Brought to you by VANTIQ
Episode 33
Looking Out the Front Window
Ken Piddington, CIO of SGR Energy and popular speaker on technology-led business transformation discusses how to create your legacy by leading the development of an intelligent, real-time, agile enterprise.
Blaine
Mathieu
Chief Marketing +

Product Officer, VANTIQ
Ken
Piddington
CIO of SGR Energy and President of Compass42

Blaine: Joining me today is Ken Piddington, CIO of SGR Energy, President of Compass42, and a member of the Forbes Technology Council. Ken has had a long career as both a CIO and an adviser on numerous digital transformation initiatives. Thanks for the time, Ken.

Ken: Thank you Blaine. Happy to be here.

Blaine: Great. All right. Let’s have some fun!

Well since you seem to have a stick in a few different fireplaces, why don’t you tell us a little bit about both SGR and Compass42?

Ken: Sure! SGR Energy is a privately held company headquartered here in Houston. We do heavy fuel oils, lending, and manufacturing, primarily supplying power generation facilities in South America. We operate globally even though we’re based here in Houston. We’ve been around since 2011. In 2018, we were named by Houston Business Journal as the fastest growing privately held company in Houston with over seventeen hundred percent revenue growth.

It’s been a wild ride here in a very short period of time for the company. So, lots of fun and exciting things going on, typically in the acquisition space and growth down in South America.

I’m also the president/CIO for Compass42, which is my own advisory firm. Through that, I provide interim and fractional CIO work and other general advisory mentoring and coaching services to companies of all different shapes and sizes and help them on their transformation efforts, particularly with new-to-job CIOs.

Blaine: Impressive. So, we first met at an nGage digital transformation conference last fall, and I heard you speak about the evolution of the CIO in digital transformation and other things that we’re going to talk about. How did you get to where you are today: being a consultant and guru in this space and doing so many things?

Ken: It’s not been a traditional journey to my role, but a big foundation to it is a lot of learning. All those books you see behind me, I read like crazy. But, [if] we kinda go back and think about my career progression, It was not traditional. I went to college. I played football and baseball. It’s probably every young athlete that has these aspirations of being a professional athlete. Soon into my college career, I realized that wasn’t going to happen and I needed to shift focus. [It was] time to start focusing on my education a little more than the college sports and fun.

While I was in college, though, and for a while afterwards, I had a fantastic summer job at a construction supply company owned by a family friend. I had the opportunity there to do everything from working in the yard loading trucks to driving trucks, sales, inventory, accounting, and obviously running the computer systems. The gentleman who owned the company took me under his wing and really taught me how to run a business.

It’s that foundation that I had looked back to and use throughout my career. It may have been the job I had summers in college, but it’s such a groundwork for who I am, the things I learned, and how I apply that today. Even though it was 20+ years ago, it’s still relevant to what I do today.

From there, I always loved to program. I’d written a gambling program to manage the NCAA basketball tournament and it got noticed. It got noticed by a software company which landed me a job as an application developer, which, ultimately, promoted me to be head of product development. We built commodities trading and risk management software for companies of all different shapes and sizes, many very big Fortune 500 companies that you know and probably do business with today used our software.

What I found was I love the business, problem solving, and figuring out how to leverage technology to drive our business forward more than I liked programming. That led me to start my own consulting firm. From that, I’m starting to work with clients of all different shapes and sizes helping them in their various business transformation efforts, which ultimately led me to be the CIO of Global Partners.

Global Partners is a Fortune 500 midstream logistics petroleum distributor and owner of gas stations and convenience stores. While there, I was able to be one of the leaders that helped drive us through dramatic growth and transformation going from a 6 billion dollar company to a 20 billion dollar company in just four years. So, it was dramatic, very fast paced. We became an entirely different company through that.

It’s that experience that I’ve been able to take with me through my consulting, advising, and other CIO roles today at SGR and others previous that I’m able to leverage all that experiences to help others be successful.

Blaine: Wow! That is quite a story. Well, thank you for sharing that. I really appreciate that. Excellent. We have a lot of gurus and experts who spend a lot of time theorizing about digital transformation, but it’s great to see someone who’s been there and done it the real world with so many companies and so successfully.

