all of these other car manufacturers that they design and build a system, a whole system. No amount of aftermarket parts is going to turn your mini into a McLaren. It's just not going to happen. So be mindful of the fact that quick fixes are great for those short horizon problems. We've got to solve it. We've got to solve it now. I need something stabilized this afternoon or this week or we've got something occurring this weekend. It just needs to be there. But you know, put the story on the backlog for fixing it properly, you know, and often you see organizations don't do this and they just compound these things and they get into this huge problem where you get a lot of technical debt. And that's where big transformation programs then have to come in and write, okay, let's sweep all of this stuff up and provide complete change to the environment. But statistically, you're more likely to climb Everest than you are to successfully complete a, uh, transformation program. So, uh, if you're a mountain climber, that's great.

Speaker A: Well, you are.

Speaker B: I am. So there you go.

Speaker A: Wow. All right. Well, so since we do have you and you've played the role of the customer for many organizations, we have a couple questions we'd like to ask on behalf of our listeners just so they can hear your perspective. The first one is when you think about the trade off of buying a highly innovative solution from a young startup versus a, uh, tried and tested solution from a company that's been around forever and probably will be around forever. This is kind of the old adage of no one gets fired for buying IBM. How do you think about that trade off as a technology leader?

Speaker B: Yeah, it comes back to what's the nature of the problem that we're trying to solve? I mean, I was on the board of Turbo and um, when I first saw Terminomics, this is the vision, this is what we're trying to do. We were at the time struggling with how do I match resources to tens of thousands of servers such within the environment. And virtualization and cloud computing introduces this highly fungible kind of resource base. Just because you have the illusion of infinite resource doesn't mean that you've got the cash to pay the bill afterwards. So it still has to return. So from my perspective, I love working with startups, I love working with that sort of, okay, what's going on? How are things going to be moving forwards? And if they take time to focus on the customer, if they're very clear about the problem that they're solving, then it makes it easier to integrate because if I have that problem, I can solve that. To your point, there will always be a place for the large enterprise software providers such in this environment, but they have tens of thousands of customers, some of which will be slower moving, less pacey environments, some of which will be more cutting edge. They've got to manage all of those customer bases and anticipate what that customer environment is like. The startup environment can deal with more the early innovation, the customer that really has a burning need to solve a problem. And that's really the key there is use highly innovative solutions when you've got key problems to solve. But stay with the program, stay with the organization. It's in my interests as an enterprise buyer to make your company successful because I want you to be around for the long term. And that's where partnership comes in.

Speaker A: And you were such a great partner for Turbo. All right, this next question is going to be a little bit hard because as you said, these two things are tied so tightly together. But when you're making a purchase decision, how often is it because someone came to you and said, this is really cool tech versus this is the business impact that I can drive or the change that I can do for your business?

Speaker B: It's no surprise, given what I've said that, uh, most of my purchasing decisions are about what's the customer problem we're trying to solve, how do we solve that, what's the benefit of solving that? But equally, it's okay to take some Hail Mary Passes and try and figure out, by deploying a highly innovative solution, could I change the economics? I've always been the case of incubate. Try and try some things out. And it's kind of like the venture thing. There are going to be wildly successful decisions you make with software that you purchase and such, and there are going to be a few that just don't work. But as long as on balance, you're getting more successes than failures, then that's fine. There's no silver bullet here in terms of that sort of purchase decision kind of piece. A lot of it comes down to, has the startup, uh, figured out what its core customer is? What's its ICP?

Speaker A: I was about to say we talk about ICPs a lot.

Speaker B: Yep.

Speaker A: Okay, well, maybe this will feed into that. But the last question we have is, what's the biggest mistake that you've seen startups make when they're trying to pitch their solution to either you or a member of your team?

Speaker B: Twofold. The ones that don't have a very clear understanding of who their ICP is, What does that look like? And almost a follow on from that, uh, is that you get people who will promise you anything. It's not in my interest to change your company and twist it and buy a solution and make it do something that it's not designed to do. It's much better that you tell me I'll have much more respect for you and will be much more likely to buy from you in future. If you say, these are the things that we do, this is the customer problems that we're solving, these are the ones that we don't. Don't promise me that you're going to solve my problems if that's not what you're trying to do at present.

