Lessons from a top tech PLC facing the biggest leadership challenge ever

What has Graeme Watt, Chief Executive of FTSE-listed Softcat PLC, learned as a CEO leading a global tech company during the COVID-19 shutdown.

Mike Drew, Partner and Global Head of Odgers Berndtson Executive Search’s Global Technology Practice continues his questions in a series of interviews with top tech CEOs.

Mike: Let’s talk about leadership, Graeme. Odgers Berndtson recently published a Leadership Conference Index, in partnership with Harvard Business Analytics Services to look at the importance of agile leadership, especially when managing through disruption. Where have you seen agile leadership in your organisation, both personally and from those around you?

Listen, I don’t think I’m in a position to give advice, but I can share some of the things we have been doing and seeing.

It’s definitely time for cool heads. Plus, nobody really has a clear idea of how long the challenges are going to be with us for, and how deep they are, so I think it's really time for cool heads.

It's a time to try to provide clear leadership, very transparent, regular communication so that the teams feel connected.

You need to remain calm and pragmatic, so your teams and people can feed off that calmness and that pragmatism.

We've been trying to plan for the worst, through multiple scenario plans, but also, we are trying to manage and execute for the best. We've been trying not to overreact, but I think it’s important also not to underreact.

Watch a ten-minute video of this ‘CEO leading through the lockdown’ interview with Graeme Watt, Chief Executive of global software reseller Softcat PLC.

From a practical point of view, we have tried to prioritise our people and our cash facilities in the first instance. Like most other companies, ensuring everyone’s safety, giving our team a clear direction, plus the technology and support to work from home was also super important.

At the same time, whilst we're a cash-rich and debt-free company, our finance team worked very quickly and effectively to build facilities to protect us case cash-flows from customers get a little bit ugly. I'm pleased to say that hasn’t been the case to date.

We have a communication plan with regular updates, and have open and active lines of communication, first for all of our employees, and then for our customers, suppliers, and partners.

We established a “working from home” group to take charge of making sure people felt connected and had access to our feel-good online team events.

We’ve been very quick to support our customers. In particular, to help them to spin out their own remote working capabilities. Our internal bi-weekly customer credit support council reviews risk and cash flows and how we can help our customers. Our weekly recruitment council reviews recruitment. We don’t know if we can take on extra cost at the moment, and aren’t sure if we can onboard new employees with the same quality and depth as pre-COVID-19.

How about areas where you have the spare capacity with existing talent?

We have thought hard about furloughing staff that are in roles that are most impacted by COVID-19, but we have decided not to. Where we do have some spare capacity in the business, we’ve been putting that into training, personal development, acquiring vendor accreditation that perhaps we didn’t have.

If we still have spare capacity after that, the teams have been working on supporting others inside (and outside) the company and volunteering with various charitable initiates as well.

We've been trying to stay connected to the industry, as well, Mike, via the Odgers Berndtson industry online forums. We can hear what others are experiencing and understand what kind of options and decisions they've been taking.

That cross-industry connection is very positive. I’ve always really enjoyed the IT industry, because of the strong connections we have, not just with our suppliers and our customers, but with our competitors and our peers as well.

We’ve seen that there's an enormous amount of empathy to help each other this time, even though they may be competitors.

I’d like to talk about Softcat as a publicly-listed technology company. Has the nature of the ownership structure impacted your approach to crisis management?

I wouldn’t say impacted. ‘Influenced’ perhaps. I wouldn’t say being a plc has shaped what we’ve done or decide, but I think it has added an extra dimension.

Investors have created expectations that surround certain decisions. So, questions from Investors, for example, relate to things like whether companies are declaring, postponing or cancelling dividends. And, if they are, is that because they have to, or are they just being cautious and perhaps conserving cash, for example?

Where companies are cutting dividends, what other actions are they taking? Investors really are linking, well ok, if you’re cutting dividends, what other actions are you taking to maximise returns?

Where companies are asking staff to take cuts or making redundancies, furloughing staff or drawing down from government loans, I think there is an expectation that directors should take a cut in pay and/or bonus.