Ken: When you look at the one result I continue to call out: we drove from a 6 billion dollar to a 20 billion dollar company. We were big to begin with, but we got really big. We were such a different organization just in that four-year period for what we were doing. You don’t think of digital as much in the oil industry as you might in other retail. We had all of that going on and there was a number of different ways both how it was applied internally and externally, customer facing, that it really made an impact in helping drive that growth.

Blaine: Interesting. Well, I want to get back to some specific examples on what you learned and experienced at that point. But, I want to go back and just touch briefly on what is one of your seminal pieces of writing that our listeners can check out on your web site and on your LinkedIn profile titled “Create Your Legacy, Inspire an IT-led Revolution“. What is the thesis of that think piece and why did you write it?

Ken: For me, times were happening and continue to be changing very quickly in our organizations. I think the role of the CIO, as technology leaders as a whole, we’ve got an opportunity to see across our organization and create value in new places than we’ve done before. With me, it was kind of a call to action to say, “Lose the pocket protector, get out of the back office, step out of your comfort zone, and create a real legacy to help drive your companies forward, and thus, your career and create that legacy for you and your team for where you want to go.”.

I believe the pace of change is faster than ever. The essence for IT to really make a stand to help drive an organization’s success or failure is now. To do that, we needed to do things in a more revolutionary way than traditional IT. That was really the basis behind it, kind of getting everyone to light a fire under them. Let’s go. The opportunity’s sitting there. Go take advantage of it. Create your legacy.

Blaine: So, are you fundamentally saying that digital transformation initiatives should be driven and led by the IT side of an organization?

Ken: I think they need to be led by the right people in the organization. But as an IT leader, you have to be really intimately involved. More often than not, it’s not going to happen if you don’t take charge. You’re in a better position than almost everybody else in your organization to do so. If you’ve been doing the right things all the way along throughout your career in what you are doing for your organization, you’ve got such a – sometimes people would refer to it as the helicopter view of the CIO – in seeing into all departments and how our business runs that you can bring more knowledge and insight to what we need to do, whatever digital transformation needs to mean for your organization. It is very different for every company. That’s what I think makes it so hard.

Because it is so technology driven, who else is better to be that face to it and a leader of it than the CIO and the other technology leaders in the company?

Blaine: Is that why we call it digital transformation, then, because it is very much technology driven? Or, what do you think about that?

Ken: I think the term is overused. There’s a lot of hype related to that. I really believe [it’s] business transformation. It’s what we’ve been doing. It’s what we should have been doing all along and digital is just a tool. The digital technologies have become so much more mainstream. – I hate that I’ll probably use that phrase “mainstream” a lot. [laughter] It’s enabling where we need to go.

I look at it as digital created a market dynamic that is something that’s really happening all around us more so than something that we need to undertake. I think it’s a greater use of technology within a company’s products, processes, and services in an effort to increase the speed of execution, deliver competitive differentiation, change the customer experience. It is really what it’s all about.

If you take the word digital out of it isn’t that what we’re doing from a business transformation all along? – continually trying to move faster, continually trying to do better, to be able to create the right experience for our customer, whether we were doing that through really cool mobile applications and data and analytics that were going to know and predict what our customers needed before they thought they even knew they needed it. Or, are you talking about different automations that could be used internally to create the intelligent enterprise?

We were still trying to transform our companies both inside and out, or hopefully we were. We were all talking about that a couple of years ago, about business transformation and transforming IT. We’re doing the same thing. Just now, technology’s become a greater part to it. People can touch it and see it.

We think about the consumerization of IT, everybody’s got their mobile device and is used to doing things differently than they were before. People are talking to some Amazon, Google, or whoever’s device that they want to speak to today at their homes and doing things that way. Why isn’t that making it into the originative business? That’s part of this transformation, this new technology to do and drive the right business outcomes.

Blaine: Which is why you would think that the IT group and the CIO should be at the forefront of these transformations and why you wrote your call to arms about an IT-led revolution.

However, in my experience, and you heard me speak a little bit about this at the engage conference, I think most people who are not IT leaders. They’re business leaders, line of business leaders or departmental, organizational leaders. [They are] generally not very happy with the impact of IT in their organization. They see them as a force for slowing down, not for actually, fundamentally driving their part of the business ahead. Do you agree with that? Do you think that’s what’s happening in the real world? And if so, why or am I just getting it wrong?

