Ep 20: Being an Early Advocate for Innovation with Former AstraZeneca CIO David Smoley

Saam Motamedi: Hi there and welcome to Enterprise Software Innovators, a show where top technology executives share how they innovate at scale. In each episode, Enterprise CIOs share how they've applied exciting new technologies and what they've learned along the way. I'm Saam Motamedi, a general partner at Greylock Partners.

Evan Reiser: And I'm Evan Reiser, the CEO and founder of Abnormal Security. Today on the show, we're bringing you a conversation with David Smoley. Throughout his storied career, David has been a CIO at several large and defining companies, including AstraZeneca, Flex and General Electric, and most recently as a technology executive at Apple. David has always been an early adopter and he shares anecdotes about advocating for innovation, best practices for collaborating with startups, and his experiences with hands-on digital transformation.

Saam Motamedi: Dave, thanks for joining us. You've had such a storied career in technology, and we've been an executive at many defining companies in different industries. And just to start and help us frame our conversation, can you give our audience a bit of background on your career?

David Smoley: Sure. Let's see. I have been in tech or around tech for over 30 years. I started as a computer science major back in the early eighties and went right from there to program at a bank in New York City, went back and got an MBA and then joined General Electric as a product manager. Spent eleven years at GE, half of which was on the business side, primarily marketing, field service, that sort of thing. And then the latter half was back in technology leadership roles, which was a fascinating kind of return to where my roots were and from there, I did a little stint in venture capital right around the .com bust. Spent some time at Honeywell’s Aerospace, where I was a division CIO, and then corporate CIO at Flextronics, which is a large contract manufacturer AstraZeneca, and then winding up at Apple, running an engineering team there.

Evan Reiser: That's quite an incredible career you've had, Dave. So one of the themes that's come up on the show a lot is digital transformation. Let me just share your view on what that means. I know there's like a marketing buzzword version of this, but what does that mean to you?

David Smoley: The reality is that transformation depends on your starting point. And so what would be a radical digital transformation for one company might be meaningless to another company, or not important at all. And so I think of digital transformation as being very contextual around a particular company or a particular situation or a particular problem that you're trying to solve. And then obviously it's the application of leading edge technology, whether that's cloud infrastructure or software tools, or artificial intelligence, machine learning, all these different tools that are out there, to get to a much higher level of efficiency, productivity and basically business impact. It's kind of my MBA hat a lot of times when thinking about transformation in general, like what's your starting point and what's your ending point? And is technology a key enabler in getting to that massive leap forward?

Saam Motamedi: Dave, one of the things I know about you reputationally from some of my partners is you've always been on the forefront of innovation. And I know you've been an early customer and partner to some of today's most important software companies. I'd love to talk about that a little bit. Maybe you could talk about a few examples in your career where you were out front leading a new technology initiative that maybe at the time may have appeared to other stakeholders to be impossible.