We are fortunate that we haven’t taken advantage of any government schemes to date, we haven’t furloughed staff, we haven’t tapped into government funding, we haven’t made redundancies.

But we did cancel our interim dividend back in March, very much as a precautionary measure, just when things were escalating and everyone was battening down the hatches.

In a few months’ time, we’ll take a further look at what to do on the dividend front, at the end of our fiscal year. So, in conclusion, I don’t think being publicly listed has impacted our approach, but it has provided some food for thought.

Mike: Softcat is right at the heart of the technology industry, and digital transformation has certainly been proved by this crisis. As we look to the future and the big reset, what areas of technology will grow and why?

Digital transformation has been a growth driver for us for a while now, and in these last few months, we've seen that accelerate and continue to do so.

Something interesting is that COVID-19 has made us much more aware and empathic to people. What we will see is companies taking more time to consider what their people want and need.

Companies will look to maintain and increase a people-centric approach to their solutions.

For example, Millennials are digital natives and comprise close to 50% of the workforce. Companies have a responsibility to narrow the gap between the business and the personal IT experience employees are used to. This means providing the flexibility that they need and are demanding when they consider when and where they work.

The way you digitally-enable your future employees can be a competitive advantage in hiring when talent is scarce.

IT is under constant pressure to strike the right balance between risk management, cost control, and innovation. But I think IT also has a real opportunity now to be the heroes – we are seeing an acceleration of mobile-first, cloud-first and remote ready and, as I say, I think IT has a real opportunity to be heroes in support of that environment.

I think the workspace was already a strong focus for us. We have seen and will continue to see remote working as a focus. At very short notice, people had to put a lot of remote working capabilities in play in a stop-gap type fashion, but we will now see companies work further on their workspace and remote working technologies to make that set up more robust.

Interestingly, our customers are starting to ask for ‘smart office’ solutions using IoT and AI to manage social distancing and isolation in the office.

We have been asked to support the more interactive management of the workforce, so things are coming into play like task management tools and time management applications, employee engagement and wellbeing tools.

Employers are asking, ‘how do we manage our employees in a more remote environment?’

There are some really interesting elements coming into play, on top of what is very well-documented demand around devices, accessories, collaboration applications and all of the additional security requirements that come with the surge in remote working

Any advice to other CEOs about accelerating their businesses against the constrained budgets of the future, post-lock-down?

I’m not sure I should be advising, but I’d like to share the approach we’ve taken at Softcat.

First, we deal with what’s actually in front of us rather than speculate too heavily on what may be in front of us.

We’ve always been and will continue to be very close to our customers and we will react with the right pace and the right weight, based on what our customers are telling us and what their needs are.

I think, of course, we are all going to be in a more constrained budget and probably lower growth ambition environment, but I think that’s ok.

Constrained budgets are fine, go out and focus on exceeding expectations and use that as a tool to release more budget is the approach we’re taking.

Other things that are particularly important to me are making sure that your team is in the best possible shape. I saw a short clip on LinkedIn which have really resonated with me. It talked about the need to have a strong ability to listen, to care, smile, show warmth, and be empathic and say thank you. And I thought that’s perfect, that is exactly the sorts of things we all have close to our hearts at Softcat.

The final thing I’ll say, in this environment, we’re finding that we may have quite a strong opinion one week, but we may have changed our views quite substantially a week later. Maybe we’ve thought harder about it, we’ve picked up on other people’s opinions, we’ve listened to people more, whether that’s our employees or our customers. We need to be alert to how things are shifting.

Be ever-present for your customers and take time to understand their revised needs and their revised expectations. Extend to them the same empathy we have been extending to our own teams internally.

It’s human relationships that count at the end of the day, and they will never be replaced by technology or other innovation. 

In times like these, we need strong and decisive leadership and I’d like to take this opportunity to thank my team for theirs.

Thank you, Graeme, on behalf of Odgers Berndtson Executive Search, let’s hope the next time we talk, it will be in person.