Ken: No. Unfortunately, it is happening in the real world more often than I wish it did. I think a big reason for that is there’s so much going on in our organizations that, as technology leaders, we tend to like to stay in our comfort zone, our comfort zone being the technology we don’t want to step outside those four walls. Organizations that have technology leaders are – I prefer to refer to it as business technology leaders – it’s like the CFO has finances, their lever that they pull in order to drive value for the company.

We, as the CIO, have to be able to pull on the same types of levers. But, I have technology as my tool kit as opposed to the finance side. But, both of us have to know the business. My first point of stepping out of our comfort zone, that’s the hard part for many folks who have grown up through technology and into their CIO roles or other senior IT leadership roles. They didn’t come at it or they don’t have the broad enough experience to really understand your business.

As I said in my backstory a bit, I found I love what was going on in the business more than I love programming and that’s where I started to put my focus around. I believe it’s my responsibility and my team’s responsibility to understand what I often refer to as “how our cash register works” as well as anybody else in our organization, no matter what role you have, if not better, in some cases.

Most people are in one particular department of the company and have a very siloed focus. We have to support all that and understand how it flows from end to end. It’s really on us to understand how that cash register works so that we can understand how to help drive that business forward, whether it’s through technology, people, or processes, bringing in new ideas to the table.

Blaine: Yup!

Ken: I think the reason most companies fail is they don’t have strong leaders that are willing to step out of their comfort zone. They may not have a rest of an executive team that’s willing to let them step out of there even if they want to. Maybe they haven’t done the right things upfront to prove that they’re ready for it. They haven’t focused on the foundational components of your IT organization and have those solid.

I always go – I’ve got my house and I want to put this great, new media room on it, but if my foundation has all these cracks and is going to fall down when I try to expand it, that’s wasted effort and I can’t do that. I’ve got to fix the cracks in my foundation before I can go put on that fancy media room. I think some people have too many cracks that haven’t been fixed. [Laughter].

Blaine: Make sense. And just for those that haven’t read your articles yet, when you refer to the cash register, you’re talking about fundamentally the business model of the company, the way it generates revenue. Right?

Ken: Absolutely and understanding what your role is in contributing to that. I don’t care what you do in the company. Whether you’re the CEO, the janitor, or you’re anywhere in between, we all do something that influences how well that cash register works. We need to understand that. That’s a big thing I’ve always done with my teams is talking about that and making them understand.

One of the hardest groups with that is you start to talk to your helpdesk and getting them to understand the cadence of your business and how their role in what they do or don’t do will influence that cash register.

Blaine: Makes sense. And for listeners under 30, the cash register was this device that used to sit on the desk. [laughter] You pressed keys and a drawer opened with the cash in it, sort of like a calculator that let cash go in and out.

Ken: Exactly.

Blaine: Just needed to point that out, just in case. It’s sort of like Square, but with paper money – is what it was.

Ken: We won’t talk about fax machines or punch cards!

Blaine: Good stuff.

I’d love it if you could give some specific examples, either through your time at SGR, your prior companies, or maybe with your consulting experience, specific examples of some interesting and impactful business transformation initiatives you’ve been involved with or are aware of?

Ken: I think I’ll give some examples from Global.

Blaine: Perfect!

Ken: That would be some great examples of that transformation. I believe in part of what you actually had seen speaking about creating this real-time, know-it-all, agile enterprise. That really ties into what I often refer to as being an intelligent enterprise. That’s your digital transformation inside. So much of the digital transformation we think about, the real cool, sexy stuff, “How do I engage my customer differently and create products out there?”, but we often forget about the digital workplace and creating an intelligent enterprise inside.

That’s where I spent a lot of my original focus, making us a better organization able to move at the speed our business needed to go at. One was an analytics project that was driven around one of our business segments on the fuel side to give them insights into what our plan was to what was happening real time as trucks were coming and picking up our product compared to where the market was at that given moment.

So, where previously they were looking out the rearview mirror and having passed what happened many exits ago trying to figure out what they went by, they were really working with much historical data. We wanted to let them start looking out the front window and looking out the back window, but much closer together. That analytics and business intelligence initiative was a big part of that transformation for that business, to help them optimize their margins and maximize revenue opportunities for their business.

