CEO to CEO Podcast: Mark Foster

November 4, 2020 Kevin Campbell

The CEO to CEO podcast is hosted by Kevin Campbell, CEO of Syniti. 

This week's guest, Mark Foster is senior vice president of IBM Services, a combined $48 billion business and nearly 240,000 person workforce. While at IBM, Mark played an integral role in IBM's acquisitions of Promontory Financial Group, Oniqua, and Red Hat. Prior to joining IBM, Mark served as group chief executive of products, industries, and group chief executive of global markets and management consulting at Accenture. During his time at Accenture, Mark drove marquis deals with George Group, Sainsbury, Best Buy, and Unilever.

 

 

 

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Kevin Campbell (01:24):

Welcome to this week's CEO to CEO podcast. I'm delighted this week to have Mark Foster with me. Mark is the SVP of services for the IBM Corporation. Mark and I go way back to our days at Accenture. Mark's certainly been one of the gurus in consulting and in the services businesses for a long time. So welcome Mark.

 

Mark Foster (01:48):

Thank you, Kevin. It's great to be on.

 

Kevin Campbell (01:50):

Mark, how about if you start about telling me about your current role at IBM, what you have right now, and how your boss measures success for you today?

 

Mark Foster (02:01):

Yes, well, as you said, I'm the senior vice president of IBM services. That covers global business services and global technology services, which is around about 240,000 of the people in IBM are straddling everything from strategy consulting, as you say, through digital agency, through our BPO business, our analytics business, our system integration application management services, and all of the infrastructure services, network management, mainframe management services across everything from a service perspective that IBM does around the world. That's my role.

 

I guess, in terms of success is measured pretty much in one word, which is drive growth. Drive growth and clearly drive growth in the new markets that IBM is targeting. Clearly, the critical market that IBM is looking to win in is the hybrid cloud marketplace. Clearly, the opportunity for us, both in our service propositions and in our platform propositions, to win in that space is the big thing we're going after. Dor me, it's about how do I pivot our organization to be relevant and then attached to the growth that's happening in that marketplace?

 

Kevin Campbell (03:16):

Well, we've had this little thing that happened to us this year called COVID in March, and now we're seven or eight months into it. How has COVID impacted your business so far?

 

Mark Foster (03:27):

Well, I mean, first of all, obviously we've got a business that's a decent mix to what I would call more transactional and more annuity type business. I think, to some extent, clearly, also we have a very large scale business that has huge geographic reach as well as service reach. To some extent, there's different patterns occurring around the patch. We've obviously seen a drop off in some of the more discretionary areas, some of the more discretionary project-based digital transformation work we were doing. Some of our businesses, like our BPO business, has had aspects with the volumes of business going through the transactions have been lower. The same has been true of parts of our technology services business as well.

 

Having said that other parts of the business, for example, there's more transactions being managed by banks than ever before. Right now, if you're plugged into any kind of online stream right now, there's huge amounts of transactions going through. It's been variable, but I think that overall, the organization has navigated, what clearly is a tough period pretty well.

 

Obviously, we're now, as we all settle into this new normal, we're getting used to what this is going to be like moving forward. We still have probably over 90% of our people entirely working from home. We're imagining a hybrid world of going back to the office, working from home, working in centers, evolving now over the next period ahead, and then try to also, of course, make sure that the offerings that we are actually taking to market are relevant for clients who are going to be in this world as well for the foreseeable future.

 

Kevin Campbell (04:59):

Yeah. Speaking of the clients, and I know you do a lot of work talking to CEOs of your clients, and at IBM you have every industry. I know it's hard to generalize given all the industries and the different ways you've been focused, but what advice are you giving your clients when they say, "Hey, Mark, how should I think about the year ahead?" What are the things that you're telling them are important for them to focus on?

