Startup Thinking For Governance

[00:00:00] Intro: Welcome to Minutes by boardcycle, where in each episode we pack the insights from one of Australia's boardroom leaders into just a few minutes.

[00:00:10] In this episode, host Richard Conway talks to Hannah Browne, managing director of technology consultancy Midnyte City, and director at Greenpeace Australia Pacific, about the application of startup thinking in the world of governance.

[00:00:24] Richard: Hello and welcome to Minutes by boardcycle. I'm your host, Richard Conway. And today I'm thrilled to be joined by Hannah Browne. Hannah, welcome to the podcast.

[00:00:36] Hannah: Thanks, Richard. Pleased to be here.

[00:00:38] Richard: Hannah's a non-executive director at Greenpeace Australia Pacific, and she's also a serial entrepreneur, having founded a number of startups, including her current business Midnyte City, where she's the managing director.

[00:00:50] Richard: Today, Hannah and I are going to discuss how company secretaries and other governance practitioners could think about applying some startup or entrepreneurial [00:01:00] methodologies into their governance practices.

[00:01:02] Richard: So to start with, Hannah, it's probably fair to say that it's rare that you hear the words governance and innovation in the same sentence.

[00:01:11] Richard: It's not generally considered to be an area where it's wise to kind of test things out or to be on the bleeding edge. So I just wanted to ask to start off with, do you think there is some place for startup thinking to play in the governance realm?

[00:01:26] Hannah: Absolutely is the short answer to your question, Richard. Maybe I'm biased by my background here, but I think technology is disrupting our lives at a pace that is completely unprecedented. I mean, even if we look at, the latest, with AI after ChatGPT's emergence, you know, late last year, I remember one of the CIOs that I work with sending me a message about nine o'clock at night saying, I've just played with this ChatGPT thing.

[00:01:52] Hannah: I think this is going to be the biggest disruption that I've ever seen in my career. And he's at the end of his career. He's a couple of years away from retiring. [00:02:00] So, I think, if I can indulge my own opinion a little bit here, I would love to see, a bit more entrepreneurialistic thinking in governance circles and in the boardroom.

[00:02:10] Hannah: I actually think it's a key component of strategy. You know, strategy is not just about sort of a navel gazing exercise about where we think we might be in 10 years’ time. It's about responding to the environment that we are in and that is being constantly disrupted.

[00:02:26] Hannah: I mean, I haven't been on 100 boards, so I couldn't tell you what are lots and lots of different boards are like, but I would love to see a bit more urgency around innovation from a governance perspective.

[00:02:38] Hannah: And less of this sort of, oh, we'll sit on the fence and see how it goes, or we'll write a policy and we'll deal with it that way. Like, you know, we have working groups and we have subcommittees for reasons. I think where you're being disrupted or where there is a chance for a competitive advantage off the back of a new technology our governance teams should be imploring leadership and investing a little bit of board time in [00:03:00] in that future perspective, in that innovation, in looking forward to the future, not just in box ticking, reporting, compliance exercises, or nostalgic, backwards looking, glory days, reminiscing.

[00:03:12] Hannah: Yeah, I'd love to see a bit more innovation in the boardroom.

[00:03:15] Richard: Yeah, great. So then I wanted to, I've kind of picked out three S's that I think are common focuses in startups, which is not to say that every startup gets all of these right or anything like that, but they're common themes that you see startups focusing on. And they're Simplification, Systematization and Scalability.

[00:03:39] Richard: And so I wanted to start off asking you about the simplification scenario. So I think there's no denying that organisational governance is just getting more complex and you can't just simplify governance by ignoring the increasing complexity in the environment that you're dealing with.

[00:03:59] Richard: So [00:04:00] how can a governance practitioner or a board think about simplification in the governance context?

[00:04:08] Hannah: As a governance group, we have to go wide. We don't have a choice about how broad our remit is that we are responsible for. It's gotta be, and I have this conversation a lot with my clients as well. We're all trying to do more with less.

[00:04:24] Hannah: So it is really important to work smarter, not harder. And the way we do that is prioritising. I was at a, a meetup with 150 CTOs last week talking about AI. And one of the presenters was talking about, he has a team of 12 and he believes on the measure of velocity, which is how fast we go, he believes that with the tooling that they are using around AI, that he's a full time equivalent additional team member in the team. And I remember thinking to myself, like, that's great but we could also just prioritise better.

[00:04:59] Hannah: And I [00:05:00] had lunch today with another really amazing CTO friend and client of mine. And, we were talking about scale as a measure, and I'm sure we'll talk about scale in a minute. But too often we talk about headcount and we don't talk about value. I've worked with a lot of organisations and a lot of teams to deliver a lot of software over the last 20 years.

[00:05:19] Hannah: And I can't think of many occasions, I couldn't even give you more than five where we measured what the value, what we hypothesised about the value that this, this initiative was going to deliver and then we delivered the initiative and then we measured the value that it created.

[00:05:35] Hannah: And when I'm talking about value, I'm talking about, did it generate more money? Did it save us time? Did it allow us to do more with less resources or did it reduce risk for the organisation? But there are four key value metrics that are applicable across any organisation.