From a more customer, sexy side of it, (I said earlier we owned gas stations and convenience stores) short of price, what were you going to do for why you would go to one store versus another. It had to be about the convenience. It had to be about the opportunities. We were in this age of most people, at least of the younger generation, leave their wallet at home but never forget to bring their mobile device. So, how can we leverage the mobile device to bring them into our stores?

We created a mobile payment at the pump application including loyalty to drive them to our stores and then from the pump into the station into the store itself to maybe buy a Coke and chips and other things to go along with that gas. The real margin, the real money was made on all the other merchandise, not so much on the actual gasoline.

Those were two examples for us that had a huge impact on what we did. One, from an internal site and one from an external perspective.

Blaine: Those are great examples. And I love that you brought up the notion of real-time business. I know when I saw you speak at the digital transformation conference, you were speaking specifically about that topic. This channel on VANTIQ TV is actually called “The Real-Time Enterprise”. So, that’s core to the concept of what we’re actually here to talk about. I also believe that many, if not most digital transformation initiatives are fundamentally about taking something that used to be done, as you said, “looking out the back window” and instead doing it looking out the front window. That’s just a super powerful analogy I’m going to start using from now on, if you don’t mind.

Ken: Feel free! No problem.

Blaine:Yeah. But riffing on the concept of real time a little bit more, tell me a little bit more about your thoughts on that generally. Why did you choose to focus on that as something you speak about these days?

Business is going so fast. We hear all the stories. There’s an event I go to that you have some keynote speaker talking about this company or that company that failed to see the writing on the wall and we did the Netflix-Blockbuster example. You talk about Uber coming into play and Airbnbs and even talk about traditional other companies like Nike that’s becoming a technology, or is a technology company first, and using the technology to help drive all the rest of their business. There’s so many examples of those.

I think that things are happening so quickly too. As pace of change and the pace of technology changes faster than ever that, as an organization, if we are not able to move at whatever speed our organization needs to move at, we’re going to find ourselves quickly disrupted and probably out of business.

If we look at the Fortune 500 from 1955, 89% of them are no longer in the Fortune 500 if they even exist at all. I don’t want to be one of those companies that gets disrupted like that. I don’t want the people I get to help to be that way either. It’s about helping you take technology to move it into the right speed for driving your business.

As I think from the real-time – I refer to it as the “real-time, know-it-all, agile enterprise – I look at that as an enterprise that captures the invisible, predicts the unknowable, digitizes the physical world, and creates innovation partnerships. It’s really an enterprise freed from the old guard barriers, vulnerabilities and intermediaries, powering a new world of ingenuity, inclusion, and velocity.

That’s a lot of really cool words to say that we need to be able to go fast and create an environment for our organization that gives all of our people the tools to make the right decisions in the right timeframes so they can take those hopefully actionable insights and do something with them to drive our business forward.

Blaine: And then be agile enough to be able to respond at this speed, right? That’s the other thing. You can’t plan to operate in real time if you haven’t got the agility to do it.

Ken: Correct. You can build that race car that can go 200+ miles an hour around the track, but not everybody’s capable of driving it. That takes great change leadership at an organization. We talk about the digital transformation. What gets left out so often in companies and why many I believe fail is they think it’s about the technology and they even have the technology tied to the desired business outcomes, but they forget that it means change for their companies.

I’m in the lucky position at SGR. We are a new company. We don’t have the legacy to deal with. My legacy is a few spreadsheets that we’re going off as we’re adding new systems and thinking everything from a cloud first [perspective] and starting out becoming the real-time, know-it-all enterprise as opposed to dealing with legacy mainframe solutions, processes, and people. Were in old ways of doing things. We’re in a great spot.

But, that change leadership at those companies is what I find to be missing or undervalued and not recognized to be critically important in the success of these transformation initiatives.

Blaine: Yeah absolutely. Well, this has been really cool. Let’s bring it around here to one of my favorite questions that I asks the guests which is: What part of conventional wisdom would you like the opportunity to call bullshit on today? I’m sure there’s got to be something where everybody is saying X and you say Y. What have you got?

