10 Dec 2020
Transformation with eyes fixed on the horizon
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Jeff Sprecher, founder, chairman and CEO of Fortune 500 company Intercontinental Exchange (NYSE: ICE) talks to Anne Murphy, Global Head of our Financial Services Practice, about transformational leadership.
In the 1990s, entrepreneur Jeff Sprecher spotted a huge opportunity to shake up the power supply business by connecting consumers and providers of electricity. Subsequent smart investment in the development of a technology platform led to the launch in 2000 of Intercontinental Exchange (ICE), an online energy trading marketplace based in Atlanta, Georgia.
Over the past 20 years, Jeff has built ICE into a trading colossus, making a number of high profile acquisitions along the way, including in 2013 the landmark $11bn takeover of the New York Stock Exchange, a business that has since undergone significant change.
Jeff has a deserved reputation for transforming and improving companies. Interestingly, the biggest lesson that shaped his approach came before his business career began, when he aspired to make it as a race car driver.
Instructors showed the young Jeff how to achieve maximum grip when cornering by aiming for the best spots on the track. But he realised there was more to it than that.
“The lesson I learnt in race car driving is that the really good drivers never look at the spot, they are focused on the horizon,” says Jeff. “They are looking three or four corners ahead. They are thinking about something way off in the distance and can never look at the crack in the road or the spot you’re supposed to hit. Consequently, if you ask a really good driver, ‘did you hit that spot in the first corner?’ they will say, ‘I have no idea’. They use their peripheral vision, they use their instinct.”
This focus on the horizon proved invaluable regarding the acquisition and transformation of NYSE, a complicated business with a history stretching back over 228 years.
“NYSE had a lot of internal culture and biases that came from its history because it was big, it was complex. Our goal was to strip it down to its essentials, take out layers of bureaucracy, leave as much of the past behind as we could so that we were embracing the future. It was a very transformative event.”
The key, argues Jeff, is to understand that while people hate change, they are excited at the prospect of adventure. Making that work required openness, good communication and people with a common value system while thoughtfully encouraging everyone to find a new normal. An important part of the transformation was looking after those who would be leaving the organisation as well.
“We went on an adventure and we had to bring a lot of people along,” explains Jeff. “A lot of people also had to leave and we were very transparent about it. We tried to be very thoughtful and for those people that stayed we needed them to be able to embrace the new culture. For those that left, we needed them to feel comfortable and be able to transition to something new.”
“There is a balance that successful transformative businesses learn to go through. But at the root of it, it’s communicating where you want to go.”
In August 2020, ICE made another $11bn acquisition in the shape of mortgage software firm Ellie Mae, adding a major piece of the jigsaw to its growing mortgage services division which has snapped up several companies in recent years. The vision is to make the house buying process more efficient by doing away with “shuffling paper” and connecting all the relevant parties in the purchase – from mortgage lenders, property registration authorities and so on.
“The trick is getting those people connected to one common network, all at the same time,” says Jeff. “We have done that by acquiring bits and bobs and then stitching it together.”
Jeff compares running a company to jumping into a river, where the hardest decision is deciding to jump in the first place. Once everyone is in the water being swept along by the current, the important thing is they shouldn’t try to fight their way back upstream. Rather, they should be empowered to choose whether to paddle left or right to avoid the rocks.
Enabling them to make good decisions, adds Jeff, means giving them access to a tremendous amount of information, “so they have some confidence in where we are heading and are not afraid.” This fosters loyalty because people want to be a part of an organisation they know and trust.
The river metaphor can be applied equally well in the boardroom. Jeff says the ICE board needs to challenge the leadership team’s thinking in a non-combative way, asking: “Have you seen the rock? Are you paddling to the left, are you paddling to the right?”
Of course, there are a number of boards within the group and Jeff considers appointments to these an art rather than a science. The aim is to create a network of people with diverse views who respect one another and can share those views in a way that drives thinking. “That results in a decision that gives everybody an opportunity to contribute but that reaches resolution quickly without bringing the board down to its knees.”
A recipe for transformation if ever there was one.