Speaker A: Well, until that point, you're interested in this startup lasting forever because you're buying from them. So if they're customizing to every single customer and essentially just being an outsourced shop, they're not going to last forever.

Speaker B: Absolutely. It's one of the arguments I've had internally with sourcing teams and things like that, where sourcing teams are clearly motivated to drive the price down as much as possible, get as many licenses for as little money as possible. You know, they want, you know, the enterprise infinite deal for no money is the ideal sourcing decision. But for me, as the user of these technologies and such, that's not the case. I want you to make profit. I want you to be around in three years, five years, 10 years time. Because if I'm deploying your solution. I've got to live with it.

Speaker A: Fantastic. All right, before we wrap, I've got a few reflective questions to give founders something to take back and start applying as they think about their own journeys and their own leadership roles. The first one is, what's one of your favorite memories from your experience as a technology leader?

Speaker B: I think it is that sort of when you meet somebody who you've impacted their life. And by that I mean the mayor of the city who we've enabled his entire municipal workforce to get paid and things like that, that's great. But internally as well, you've enabled an environment in which they can succeed. I pioneered a sort of rotations program at escorts, which allow people to try a new job with a sort of return ticket if it didn't quite work out. And we had a whole bunch of different people try things that they never would have applied for, and their careers and life has been impacted in a hugely positive way. So for me, again, it's no surprise it comes back to that people. It starts and ends with people. You know, technologies come and go. Don't get too religious about them. I mean, eunuch's bigger to heart, you know, so, uh, when I was early in my career, you know, Windows was the spawn of the devil, but everything has its place. Don't hold on to those religious opinions about technologies and such, because things change.

Speaker A: The world changes so fast.

Speaker B: Indeed.

Speaker A: Especially these days, it seems. Okay, well, this is going to be, I think, tightly related to that. But what's a leadership lesson that you wish more founders understood as they grow their business?

Speaker B: Uh, it's a team sport. You may have a rock star engineer or think that you've got the most amazing technology, but if you don't have a team of people that is providing, go to market and you don't understand how to do that, then the world beating technology that no one knows about is not going to change the world. So it is a team sport. It's about enabling that team of people to build something that's magical, get it into the marketplace and start to build that momentum. Unsurprisingly, from my perspective, people, it's all about team. And Venture Guides has this sort of mantra which. Well, no, it comes from Ben, because he's been talking about it for years and years and years. Customer, team, self. If you're very clear about who your customer is, you're solving their problems. You've got the team of people that enable that. You'll look after yourself. It'll happen awesome.

Speaker A: Speaking of people, where can people learn more about you?

Speaker B: I'm on LinkedIn, so by all means, you know, just come and connect and such. I did used to joke that my mobile number is or my cell phone number is globally known. It very much seems to be that way and such. But uh, just connect with me on LinkedIn and we'll chat.

Speaker A: Well, thank you so much for joining. This has been really fun and in many ways a trip down memory lane while also being super related to the present. So thank you Ian.

Speaker B: Thanks for having me.

Speaker A: And thank you for joining us on Built Not Born, the podcast where we break down the real stories of business execution. If you enjoyed this conversation with Ian Penny, be sure to subscribe and leave a review. And if you're a founder looking for guidance on scaling your startup, check out venture guides.com thank you very much. Now let's get to work. Build Not Born the Startup Go to Market Podcast is brought to you by Venture Guides. To find out more about Venture Guides and how our venture capital plus guiding model helps early stage startups build scalable go to market strategies and grow faster. Visit ventureguides.com and then make sure to search for Built Not Born in Apple Podcasts, Spotify, YouTube Podcasts, or anywhere else that you listen. Hit subscribe so you don't miss anything. Future episodes and we look forward to building with you. On behalf of the team here at Venture Guides, thanks for listening. Until next time, keep building.