Ken: Well I kinda have three. One, I do kind of call B.S. on this whole phrase “digital transformation”. I mentioned it a little bit earlier. To me, it’s about business transformation. I think it’s overhyped and overused. It’s really about the business transformation and digitally, the technologies that we’re using to continue to drive forward to create the business outcomes.

I think the other one is this concept of bi-modal IT. I hated it when Gartner came out with it, that we have these two speeds of IT, you go slow with your legacy and fast trying to do this transformation.

Our businesses aren’t going at two speeds. Our businesses are going fast, if not faster and faster every day, but it’s one speed. It’s all steam forward. I don’t know of a single company that’s going out there and says, “Hey, we’re a bi-modal organization. Look how successful we are.” They are all talking about how we have to go faster to avoid disruption. So, why is IT trying to do something differently than the rest of the organization? All we’re doing is creating that misalignment that we always talk about.

I just look at it as we need to, from a technology perspective, stop thinking about bi-modal IT, and start focusing on what we need to do to move at the speed of business. We can’t be the laggard and slow us down.

The third thing I think is kind of B.S. is the hype around blockchain. I do believe blockchain is a great technology and is going to be very [good] in our enterprise. It’s just not there and ready for primetime yet. We get all the hype about it. It’s out there and every media publication is talking about it. It’s a topic at every event. We see commercials about blockchain for our tomatoes.

That’s great, but it’s not changing how I buy tomatoes and I don’t think it’s ready for the enterprise yet. But, because of all this hype, companies are focusing on it and probably focusing on it before they should be. They’ve got maybe some cracks in their foundation that are going to make that harder for them to start to applaud as blockchain. They’re spending time on something that’s cool and sexy and forgetting about what they need to do to solidify the foundation and other things that are going to have greater impacts on their business today rather than some things down the line.

I know a couple organizations or industries that have been talking about what they want to do for blockchain. I’m in the oil space and I think blockchain from a smart contract as we think about the purchases of crude oil or even how we manage things at the wellhead are great, great use cases for it. But, in order for them to work just because someone builds the platform to do it means I have to get all the other players onboard in order for it to truly be beneficial.

It’s a large industry with a lot of different and unique players of all different shapes and sizes not all ready to go. There is a consortium of large oil players that came together to try and create this platform. It’s been two years and there’s nothing on the market yet. They’ve done some great proof of concepts and proved that it can work, but it hasn’t become mainstream. That’s where I think the hype is the B.S. part. It is a real technology. It will be something in our industry or organizations soon, but maybe not tomorrow like others would like to predict.

Blaine: Yeah. Well thanks, Ken. We’ve had many guests use the opportunity to call B.S. on blockchain. This is one of the most well thought through discussions of why on VANTIQ TV. So, thank you for that.

Any technology or business predictions for 2019?

Ken: Yeah yeah! I think it’s an exciting time, but I think:

1. I mentioned it a number of times, is the speed of business is only going to increase. I think, from a technology perspective, we’ve got to be prepared for that. So, we as technology leaders, are not slowing are companies down. So, that’s one. We’re going have to get faster.

2. Maybe it won’t fully come to bear in 2019, but I think that AI, the way it’s being used today only scratches the surface of what can be done with it. I think that it will become so ubiquitous that we won’t even call it AI anymore. It will just be there and everywhere and everything we do. Robotic process automation (RPA) and natural language processing I think are going to be mainstream in companies here in 2019 and not something that we’re just kind of experimenting with on the side.

I really think the natural language processing is going to take off tremendously, whether it’s through companies experimenting with how they add that Amazon Echo or Google home or Apple’s Siri or another thing like that into their organization, they’re building something on their own or they’re leveraging other companies products that have that imbedded into it, It’s going to start to be an expected feature of what you do and how we interact.

No longer do I want to type my keyboard to go find the report. Why can’t I just say, “Hey, show me last month’s PNL”. And bam, I’ve got it or ask different questions of my data.

And what that means, then, is the other part of my 2019 predictions. Data strategies have to really start to be real, exist, and be part of your business strategy because none of that, whether it’s the AI, RPA, or any of these other technologies you might want to talk about, they don’t work well if we don’t have solid data and a plan for how that data works. I think that’s a key part to what you’re going to see in 2019.