David Smoley: Yeah, one of the things that I love about being a tech leader and being in the tech industry is 100% about change. The pace of change is massive. A great anecdote about a great story there for me was while I was CIO at Flextronics. So this is maybe 15 years ago, we were a massive 350,000 person company across 70 countries around the world, factories everywhere. And as you can imagine, we had HR systems everywhere. And most of them were homegrown, many of them were multiple versions. And the CEO at the time said, hey, this is crazy. I want to have one system where I can kind of see all my people. We can deal with consistency around how we manage compensation, how we hire and fire all these things. And so at the time, SAP was kind of the standard, and we were using SAP for our supply chain, parts of it, and for procurement. And so it seemed super logical to just then roll out SAP HR. But I knew from years of deploying SAP and Oracle at different companies that SAP HR modules were incredibly rigid, very difficult to implement, particularly when you get into different countries, languages, currencies, things like that, and problematic. And so I was kind of talking to people, talking to my network, trying to find out what else was out there. And somebody mentioned a small company called Workday, and it was a couple of guys who had spun out of Peoplesoft, which had been acquired by Oracle. But I had a trusted friend who said, these guys are the real deal, they know what they're doing. It's a small company, but it's pretty exciting. And in the early days of cloud, you can access it from anywhere, with a great user interface. And I thought, okay, I mean, this sounds like a neat alternative. So we went and started talking to these Workday guys. And long story short, it was a completely radical thought to go with such a small company. I think they had 20 customers at the time. I mean, it was really small. And on top of that, it wasn't on premise software. I mean, everything was on premise. You had a data center, you bought a server, you loaded your software on, and then you configured the database and deployed it. That's just how you did everything. And this was one of the early companies to say, no, we're going to run it in our data center and you can have access to it, but it'll be yours, and so on. So we had this conversation and the first time I got onto workday, I could tell this was going to be a game changer. It was so much more user friendly, it was so much easier. And then when you looked at the model and thought about the fact that you didn't have to run the infrastructure that you could scale up and there was mobile access, all these different features, it became incredibly interesting. So I then had to convince the head of HR and the CEO and others that this might be worth taking a risk. And so we went through this process of discussing and debating the change. Unfortunately, Flextronics is a company that was built in the tech industry. So even though it was supply chain-oriented, manufacturing-oriented, the idea of taking risks, of trying new technology of change was very comfortable. And so the CEO and I met with Dave Duffield and Aneel Bhusri , who at the time we were the co-CEOs, one Saturday morning and we sat down for about a half an hour and had this great conversation around what they were attempting to do, what we wanted to do and how we get there. And that was it. The deal was done. We walked out. The CEO said, those are the kind of guys I want to do business with. And we then took this risk, which was almost a co-development approach. When you're doing a deal with an early stage company like that, it's not a procurement, it's not buy, sell. Here's my order form, deliver it. It's like, here's my wish list and here's my roadmap product feature roadmap and let's align and negotiate and then enter into kind of a co-engineering, almost a co-development, multi-year project where we knew they couldn't do what we needed at that time, but we knew where they were headed was the right direction. We agreed jointly to create this reciprocated relationship where we evolved together and got them to be sort of the awesome tool that they are today and helped us along the way to meet our needs without having to go down a more restrictive path. One of the things you have to love if you're a Technologist, I think, is living on that edge of what's possible and what are the risks and how do you push through and get people to sort of see your side of what the possibilities are.

Evan Reiser: The thing I just find really impressive about you, that there's some organizations that they're going to wait a little bit too long and they're kind of like, don't realize some of the benefits early. There are some companies that go a little bit too early and kind of end up blowing up because it doesn't really work or do the thing that they thought was right, but you seem to have a history of getting it right.

David Smoley: Yeah, I don't know. Personally, I'm known as a guy who thinks that rules are somewhat optional, and I've never met a no that I didn't want to figure out how to get around or try. So there's a bit of sickness or something that I have, which is that I love challenges. I love when people say, oh, we can't do that or That'll never happen. And then obviously, I think I've developed skills over the years of analysis and team building because so much of this is just not something one person can do. It's all about knowing your own personal strengths and weaknesses and then surrounding yourself, creating relationships with people who complement and help you to be your best you and build a team that can do great things. And I mean, I'm a huge advocate of being a curious person constantly. Like, you should always be asking why five times for everything? And you should always be thinking, is there a better way? What could be a better way?

Evan Reiser: So I imagine that there may be a CIO listening to this conversation right now, and maybe they're looking at some startup or technology and they're kind of imagining the ways it could really transform their business. And they're probably struggling because they're like, hey, should I maybe wait a little bit to kind of see this? If it's a little more mature, I collect more information and maybe I go that direction? Or should I jump in now so I can really kind of apply this technology and get kind of the value a little bit? Master any advice for people out there that are trying to think about how to partner with startups or when do I decide I really want to take this on as a place for innovation or not?