So when I say simplify, I think about prioritisation and I think about how we can get better at working on the right things and not just doing all the things that we think we have to do.

[00:07:17] Richard: Yep. So I guess to, to summarise what you've said there, perhaps, as the governance world does get more complex, you have to revisit what you've been doing historically, think about the impact of those things compared to new things that are coming in, and question what you've done in the past, potentially get rid of some of the processes or activities that you've done in the past which are no longer impactful in the, in your kind of new world.

[00:07:45] Hannah: Absolutely.

[00:08:24] Richard: And so Hannah, the next concept I wanted to ask you about is systematisation. It's an area that, yeah, startups and entrepreneurial businesses are pretty focused on as well. And so I wanted to ask you to sort of explain the reasons why they're focused on that. And again, how someone like a company secretary can apply that kind of thinking to their work as well.

[00:08:55] Hannah: I think systematisation is really important, but I think it's really hard to get [00:09:00] right. And I think this is a fundamental responsibility of leadership, is to look at the systems we have in place, look at systems that are in place maybe in other places, and think about how we can systematise.

[00:09:15] Hannah: There's a thread the needle exercise here in too much systematisation, too much, you know, becomes bureaucracy and stifles innovation, and it stifles your high performance teams very quickly. But not enough is not the guardrails that people need to be really effective at what they're doing.

[00:09:33] Hannah: You know, if I look at organisations that I think that are doing a really good job at this, I have a bunch of friends that Block, and looking at the way that they regularly have new cadences of how to understand what's going on across the organisation to elevate voices of people who, you know, aren't necessarily in the executive team, you know, the way they evaluate their work and their decision making is probably some of the most progressive that I've seen, [00:10:00] honestly.

[00:10:00] Hannah: So yeah, like systematisation is a, is a hard one. And some people that you'll talk to think that you can, you can buy tools to just, you know, create systems for your organisation. And, and some people think that you can buy tools and then retrofit those tools to the systems you've already created in your organisation.

[00:10:17] Hannah: And, you know, I think pragmatic and effective road is the middle road somewhere between those two things. Like don't customise off the shelf software is a good piece of advice for most people.

[00:10:28] Hannah: How do we set up the right systems? And, to your point earlier, startups are an exciting place to be, because they actually have to review that systematisation really regularly.

[00:10:36] Hannah: You know, when they grow three times, in terms of their internal team, or if they grow three times the customer base, or if they move into new international markets or new verticals, they need to look at how they service those verticals and how they service that, keep their culture and keep everyone productive and happy when their teams grow and be able to be compliant in new markets when they're investing into new spaces.

[00:10:57] Hannah: So that [00:11:00] systematisation and the regular review of that and the right sizing of that becomes actually the most important and the most interesting part of being part of a startup.

I don't know that I have any answers to your question, Richard, but it's a fun space to play. And I think it's one where you see the wheat really sorted from the chaff in terms of organisational leadership, because the people who fail are the people who keep trying to do the same thing in different circumstances.

[00:12:58] Richard: Yep. I also wanted to [00:13:00] draw a link between, what you've just talked about on the systematisation front and the simplification or prioritisation bit that you talked about before.

[00:13:10] Richard: Which in my mind is around prioritisation generally comes before systematisation. I guess, generally in my mind, you find the things that are low priority or which are ripe for simplification and you need to make a decision in my mind around whether those are low priority and we just don't need to do it at all.

[00:13:29] Richard: In which case, don't worry about systematisation. You don't want to systematise things that you just don't need to do at all. But if they are low priority, but they're actually essential steps that need to be taken in something, then those are your targets for systematisation, because what you're saying there is this is not our special sauce, this isn't what I really want to be spending my time doing. And the systematisation is around freeing up your time to do the higher order tasks that are [00:14:00] more critical to your role.

[00:14:01] Hannah: Absolutely. And as you describe that, I'm thinking about opportunities for automation in our organisations. You know, the technology is there.

[00:14:09] Hannah: We really shouldn't be doing manually repetitive tasks. We really should be automating these jobs, especially if they're regular jobs. And the other thought that occurred to me is, Wardley mapping.

[00:14:19] Hannah: There's a 12 minute YouTube video by Simon Wardley on describing organisational decision making like maps. And he talks about how you can map out your organisation in a way that can help you determine where your core IP is. And where those, as you said, important but not key or not special sauce activities are. And that's really where you should bring in software to help you.

[00:14:45] Hannah: So, again, to that point of, systematisation, Wardley mapping can be a very useful tool in a leadership team or even a boardroom to help determine where maybe we should systematise and where we should [00:15:00] customise or look to really own our own IP or build from scratch.

[00:15:03] Hannah: I remember years ago, small tangent story. Andrew Todd is one of my favorite technology leaders in Melbourne.

[00:15:16] Hannah: And I'm very fortunate that he is the advisory board for Midnight City. So I get to spend a lot of time with him and bounce a lot of ideas. And IOOF strategy was one of the best I've ever seen.

