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Working with startups: IT execs tell their stories

Byron Connolly | May 24, 2016
Companies try to benefit from a startup culture in an increasingly competitive market

Matt Toohey worked at iiNet for just over a decade, joining as IT manager in 2004 before being elevated to CIO in 2011 – a position he held until his departure in December last year.

During that time, the Perth ISP was, as Toohey puts it, going “hard at organic growth and harder at acquisitions.” The company made 12 acquisitions with its customer and staff numbers, earnings and market capitalisation doubling every two to three years.

This meant that iiNet’s IT team was, in essence, running to stand still, Toohey, now IT chief at Wesfarmers Chemicals, Energy & Fertilisers, told CIO Australia at the CIO Summit in Perth.

“The IT organisation was growing rapidly through acquisition and was encumbered with those legacy applications. Not only did we have to consolidate the IT environment but we had to build a capability, which was doubling customers every two years but had to produce products that were going to be competitive and market leading,” he said.

It was becoming clear that the organisation needed to claw back some of the agility that it once had when it was a smaller entity. At the time, a key challenge for the ISP was to be first to market with NBN services.

The answer was to extract key people from their business units and place them in a startup incubator, effectively exposing them to a startup mindset and concepts around hypothesis-driven development and failure.

iiNet did have one significant advantage over other organisations – it’s founder and then CEO, Michael Malone repeated at every opportunity that staff members had the luxury of failing often and it was encouraged, said Toohey.

A big challenge around acting like a lean startup was that this model didn’t necessarily gel with the ISP’s existing governance structure, which was driven by a policy that was sometimes risk-averse, he said.

“This permeated right through to things such as remuneration policies – people were remunerated on project delivery, not necessarily on business outcomes.”

Choosing the right people to be engaged in the startup experiment was key to its success – those who would go back into the business and effectively become “religious zealots”, preaching about the capabilities and outcomes that had been achieved, said Toohey.

Working alongside the startup community led to real results – iiNet managed to grab the second highest number of NBN subscribers after Telstra.

“The key learning is that you have to be prepared to lose some good staff because once they are exposed to this sort of environment, this sort of culture they don’t necessary want to move away.”

Toohey admitted that around 75 to 80 per cent of the team working in the incubator moved on relatively quickly.

 

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