David Smoley: I don't think there's a real clear answer. The answer is it depends. And I think it depends on the company, the culture, the company you're part of, your boss, CEO, the CFO, kind of that whole environment. It depends on the industry that you're participating in. It depends on specifically what companies and technologies you're talking about. And so I think how you can maybe set that up for success is, first of all, becoming exposed to and aware of those leading edge companies, those leading edge technologies, requires effort. I mean, that to me, is something that you should allocate time, every week to do. Okay, in my opinion, there are certain companies, the venture funds are there's a lot of them out there. So what I would do is think about how to create relationships, introduce yourself and develop relationships with a handful, two or three venture firms that have portfolio companies in your space, in your industry. I mean, Silicon Valley is sort of the hotspot in the mecca. So finding companies there is great, but there may also be companies in your geographic area because not everybody's on the West Coast. So if you're in the East Coast or overseas or Central Indiana or whatever, find the firms that are doing tech investing also close to you, where you can begin to have regular conversations. What are they investing in, why are they investing in? What's interesting to them and what I found is the VC firms are obviously interested in figuring out whether what they've invested in makes sense. They're interested in smart people with experience coming in and looking at it and saying, wow, this is great, I would buy it. Or no, this does not make sense. Right. As are the CEOs and the leaders of these small companies. I mean, they're all looking for customers, so I think they want to have an impact. And so it's kind of this great quid pro quo where you're looking for cool technology or cool people, smart people who can help you in your role as a tech leader. And they're looking for smart tech leaders who are going to help them develop great products and great companies. So it's a win win now. It's inefficient as compared to a buy-sell relationship. Like if you know exactly what you want from, I don't know, Oracle or sats, you can fill out the order form and tell your sales guy and buy that piece of software or that feature. But with the earlier stage companies, it is more of a conversation. However, I think that's where the greatness in it really comes together because it's about ideas and it's about sort of the long game of where your industry, your company and technology are going in the future and how they might converge together.

Evan Reiser: Yeah, the one thing that really resonated with me, the thing you said about kind of the win-win, that's actually one of the reasons why I personally enjoy working as an enterprise software entrepreneur is because the three of us were sitting down. We're like, hey, we can only win together in our respective jobs if we actually go produce real value, right? And that's what we're here to do. None of us can win long term if we don't do that. And it turns it from a kind of buy-sell relationship to a true partnership where like, we either hold on or we all lose, right? So let's go work hard and figure it out together. We all bring our own elements to the table and that's just a fun collaboration.

David Smoley: Yeah, absolutely. And I think it is fun. I think just maybe a Pragmatic point as well to throw in there is what can be friction to this and disruptive is sort of a traditional mindset around procurement and legal in particular. And so I think if you're going to do this, one of the things that's really helpful is to spend some time with your senior legal folks and your senior procurement folks to sort of establish the guidelines and the approach for this. Because if you're doing this, you can't have the procurement guys coming in and sort of driving this traditional buy-sell conversation because that blows up any sort of longer term innovation codevelopment. And the same thing with legal. You can't start by focusing on the size of the company. They're too small, the lack of customers, they're too early, and the fact that they won't give you unlimited liability or whatever. Those are the sorts of things that will blow it up. So you have to kind of say, we're going to set that aside for a point and then take a different approach to having those conversations.

Evan Reiser: One more kind of follow up question on this topic. I just feel like there's a lot of insight here. There's probably some of your peers that there's probably even up and coming technology, right? And they're hearing what you're saying. Like, Dave, I hear you. Like, I'm already super busy. I'm going to go spend all this time with these venture capitalists and talk to some crazy founders. There's a cost there, right? It seems like in your career you've also seen some upsides to that, right? And there's been cases where you've won big. Are there any anecdotes you can share from Flex or AstraZeneca about things like, hey, here's something that was a challenge for us at the time. There's a science fiction type idea, but we actually were able to incorporate technology and that created us actually realized that value. And if we hadn't really explored some of the technology options, we couldn't have had that impact on our business or maybe our customers.