[00:15:27] Hannah: They built their own platform and it was built by a team out of Tasmania, written in Delphi. You know, like it was not what the cool kids were excited about. But it was incredibly strategic because what they then did was got funding, and acquired a whole bunch of distressed financial services assets. One after the other, after the other, after the other.

[00:15:47] Hannah: And they would migrate across the products and the customers and then decommission the old platform. And you know, this was a strategy that took years to see fruition on. But over the course of five, eight [00:16:00] years, they went from ASX 300 to ASX 50. Because all of these organisations had not respected how important the technology was to their function.

[00:16:08] Hannah: So they got in these distressed states where they had so much tech debt that they couldn't actually deliver services for their company. They almost wound themselves up. Then IOOF would come and scoop them up, take what was useful in terms of the people and the tech and the products, and then shut down the organisations.

[00:16:25] Hannah: And it was just, it was the most well executed M&A strategy I've ever seen in my corporate career. And I still look back fondly on it and think back to just how pragmatic that was, that they recognised that tech was their core IP. And they were going to build their own. They weren't going to cobble together a bunch of custom off the shelf systems.

[00:16:44] Hannah: And that became their absolute competitive advantage in the market was their underlying tech. When they were fundamentally a financial services company.

[00:16:51] Richard: And perhaps the corollary to draw there to someone in governance, I guess, at the higher level is what's happening there is that there are [00:17:00] certain organisations that are not revisiting this systematisation, in technology, in that case. Other organisations are, and if you're not revisiting that thinking about whether it's still fit for purpose, then eventually something else will come in to replace it.

[00:17:16] Hannah: Absolutely, especially when we're talking about technology, especially.

[00:17:20] Richard: And so Hannah, the last concept I wanted to ask you to talk about is scalability. So I think that kind of directly relates to the pressures that governance teams are under around, you know, increasing complexity in corporate governance. But again, just wanted to ask you to talk about how startups are thinking about scalability, why they're thinking about scalability, and how that can fit in in the corporate context and the governance context as well.

[00:17:50] Hannah: So this is such a how long is a piece of string question. You know, I had lunch earlier today with someone who I absolutely adore in the market and they're in [00:18:00] a startup at the moment who has scaled too much. Where, you know, actually, they've got more headcount and more people than they need to do the work that they need to do.

[00:18:10] Hannah: And in fact, their industry is being disrupted. And what they do need to do is take a step back and pivot into a new direction. And, you know, and all the machinations of how that will unfold are currently rolling out in that organisation.

[00:18:24] Hannah: There's another customer I'm thinking of at the moment who had an enormous breakthrough in terms of the US market where they've picked up an enormous client over there that is going to dwarf anything that they've done prior.

[00:18:38] Hannah: And, you know, they've got a really lean little like 12 person engineering team that has built this platform that now needs to scale in a way that it never has before. And so, you know, for them, scaling is, if anything, you know, in that first example, the scaling challenge has been around, they've scaled too much with their people and not enough with their [00:19:00] tech.

[00:19:00] Hannah: And this, this secondary example is where actually, they're scaling their revenue and their platform exponentially, but not necessarily scaling their team. I know they're bringing on a couple more people, which in percentage terms, you know, if you add three people to a team of 12, that's a big increase, for the scaling that the tech needs to achieve to deliver for this new client.

[00:19:21] Hannah: And then another new client coming on behind them. You know, I actually think, I would be wanting to make sure that, you know, that team is super dialed in. Because resilience is the number one question when you're scaling.

[00:19:34] Hannah: If you've got a new customer who's going to do 80 percent more than you've ever done with all your existing customers before, and I'm not, not saying that's the number, I'm just using that as a hypothetical, then, you know, knowing your platform can scale reliably, consistently, and with resilience to that is super important.

[00:19:49] Hannah: So, I think scalability means different things to different people. And you know, maybe this is a bit of a cop out answer, Richard, but I think in a similar way [00:20:00] to simplification and systematisation, like these are fundamental conundrums that we are challenged with in our organisations. And I often say to the team that I work with at Midnyte City, you know, all of our customers are trying to solve the same problems, right?

[00:20:17] Hannah: Everyone is trying to, simplify, scale, systematise. They're trying to have, you know, quality in what they produce. They're trying to be innovative. They're trying to be more agile, more adaptive and focus on value. They're trying to do the work that's going to have the biggest impact on the organisation.

[00:20:33] Hannah: But the way every organization needs to solve these problems is different, because their constraints are different. So yeah, what constrains one, you know, I think often about, the West farmers group, you know, like office work and Office Works, Target, Kmart, Bunnings, et cetera, et cetera.

[00:20:50] Hannah: They're all, retail outlets with a big footprint across the nation. But each of them has very different constraints in terms of what they [00:21:00] face. So your tech strategy for Target is going to be completely not applicable for Kmart or Officeworks or Bunnings. You know, they actually need to think quite differently about how they run their organisations.

[00:21:10] Richard: Probably the key point there is around, you need to think about what your constraints are in your governance organisation or any, any organisation when you're thinking about scalability. So often, I guess, the constraint that a governance team has is around human resourcing.

[00:21:28] Richard: But if that's not your constraint, then you need to think about how you scale in line with, whatever constraint you do have.