 

Mark Foster (05:25):

Yes. Well, the first thing is that all of them, obviously, have realized that this current phase has actually been accelerating the digital transformation. Most of the the conversations I was having pre-COVID were about the arc of transformation of massive technology driven change. And clearly in most companies now have seen that accelerate. To some extent, therefore, the advice is keep on going, and to some extent, see what you can do to stand now upon the accelerated use of technology in your business to move faster into new markets. I think that many of them are thinking hard about the balance of their energies between internal process optimization, flexibility, managing their costs and their cash in a smart way in a world that's going to carry on being very volatile, versus is this a moment in time that I could leapfrog my competition and really build into new markets in a dramatic way?

 

I think that, to some extent, the advice we're giving right now is actually, you need to make sure you're not too internally focused, that there is actually some opportunities in the marketplace, and if you're not seizing it, others will be. At the same time, you do have opportunity right now to probably make bolder strategic steps that you've had for a while with a certain amount of air cover from the macro environment. I think these are all things that are on people's minds.

 

The third area, I'd say, of advice is really around the workforce and how to be a leader in these times, because clearly it's a challenge, different skills required, ways of communicating, how you bring your teams with you is really different. We mustn't take for granted the fact that people have put up with this way of interacting for the last six months or so that that'll be true forever. So how do we keep it fresh? And how do we keep our teams engaged around purpose becomes even more important.

 

Kevin Campbell (07:17):

Yeah, and you talked a little bit about growth, right? People today are looking at growth either because their business has been impacted and now they're trying to get back to growth, or I think most people are contemplating, is now a time that I double down on my strategy and maybe pick off some of the weaker competitors in there? So when it comes to growth, what are the key things you're hearing from people and key things you're advising them?

 

Mark Foster (07:49):

Well, I think the critical thing for growth for us, obviously, is around what are you doing more around connecting with your customers and understanding customer needs in a very much more powerful way? But also a really big driver of our growth advice relates to this concept of business platforms. Pretty much, every company that we're talking to is on its own journey to become a bit of a platform company, if you like, as technology becomes a bigger part of what they do in their business. As you think about that, therefore, the critical choice you make about which business platform you want to win on, I feel like a new definition of competitive advantage that's defined around a business platform or platforms, those choices are becoming much more stark. And frankly, the cost of investing to win in those platforms is rising.

 

In terms of organizations being really clear where their North Star is becomes really important, but also this idea of platforms that straddle historic boundaries. So looking at your competitive advantage in a new ecosystem lens, thinking about how you with other companies that have related interests that you could start to work together on creating a different ecosystem of value to go after new customer opportunities. Whether you're a bank that gets into retail, whether you're a retailer that gets into insurance, whether you're an automotive company that gets into insurance, et cetera, et cetera, there are so many opportunities now to create business platforms for growth that are straddling former boundaries. I think that's something that we're going to see a lot more of.

 

Kevin Campbell (09:21):

Interesting. I think there's a lot of interesting possibilities out there of what people can do and what people... I hear people talking about really interesting things and things that we would have thought a couple of months or years ago were wild are now interesting possibilities, which I think is great. It's a little scary for people, but it's also a huge opportunity for people. A big part of that, at least in the CEOs that I talk to and I'm sure similar to you too, as then they look at M&A, because there's ways to get there organically, and then ways to get there through M&A. When you talk about M&A, and you talk to CEOs about thinking about their strategic choices, what's the guidance that you give them on what to get right?

 

Mark Foster (10:15):

I think the trick is going to be, frankly, evaluations are going to be all over the map right now and that, and I think, therefore, trying to make sure you understand the value of what you're getting is really important, because it's a pretty volatile picture in terms of that. I think, as always, to be honest with you, I think it comes back to my last answer around the whole area of business platform. I think being clear about how what you're bringing on board is enhancing your business platform for success becomes really, really key.

