The financial start-up industry is in constant evolution and IT is becoming a critical dimension of the business strategy. Our last interview highlighted the need for IT managers in banking to step up as business leaders. This week, Aleksandar Kudic, Chief Technology Officer of Grove Capital Management, explores with us the collaboration between IT and the business within start ups, and he shares his experiences on the different aspects the CTO role.
Every company is a technology company
Technology is all about making a difference to the business. For Aleks Kudic it is a leverage for the company to outcompete its rivals. IT and business are more intertwined than ever. Not only technology itself is vital, but data is quickly becoming the oxygen of the business: “most modern businesses nowadays are data driven, or they should aspire to be data driven” says Aleks. And it is not just about “big data”, it's about the necessity to understand the business environment better and to make decisions strongly backed by data.
Aleks is part of the leadership team, an ideal set up which allows him to discuss business decisions and their impacts on technology from an early stage on, as well as to be more proactive in offering technology solutions to improve the business. Because technology is so critical to the business, it is important to understand the impacts of decisions on IT as well as possible.
Not every CTO is part of the executive team, and even for those with less opportunities to contribute directly to the decisions, Aleks highlights the importance to stay connected: “it is invaluable for them to keep an eye on business concerns that don’t directly impact technology but will have implications later on”. For him, this is the most important part of his role. It is when he can propose solutions that create capabilities for the business. It means researching cutting edge technology and putting together solutions that will make a real difference.
But it is only one side of the role, as the list of his daily challenges is quite different, and more varied, as he describes: “information security, dealing with administration, dealing with policies, dealing with compliance…I’m also doing IT support, which has its own set of issues!”
Operational vs. Capability Building Work
One of those challenges is to balance operational work (keeping the business up and running efficiently on a day to day basis), with the building of capability for the business (implementing solutions that enable more business options). This is a recurring challenge for IT at every level and in every industry. Aleks explains that even though the perfect model doesn’t exist, IT leaders need to have a strategy and be aware of the balance they are creating.
Some of his previous roles had illustrated for him the risk of too much operational focus: “people just cope, there is a ‘fire fighting’ culture that creates results in the short run” … but then fails to scale or to adapt. A fire fighting culture leads to large operational set up but little capability building for strategic opportunities.
On the other hand, the business suffers very quickly if the response to operational requirements is too slow: “if you decide to invest in capability building, the team that depends on the immediacy of the information is going to struggle,” he explains. There is no magical solution and the best approach is to become very aware of what you are trying to achieve. For Aleks, one key aspect is to ensure everybody in the company, in technology and beyond, understands the model and balance that IT is aiming for. So when the CTO needs to make a decision, everyone understands why and it becomes easier to get buy-in.
When capability building is on the agenda, the priority is flexibility and agility: “to create something that doesn’t create huge overhead in terms of being able to change and to adjust quicker than bigger organisation,” says Aleks. This is the advantage of start-ups and it needs to be carefully maintained.
He recalls an episode that highlighted the difference between banks and start-ups: “I was at a great presentation, and there was this diagram about a financial start up trying to outrun a big bank: but there isn’t anything big banks can’t do if they put their minds to it, they have the resources, they have smart people, they have the technology,” yet with a well tuned operational vs. strategic model and with solutions that can evolve with a minimum overhead, start ups are able to out-manoeuvre banks.
To achieve this, Aleks relies on a small team of four in London and a flexible, outsourced team in Belgrade. This allows him to tap into specific expertise for specific projects. The solution works for Aleks, but doesn’t come without challenge. Communication is one. It is true with any remote team, and his is no exception: “Being able to get the best out of your team is never a done job … with the outsourced team in Belgrade it requires a different type of communication skills, … how do you make sure people understand you, that you understand them and to address the issues they might have?” he asks, before quickly giving his answer: by communicating, over and over.
Relationships, off and on-shore, need time and constant re-adjustments. It is easy to see it as a distraction from technology itself: “for a hands-on CTO, building relationship is time that he’s not spending developing,” Aleks admits before explaining that investing time in relationships is the only scalable way to build a highly productive team and leverage its efforts.
Start-up IT teams need to stay agile and flexible. A CTO mainly “orchestrate” existing solutions rather than developing their own, so there is no need for big, heavy teams. Aleks describes his role as picking the very best solutions on the market and integrating them in the workflow. On the operations side, cloud solutions enhance flexibility to the point where to stay competitive: “you almost do not have a choice but to leverage the cloud, you need good reasons not to, it’s a default choice, and it’s the right choice for the majority of companies in our space,” says Aleks.
About innovation in the financial industry, Aleks first thought goes to solutions “removing friction from already existing processes, like sending money abroad”. With providers now doing it cheaper than banks, he continues: “We’re seeing startups with billion dollars valuations who offer more innovative services by removing friction from the value chain.”
The data revolution is the second aspect. For Aleks, its main value is to bring data to the business in a timely and useful way. When before, requesting a report from IT might have taken weeks, “now we finally have tools that are outside of IT to be able to surface requested data in a reasonable way, we have the tools that can do that really quickly, at a monthly cost, that is fantastic!” says Aleks. The business has now the tools to query and analyse data that IT processes were struggling to provide.
But innovations appear everywhere. Around tech recruitment for instance, with new types of social interactions outside the traditional recruitment route. For Aleks: “the current model of recruiting is a bit broken… and there is a lot of potential in all the different technical events from tech meet ups to hackerX events, to new job websites specialising in particular segments”. Those events are ideal for start-ups to meet potential candidates that will share the same culture.
He finishes: “HackerX events are not frequent in London, but there are similar ones where you can meet people. They understand what you’re doing and you understand their backgrounds. If there’s an interest you can move forward very quickly”.
CTOs need to demonstrate a wide range of skills from strategic vision to hands on support. But the pre-requisite is still a real excitement about innovation in order to drive and support business growth.
Thank you very much to Aleksandar Kudic for sharing his views on his role and his industry. More insights and tips from Aleks about the CTO's roles and decisions in his blog.
You can also see, comment and like this interview on LinkedIn