From Service Provider to Growth Leader

Vanguard

John Marcante, CIO and Managing Director of Vanguard, the largest mutual fund company in the world, manages an organization of thousands of IT people who support more than 14,000 employees. Last year, I posted blogs on Marcante’s approach to leadership development and communicating IT strategy. I received such wonderful feedback on those blogs, that I approached Marcante for more. I am pleased to present a new interview on the changing CIO role and the “test and learn” approach.

How is your role as CIO different than five years ago?

Today, my role is less about leading a service provider organization and more about using technology for top line growth, whether that’s revenue or client loyalty. That puts a new set of expectations on the technology organization, which grew up enabling strategy. Now, there are many more times when IT has to lead.

Years ago, we built out a big data ecosystem at Vanguard. In IT, we wanted to accelerate our progress with big data, and we knew that if we were to become a data driven company, we had to build out the ecosystem. We did the opposite of what a service provider would do. Our attitude was, “Build it and they will come.” That’s probably the fastest way for a CIO to get fired, but the investment has led to a huge number of great use cases around data analytics at Vanguard.

How do you evolve your team from service provider to leader?

We rotate our high-potential performers and senior executives around the company. I’ve had the chance to move out of IT and run some of our businesses at Vanguard, and many of my leaders have rotated through other corporate roles and returned to IT.  That not only gives us credibility but allows us to be more effective at envisioning the possibilities for technology to better serve our clients in each of our diverse businesses. Years ago, we rotated an IT leader, Rich Luzzi, out of IT to run our very complex institutional operations group.  Because that group had big people management responsibilities and some very challenging change management opportunities, it presented Rich with an opportunity to apply his technology knowledge to that business.

Rich was out of IT for a decade, and then I brought him back to run the data centers, which is arguably one of the more technical positions that we have. He asked me, “Why are you bringing me back to run the data centers?” And I said, “Because the data centers are moving toward service oriented infrastructure with DevOps and cloud computing. We are becoming a broker of services in the data center, rather than just providing compute and storage power. That requires big changes on the people side and you are well equipped to manage it.” And, you know what? He’s doing an excellent job.

Ultimately, we’ve structured the senior team with the objective to break out of traditional IT silos and work collaboratively – which is critical as functions like development and operations start merging.

How are you building speed and agility into your IT organization?

The amount of time between a disruptive idea and massive adoption is shorter than ever, so as CIO, it is vital to create an environment that is flexible and nimble and can test and learn and fail fast. You do that by automating as much as possible, implementing Agile, and taking a minimal viable product approach. It is about not trying to get everything done. It is about continuous delivery and releasing software at a moment’s notice.

We are pushing the envelope on flexibility, “test and learn”, and “failing fast and cheap”, and the accompanying technologies that enable that approach – cloud, modular applications, and scalable services. We haven’t conquered these yet but we are committed to that direction in our roadmap for IT.

What is the single greatest obstacle to achieving this nimble “test and learn” environment?

The largest obstacle for big companies is culture. Eric Ries’s book, The Lean Startup, provides lessons learned from Silicon Valley startups for large companies. The book is about how to set up a culture where you don’t need to be perfect and where “failure” is not a bad word. Big companies have to start valuing a culture that builds off of learning from failure. That is a new way to think, and large companies are trying to figure out how to get there.

A few months ago, our chairman took the executive team to Silicon Valley for a week. He said, “We’re going to spend time with venture capitalists and startup companies and Stanford University. We are going to bring these ideas back to Vanguard.”

This “test and learn” approach has caught on like wildfire at Vanguard. In fact, our head of product development is applying the Lean Startup approach to R&D. I can rattle off a ton of IT initiatives where we are applying those lessons, but when you see those concepts take off in product R&D, you know you’ve really hit on something.

What advice would you give to a new CIO?

Run IT like a business. Create a vision, have a purpose, and have a strategy to bring the organization into the future. Don’t wait for others to dictate your strategy. That’s the old service provider mentality. We used to say, “The business needs to figure out what they want first, and then we’ll be able to deliver it.” That does not work in a world where technology is the business. IT has to lead.

 About John Marcante

John T. Marcante is Vanguard’s Chief Information Officer and Managing Director of Vanguard’s Information Technology Division. Mr. Marcante oversees all aspects of Vanguard’s worldwide technology agenda to serve clients and manage investments. Mr. Marcante, with more than 26 years of experience in the business and technology fields, joined Vanguard in 1993. After serving in a number of leadership roles throughout the company, he returned to the IT division in 2012 and was named Vanguard’s chief information officer and a managing director.

About Vanguard

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages more than $3.3 trillion in global assets. The firm offers more than 297 funds to its more than 20 million investors worldwide.