David Smoley: Yeah, I think Apple is probably the area where I had the most experience with that sort of thing. And it's hard because it's not analogous to other companies in general. But I think one of the things that's been interesting about my career evolution to me is I spent years in sort of these large industrial companies that are very process-oriented and all about creating efficiencies and efficiency. So digital transformation, primarily taking manual processes and enabling them through digital, or taking poorly executed digital processes and streamlining them or standardizing them or putting them on a mobile device or those sorts of things. And that's hard. In particular, it's hard, but it's very sort of methodological and repeatable. And it's also the sort of thing that it's generally taking things that have been done in other places, other companies, other industries, and applying them into your situation. So a lot of times it is kind of a steal from others, which makes it a little more predictable and therefore it's easier to do the business case and it's easier to measure your outcome. What was interesting about Apple and what's also interesting about the rush to digital and even the industrial and traditional businesses is that it's very messy. It requires an entirely different mindset because like I said, when you're doing a new ERP system or you're coming up with a new customer ordering system. It's kind of like you can measure how the old one was. You can make predictions about how much people, time, and money you're going to save. There's a schedule and you go do it right and all that's debatable. But it's generally line of sight when you're looking at how to kind of come up with these new innovative ways of ordering or doing health on your watch and linking it to your phone, all these kinds of things. It's messy and it's pure innovation. And so what I found at Apple, which was incredibly interesting, is that it's messy at Apple. But the fact is, just because it's messy, they know that, they live with that. They've got the processes and the people and the approach to make that work. What I found at AstraZeneca, and even to some extent at Flextronics, is they're not comfortable with that messiness. It's not part of their culture. So if you're at AstraZeneca, you're in the business of discovering and getting approval for drugs and then massively ramping them up and shipping them out. That's predictable to some extent. That's got metrics. And then when you come in and say, well, now we're going to look at how we could possibly digitize our clinical trials or automate part of the drug discovery process, that stuff that hasn't been done before, right? So now you're talking about applying technology in a way that has a significant rate of failure. So it's about trial and error and trial and error and trial and error. There's a significant cost. It's a little bit unpredictable. And so what you find at traditional companies, if the senior leaders there had $10 extra to spend, the likelihood that they would spend it on an experiment in the technology world versus on this long list of molecules that they're trying to convert into drugs, they'd go for the molecule every time. So it was really hard to have those conversations and to fight. And then anytime you got the money for technology, if it didn't go perfectly and exactly execute what they thought, then they viewed it as a failure and they're ready to throw the whole thing out. What you find at companies like Apple is their every bit is focused on success, but they understand that it takes a high degree of experimentation and failure. And in some cases, you're being very duplicative. You might have multiple teams chasing the same sort of technology feature or goal, and then as that evolves, you down select and kind of go with the ones that are looking more successful. And they're used to that messy process. So I think that's been the key learning for me.

Evan Reiser: So what we like to, at the end of these sessions, to do kind of a bit of a Lightning round, just get some shorter tweet length responses. So maybe the first question I have for you. And I know this is like a very tough one to do, like the one tweet answer, but how should companies measure the success of a CIO?

David Smoley: In my opinion, technology success is bimodal. And I think it all goes together. It doesn't have to be under one team, one person. But there are the operations of technology. So companies, almost every company is technology-enabled, technology-driven. So do you have the right data structure? Do you have the right systems of transactions? So order management, customer management, supplier management, all those sorts of things. And that is a part of almost every business which is focused on efficiency, productivity, and making it simple. And then there's the systems of innovation, the systems of engagement, which either externally with customers or internally across different departments, are all about that, sort of, can you answer the questions that you need to kind of get to the next level? And so I think CIOs need to be evaluated along both those lines.