Across more organizations, data strategy is truly part of our business strategy which means companies recognizing data as a real asset critical to business success and not an afterthought. That does mean we’re going to focus more on the security of our data, both in transit and at rest. It’s going to start showing us an asset on the balance sheet, even because it’s that critical to what our businesses do. I think legacy data management practices are going to start to die off and the concept of data ops is going to become more mainstream, enabling companies to move data at the speed of business.

That’s what I think’s going to happen in 2019. Data is the foundation. We’re going to think about it more intelligently. It’s going to be a real asset and technologies like AI, RPA are going to take off because of it.

Blaine: Great predictions. Data ops is a really interesting concept. Obviously, Dev Ops, which you didn’t talk about today much, but the concept of Dev Ops is starting to take IT departments by storm. Data ops is an interesting concept.

On your AI topic, I absolutely agree. People don’t even realize it directly, but natural language processing, visual and facial recognition, all these applications are fundamentally applications of AI. They’re different elements of AI. They’re being embedded in everywhere. You don’t think of them as AI anymore, but that’s what they are. I agree 2019 will be a year when we sort of forget there’s A.I. inside of everything, but it is inside of everything.

Ken: Absolutely. You mentioned Dev ops, I know I didn’t mention it because it’s been around for a little while. It’s actually kind of an older phrase now. I look at data ops as the complementary or missing components of that. We did all these great things from a dev ops perspective around bringing the applications and operations group together and being able to release, test, and move code to make the production faster and better with less issues. It’s a great methodology and one I strongly believe in.

We forgot in all of that was the data. We did all these really cool things around the application side, but data continued to move at a snail’s pace in how we managed that to increase testing cycles to improve all the things that dev ops is about without the data. The data side of it, to me, is where there’s the biggest bang for the buck and opportunity for companies because we’ve done things very traditionally old school. That hasn’t matured at the same pace as other things that we’ve done, other processes, in our organizations.

Blaine: Yup. All right, to wrap it up, any final key takeaways or tips for a business leader trying to drive the transformation of her organization?

Ken: Yeah absolutely. I think understanding your business top to bottom, inside out. That’s the cash register, again, is critical for you and your team to be successful in this new normal that we’re in. I think you need to look outside your industry for innovation and bring those great ideas back to your company. Too often, we get focused on what we do in the industry that we’re in and don’t realize a lot of what happens around us is things that we can pull into our own company.

When we did that that mobile application for payment at the pump, we modeled a lot it after Starbucks. I loved the experience and how Starbucks application worked. We modeled a lot of what we did based on their stuff. We went to retail coffee and leveraged it for petroleum’s distribution.

As I think about these “creating that real-time, know-it-all agile enterprise”, I’ve always had three ingredients that I think are key that you need to think about and how we do that. One, you’ve got to leverage the technology and that starts with the data. Two, change leadership. And 3, you got to have a methodology for how you’re going to design and build this. I apply a lot of design thinking methods to what we do with my team, but you can’t just fly by to see your pants. Have a plan. Those are my three ingredients, that recipe, that’s there.

As business technology leaders, it’s a great piece of advice that was given to me early in my CIO career and I’ve followed it. I’ll try to follow it often and share it with many others. It’s about focusing on the four C’s. This is hard for technology executives because we grew up in the technology side. The four C’s are Cash, Customer, Culture, and Competition. The rest of your C suite, executive team, and board are thinking about those things. You need to be as well. You can’t just think about the technology side.

That leads me to the last part of my tips or advice. Remember nobody really cares about the technology. They only care about the business outcomes technology can help them achieve. That’s what’s really important. That’s the hardest thing for technologists to get over: technology doesn’t really matter. It’s all about business outcomes.

Blaine: Yeah. Wow. Well, I can’t wait to read the transcript of this interview because we’ve covered so many bases here, so much deep, rich thinking that it’s going to take me a while, even, to comprehend it all! But, I think it will be well worth reading. So Ken, thank you so much for joining me today. It was a lot of fun.

Ken: Thank you for having me! Greatly appreciate it.

Blaine: You bet. And those interested in hearing more of Ken’s thoughts can follow @kenpiddington on Twitter and also check out his LinkedIn profile and visit his website, kenpiddington.com. And of course, you can reach out to me anytime at [email protected]

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