In the latest edition of our ‘Transformational Leaders’ series, we talk to John Lockett, Group CIO at Serco. John has been a ‘friend of the firm’ over many years, regularly attending Odgers and Berwick events and forums. We spoke with John just prior to UK lockdown, and again as restrictions began to ease.
Serco is a British FTSE top 250 provider of public services, managing over 500 contracts worldwide and employing over 55,000 people. Operating internationally across UK & Europe, North America, Asia Pacific and the Middle East, Serco delivers services across five core sectors - Defence, Justice & Immigration, Transport, Health and Citizen Services. Founded almost a century ago, the business faced some momentous challenges back in 2013 and 2014, including profit warnings and several significant ExCom changes.
As one of the UK Government’s largest contractors, it has been absolutely critical for Serco to ensure continuity of existing vital services throughout the COVID-19 pandemic; as well as rising to the challenge of providing new services to support the response, such as call handlers to support the Government’s ‘Test and Trace’ programme.
You have been Group CIO with Serco for just over five years now, John: Tell me a little about your overall experience since joining and how the organisation has changed during that time.
Well, it has been a fascinating journey in terms of what has been achieved in the past five years. The business was as good as bankrupt when I started. We had just written off £1.5bn, needed to raise £0.5bn in new capital, embed a new senior management team and basically turn the business around. I came in halfway through the stabilise phase of the ‘Stabilise, Transform and Grow’ strategy and was heavily involved in the three-and-a-half-year transformation phase. We are now firmly in growth phase, with share prices recovering (notwithstanding the impact of COVID-19) and margins moving towards acceptable levels. The past five years have been about taking a company on the brink of bankruptcy, which could have gone the same way as Carillion, to an organisation that is seen as a voice of reason in the sector, with an industry leading PE ratio.
What has been the key to this successful turnaround?
Clarity of vision and purpose – we have been very clear from the start about what we will and will not do and we have stuck to it. This mentality has been adopted throughout the organisation. We have a continued focus on our core services, which is absolutely key, as well as commitment to only partaking in ‘good’ deals.
We have also significantly grown the business outside of the UK. During Brexit, a lot of UK Government work stalled so we developed markets in the US, Australia and the Middle East. Prior to that, over 55% of revenue was derived from work delivered in the UK and this has now dropped to under 45%.
As a contracting company, our very success depends upon our agility; our ability to scale up when we win work and scale down if we lose it. At the start of the COVID-19 pandemic, we stood up a 50-person strong Coronavirus call centre, and we are now one of two main contractors supporting the critical test and trace programme. One of the key reasons we were selected for these contracts was our ability to mobilise quickly and use our existing infrastructure and incumbent capability.
Thinking about the pre COVID-19 landscape, can you tell us about how the need for transformation at Serco came about and the changes you have personally driven through as part of the ‘Transform’ phase?
My IT team were right across the piece – we focussed on executing the technology changes which were pivotal to the business change. I was responsible for IT across the group - from implementing the new version of SAP and workforce management systems to driving innovations like facial recognition and machine learning. When I first started with Serco, I addressed the ‘utility’ aspects of IT and technology within the business – I needed to gain credibility and get a seat at the table before I could really drive innovation and help to change business processes.
What was unique to this challenge that you had not encountered before?
The sheer diversity of the business. I have worked in the utilities, services and government sectors previously, but the diversity of the Serco business is staggering. Spanning the five different business units (transport, citizen services, health, MOD / DOD, justice and immigration) means that I can be working with technicians on the digitisation of satellite pictures for the European space agency one day and at an atomic weapons facility the next. I have worked on asset management projects for Santander Cycles in London and IoT/MI data projects to improve hospital cleaning. Many people just do not realise what a wide variety of services Serco provide.
Given Serco is such a diversified business, does it have a fragmented feel or is there a good cross over of talent, systems and processes?
We are getting a lot better at this. Five years ago, there was very little transfer of capability. Now we use ‘microservices’ like digital images and geolocation in a variety of ways – whether it is for a refuse collector to take a picture of a bin that has the wrong type of waste in it, or to support asset management and repairs in a hospital. It is the same principle, the same technology and the same capability. We are developing more and more microservices that can be used across the business to drive economy of scale. This is where I am trying to drive innovation and value.