 

Of course, you hope it brings with it channel, where you hope it brings with you some technology or asset. But of course, you very importantly, right now, you're focusing on the talent that comes on board with it. I think that, perhaps more than ever, the focus on the skills and their maturity, their progressive modernity, as it were, with regard to where you want to go, rather than where they may have been in the past becomes important. To some extent, you have to be very careful you're not just picking up yesterdays companies, but you really are picking up capability that could be part of tomorrow's company with yours. That, I think, is a much more nuanced and thoughtful area than perhaps some of the roll-up strategies of the past might've been.

 

Kevin Campbell (11:31):

One of the things that's important, when you think about these business platforms, at least as I understand and talk to people about, is the supply chains around the world are being disrupted. Being an old supply chain guy who spent most of your life there, even running supply chains on behalf of clients, what's the impact on the supply chain today? And how are you advising people to think about that?

 

Mark Foster (11:59):

Yes. I mean, exactly. The supply chain has become almost... If we've learned one thing from this COVID experience, it's just really how important supply chains are and how dependent we are on every link in the chain being synchronized to allow the thing to work. We've had this concept of shattered supply chains that some of us have been talking about. During this period of time, our supply chains have been shattered by the stop start nature of markets, the stop start nature of supply, both sides being in, if you like, in a much more volatile picture. What that's meant is that, frankly, the historic ideas that we always use for things like supply chain planning, where we have our... Use history as a basis for predicting the patterns of supply and demand, that's hard to go completely out the window.

 

So now, we're into much more sensing models that operate on the short term, short term sensing models that can understand micro dynamics. And so, we're doing a lot now around our services for clients around helping them think about this continuous interactive planning process where you're actually sensing everything from the micro COVID situation, taking place at the county level, say in the US, how is that going to impact the demand models for different kinds of products? How does that connect into weather, the impact of weather and COVID, and the patterns of supply and demand for core products like automotive or anything else? You can imagine the dynamics in play. It's become much more real time, much more insights from that kind of dynamic picture that we think is going to be the heart of those models going forward.

 

Kevin Campbell (13:45):

Speaking of M&A, you guys announced a major transaction a couple of weeks ago, and maybe you could just give us a few minutes on what was the thinking around spinning off the GGS business, a big part, for people who don't know, it's been part of your infrastructure business that you had?

 

Mark Foster (14:08):

Well, I think it comes back to the comment I made about clarity of intent and business platforms, actually. I think at the end of the day, that what we've created through this model is two companies that will have a very clear and unambiguous business platforms to build on. The infrastructure services business we'll be able to go after the modernizing world of more cloud-centric infrastructure with its own cost structure freed up from the, if you like, the scale of the IBM organization, to be able to compete more effectively and to modernize the way that it goes to market in what's a very fast moving marketplace, and to become the win... It's already as the largest player of its type in the world. So the opportunity is to now leverage that scale, but do so with more nimbleness of being part of its own entity.

 

While the remainder of IBM can really double down on this hybrid cloud opportunity to go after the hybrid cloud platform with all it means for application modernization at scale, process transformation at scale, and the implementation of Red Hat OpenShift as a default architecture, the change across many clouds, many private clouds, and the mainframe moving forward.

 

Kevin Campbell (15:18):

I think you guys get an A+ for demonstrating your advice on strategy with your own execution in there. And so, I think a lot of us are excited to see how that plays out, but it makes a ton of sense. You've done a whole bunch of acquisitions in the past for your business, whether we go way back to the George Group, or you talk about the Promontory Financial Group that you guys bought. What are you learned after watching these yourself and watching lots of clients is what's the key to success?

 

Mark Foster (15:53):

Yeah, well, I mean, a certain amount of this actually is very contextual, of course, about the individual situation and the nature of the acquisition. A couple of things I think do stand out to me, again, are, one, I think you do have to be very careful with an acquisition about how you keep it standalone, enough to actually manage its way into the business carefully. Because too often, I think, we try and rush integration. Actually, my view, my experience of that is the faster you rush integration, the more you lose the value of the thing that you acquire, if you're not careful. I think the care of that point of how long you keep something separate, as it comes into the business, is important, particularly not just because you need to be able to often manage a management team structure around the deal that was done, but actually just to understand how best to take advantage of the synergy opportunity as well with care.