Evan Reiser: It sounds like it's the combination of both. There's some sizzle in there that is kind of sizzle, but probably the majority of it is not just like processes need to be digitized and operationalized. And there's a lot of work, I think, both in It and in cybersecurity as well, where no one notices when things are going really well at the moment they break, everyone gets very weird.

David Smoley: It's probably maybe apply the 80 20 rule or the 70 30 rule where you kind of say, look, 70 80% of it is keeping the lights on and keeping the cost low, and then 20% of it is driving that top line and breakthrough disruptive innovation.

Evan Reiser: So if you think about up and coming CIOs, what are some areas which they may overestimate or underestimate the importance of?

David Smoley: Yeah, I think CIOs often underestimate the importance of that solid foundation of well-integrated, well-managed systems that create the enabler foundation for those breakthrough transformative systems of engagement.

Evan Reiser: That makes sense. Maybe switching more to kind of like the personal side. Is there like a recent book you've read that's had an impact on you and so love to hear why.

David Smoley: Yeah, so Peter High wrote a book in 2009, World Class IT, and I consider it the bible of enterprise, ITmanagement. Every single company I've been at, I've given it to my staff and to others. It really, I think, covers the basics of how to run an efficient technology operation. I highly recommend that. Yeah, great book.

Evan Reiser: Wow. That's a strong recommendation. I have to do some rereading there just again, continuing on this theme, you just have this history of being able to see the future a little bit right and get it right. That's like a skill I think all of us wish we had, we could do a little bit better. When you think about whether some of these technologies, as you mentioned, or any other ones, love to hear from you, what do you think would be true about technology's future impact in the world that maybe most people today would not believe is going to be true?

David Smoley: Yeah, I think just the connectedness okay, I'll say that it both owes me and scares me. The connectedness of what we do, what we think, who we communicate with, what news we get, is just increasingly more insightful and powerful. I just think that's amazing. But when it's not there because it fails for some reason, or when you deal with a part of civilization, a part of the world, a part of the country that isn't at the same level, it's shocking and in some cases devastating. And so one of the things I think more about these days is how to deal with that incredible gap between techno elite and techno poor. Because I think it's something that is very solvable if we put our mind to it. But it's easy to get caught up in making lots of money and having a huge impact in sort of living a comfortable life and forgetting that if we don't pay attention and put effort in, we're leaving a lot of people way behind. And that could in the short run, it's a big problem for those people. In the long run, it's a big problem for all of us because it could lead to really bad situations, I think, politically and from a stability standpoint.

Evan Reiser: Yeah, that's a really good point. I'm a science fiction fan. There's this one author, I've read this one quote that says the future is already here. It's just not evenly distributed.

David Smoley: Yeah, absolutely.

Evan Reiser: There is like a wide distribution of it's very easy to lose sight. That is because we only see a small part of that world. It's kind of hard to imagine the extremes.

David Smoley: I love that quote also because that kind of highlights then to your point, the ability to sort of anticipate what is going to be successful and what's going to work. If you have that view that the future is here, it's just not equally distributed, then as a technology leader, you're constantly searching for that one place where somebody's doing something really cool and interesting that we could do. And therefore, in a way, there's nothing new in the world. Right. It's just finding that one thing that you can then apply into your company, your situation, that would make a difference. I love that. That's a great quote.

Evan Reiser: Well, Dave, as always, really appreciate your insights and super happy we got a chance to chat and looking forward to speaking again soon.

David Smoley: Awesome. Thanks for having me. I really appreciate it.

Evan Reiser: That was David Smoley, former CIO at AstraZeneca, Flex and General Electric.

Saam Motamedi: Thanks for listening to the Enterprise Software Innovators podcast. I'm Saam Motamedi, general partner at Greylock Partners.

Evan Reiser: And I'm Evan Reiser, the CEO and founder of Abnormal Security. Please be sure to subscribe so you never miss an episode. You can find more great lessons from technology leaders and other enterprise software experts at enterprise software block.

Saam Motamedi: This show is produced by Luke Reiser and Josh Meer. See you next time.