How did you keep your team engaged throughout transformation and disruption?
Clarity of vision is critical, and I needed to ensure I was consistent, approachable and visible. Pre COVID-19, I was on the road a lot – talking to small groups, large groups and individuals, allowing them to feel part of the transformation. During COVID-19 this engagement has been even more important, particularly as this is being done virtually. It’s important that everyone understands that they are part of the change, rather than ‘having it done to them’.
In your opinion, what are the most important elements of a successful transformation programme?
Again, clarity of vision and ensuring you articulate what you want. Being clear about the purpose of any transformation is key – not just at the high level but by unpacking the layers for people. Ensure you can define the what, why, how and by when. Confirm everyone knows what’s going on, so that all involved can share the purpose and desire to make a difference and drive the change.
What is it about you that makes you successful as a transformational leader?
Clarity and resilience – if you do not show people a clear vision about where you want to be and how you want to get there, the rest is meaningless. I have a great desire to make a difference, and I am energetic and passionate about what we do as a business.
Where or whom do you go to for inspiration and motivation?
I look for it everywhere to be honest: Industry and networking events and seminars; I read a lot; I make sure that I allocate time in my diary for reflection and breathing space. My job is to make the big calls, and to get them right. You cannot make the big calls and get them right most of the time unless you give yourself space and time, are well informed and listen.
Your response to COVID-19, both internally and for your customers must have been an enormous challenge.
We had the complexity of operating across different geographical regions who were at different stages and severity of pandemic and lockdown. This meant that the solutions and services we delivered to UK Government was different to that which was delivered for example in Australia or the Middle East.
Clearly, only a very small fraction of Serco employees can work from home – over 80% of our colleagues are front line performing vital works in hospitals, prisons, immigration centres and caring for the vulnerable. They have had to keep doing their day job. Keeping the workforce safe has been an absolute top priority. Tragically seven of our colleagues have lost their lives. Many more have lost friends and relatives. This has made the crisis very real indeed for us.
We had to move 11,000 of our 55,000 strong workforce, including office and call centre-based teams, to remote working but we already had the core capability for everyone to do so. We needed to buy everyone a laptop, but pretty much everything else was in place. Prior to COVID-19, only modest numbers of our workforces regularly worked from home, so this was a huge task, but in reality, took no time at all to get up and running.
We set up divisional crisis teams and a group crisis response function. In each region the divisions led, reacting to the local situation. Where things were needed at group level (for example, everyone was looking for PPE), we bought at group level. We have been ensuring that key learnings from both division and group – things like managing remote staff, managing isolation, shared recruitment practices - are shared for everyone’s benefit.
You have had some interesting contract wins as a result of the crisis. How has your team played a part in delivering these?
Yes, we have been at the centre of some activity. The UK Government came to us needing a testing centre, and we stood the first one up in 48 hours. They wanted to use the Universal Credit mechanism for furlough payments, so we scaled up by 2,000 temporary staff in extremely quick timescales. We had very good discussions with other suppliers and businesses who were not using their call centre agents and were able to on board them very quickly. Our IT services are all in the Cloud, so they could use the Serco applications and call centre capability, log in via a browser and just get on with their work. The degree of people wanting to support one another, to help each other and come together has been unbelievable. So, we did the testing centres, we did the universal credit and then the Government came to us about test and trace. We went through a very speedy procurement process and were able to demonstrate credibility and the ability to mobilise rapidly. So now we are delivering that service as well.
And finally, John, what is next in terms of innovation for Serco?
In terms of technology innovation for our business, my own view is that further development and adoption of microservices is the way forward. Choosing the appropriate capabilities to deliver innovations and embedding them in the right context. It is not necessarily about using fancy tech like artificial intelligence, machine learning and Blockchain, but understanding what needs to be achieved, and the context in which applications are embedded, that can drive innovation.
For more information about Berwick Talent Solutions, please email Lucy Thomas.