 

I think, having said that, it's then about how you then do go about a careful integration process. And particularly there, I've learned the trick is to try as much as possible to start to meld talent, leadership talent, between the acquired organization and your own organization. The more that you can do that, you ease the way into the eventual cultural mix being stronger. As I say, you also start to get some accelerated synergy value from that.

 

I think the other thing is just to continuously be very mindful of the fact that, simply because something comes up to an organization, it doesn't immediately adopt the culture. You've got to really, really be very thoughtful about how you manage it and that you respect the way that the previous organization succeeded as well. You can see, imagine with the Red Hat acquisition that IBM did a year or so back, one of the biggest acquisition in the history of IBM. Very strong cultures on both sides. I think, so far, again, we've done a very nice job, I think, of obviously managing both the necessary separation that came from an open player like Red Hat, but actually the reality of how to manage that from a interaction of talent and knowledge in a very, very effective way.

 

Kevin Campbell (18:09):

By all accounts, you guys have gotten huge marks, positive marks, for how you've managed that integration. I know there were more than a few skeptics at the beginning that you would get the IBM and all the history there with the hip up and coming Red Hat and be able to get the best of both. It seems that that's gone pretty well. And so, I think that's really a challenge. Because too often, as you say, people buy somebody because they're different and then they try to turn them into themselves, and then it doesn't work when we get there. Let's switched to one of my favorite topics, which is data. I know at IBM data's important to you guys. And you guys, whether it's through Watson and some of the stuff you have with that, or it's your longer-term view of the connected enterprise, data's important. How do you think about data and its role in the corporation?

 

Mark Foster (19:08):

I think, the fuel and the direction of many of those strategies is going to be the data that the organization has, the fact that 80% of data remains inside the firewalls of organizations. It's the ability to put that proprietary data to work alongside other data sources. It's the ability to take what do you have with external data, meld it, and have that be the basis of the next generation of competitive advantage is huge. We see that, fundamentally, every single workflow in the company, whether it's your customer service's workflow, your supply chain, we touched on a moment ago, will be fueled by, and improved by, the better use of data.

 

AI, yes. Automation, yes. Blockchain, yes. IOT, Edge, et cetera. You can imagine how all of these are actually all transforming the way that a workflow operates. They're all fundamentally data-driven. I think that what we're trying to help our clients do is, first of all, recognize, how do you swim through this vast mass of data your company is now swimming in? And how do you actually pick and curate the data that's important to support these transformed workflows you need to go after, and in a way be more targeted around the data I wish to curate, but at the same time, take advantage of the tools that allow me to put more heterogeneous data side by side to create new, fresh, insights?

 

Kevin Campbell (20:38):

That's good advice. We're getting to the end of our time here. I always like to wrap up with talking about... Because all of us have careers. We give advice and we get advice. What's the best career advice that you've ever gotten?

 

Mark Foster (20:53):

I think one of the best career advice I got at various times in my career when we were at our previous place was don't leave. But seriously behind that, I think that the issue of the grass is greener point I think is actually a, I think, a really good bit of advice. And to really understand before... I mean, rash moments in time when things aren't going so well in every career, in every role, you have has ups and downs, and good and bad days, is to actually reflect before [inaudible 00:00:21:24], but being thoughtful. Having said that, I think I also have the other side of it. The corollary for me always was always test whether you're enjoying what you're doing or not, at the end of the day, and do it over a decent arc, test that. And if you're not, then you should go and do something else. We're all working to live, not living to work. That, to me, I think is pretty important advice.

 

Kevin Campbell (21:48):

That's well said, Mark. Mark Foster, senior vice president of services at the IBM corporation. Mark, thanks for taking time with us today and everybody please tune in next week to next week's episode of CEO to CEO podcast. Thanks.

About the Author

Kevin Campbell

CEO, Syniti

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