Ep 25. Bruce Nixon, CEO of Holocentric – The Honest CEO Show

The Honest CEO Show, Episode 25: Bruce Nixon, CEO of Holocentric

Caroline Kennedy (00:20)
Welcome and today my guest is Bruce Nixon who is the CEO and director of HoloCentric. Holocentric is an Australian technology company and Bruce is fiercely passionate in his belief that companies can achieve greater performance by better understanding how people, processes and technology come together to meet strategic objectives as well as regulatory obligations.

Holocentric has assisted some of Australia's largest organisations to implement its innovative BMS platform, which provides clarity and accountability over all facets of operations. Some of those clients have included the Australian Tax Office, Westpac, Qantas, Western Power, UGL Services, Icelandair and IP Australia to name a few.

Good morning, Bruce, and welcome to the show.

Bruce Nixon (01:21)
Good morning Caroline, thank you very much.

Caroline Kennedy (01:23)
Now tell us about Holocentric.

Bruce Nixon (01:29)
Sure, Holocentric is a software company and we've been around for about 13 years. We have about 40 employees. We provide some capability to large organisations that enables them to understand how their business works in more detail. Typically we find that there is a whole range of knowledge spread across the organisation, but no one place that people can go to to reference how things really work.

So we call that a business management system and that's the software that we provide typically to very large complex organisations that need to deal with change on a continual basis.

Caroline Kennedy (02:11)
So my understanding of that is like a centralised system and knowledge base where people can go and reference.

Bruce Nixon (02:17)
That is correct Caroline, yes. So it might be referenced for the purposes of just making sure that people are things in the correct way or it could be referenced from the perspective of considering how they may change how they work to be better, to bring about new ideas, to innovate the way they operate as a business.

Caroline Kennedy (02:35)
Sure. Tell us about your BMS platform. I understand it is quite innovative.

Bruce Nixon (02:42)
Yes, the BMS platform we've built over the last few years and our background goes back to helping people to understand the complexity involved with projects. So as organisations implement new IT systems or implement some change in their processes, they need to better understand what they do and how they need to change.

In applying that technology, people typically took a project view, whereas, okay, once the change is implemented, the need for the software that we provided wasn't considered as strong as what it was at the beginning of the project. I.e. they'd done some work, they gathered some information, they used that to implement some change, but then they neglected that information, all that knowledge they gathered went to waste.

We were quite frustrated by this and decided that we've got to take a different approach whereby that knowledge that people gather, the investment they make in getting a better understanding of how they work needs to be retained and needs to help them to run the business and make further change and to continually improve the business rather than just being used for that one-off change. So that's the journey we started about ⁓ five years ago to convert what was a modeling tool, a capability to understand complexity but then to bring that into an operational sense for organisations where it helps them to be more effective in what they do, to meet their compliance obligations, but very importantly to implement further change and continually improve the business.

Caroline Kennedy (04:17)
Okay and in terms of the system, my understanding and correct me if I'm wrong, is that it collects data as well so you can gain insights from historical aspects of the business too, is that correct?

Bruce Nixon (04:32)
What we do is we combine the data. Typically organisations already gather a lot of data. In fact, they have so much data that they don't know how to deal with it effectively. What they typically lack is the contextual information about that. So rather than gathering the data, we will reference the data that's already in existence. So they have business intelligence tools, have big data applications, and retailers are very strong on this about gathering further information about the frequent buyers and customers and their buying habits.

But how do they deal with that and how do they use that more effectively to actually improve and run the business? That's where we ⁓ specialise and say, that data that you capture provides certain information about how you do things, but you need to combine that with, okay, what are we going to do about that? How are we going to change our business, how could we be more effective in our operations, how can we provide better customer service as a result of that data that we've captured? So that's really the specialisation that we have is providing that contextual view as to how that data can help them to make better decisions.

Caroline Kennedy (05:41)
Yep, and I would completely agree with you in regards to businesses that collect quite a substantial amount of yet don't know how to necessarily use the data. And data can, as you say, when you contextualise it, it can really tell a story and you can see patterns and you can see areas perhaps where you need to delve into a little bit deeper because perhaps there's an anomaly and you need to look at that to see why did that change and what do we need to do about that.

Bruce Nixon (06:12)
Yeah, I think that's one of the great opportunities is to look at that data and see how, as you say, how those patterns may be observed from the data that's been captured. Today, the cost of data storage is so cheap. We gather so many more terabytes of data that it's become very cost effective to enable organisations to do that.

But the investment now has to go into how do we analyse that more effectively so that we can make better decisions.

Caroline Kennedy (06:45)
And I think the analysis part is the opportunity as well because there is a lot of opportunity when you analyse the data correctly. And I think this is a skill too from what I've seen over the course of my career. There are certain individuals who can really look at data and analyse it and then see a pattern as we talked about before.

Bruce Nixon (07:07)
Yes, yes and also what we look at is looking at those analysis of the data then relate that back to well what were the intentions of the business? What were your strategies? What were you trying to achieve? What's your design of your business and how do you relate the data that you've captured back to what the expectations were? Are we in alignment? Are we achieving what we set out to achieve? And that's really a big gap I think at the moment is relating that back to what the intentions were.

Caroline Kennedy (07:39)
Absolutely. Yeah. Now you've mentioned before that BMS can help smaller companies compete against much multinationals. Can you tell us about that?

Bruce Nixon (07:50)
Sure, so I think the multinational companies, what we typically find is that they achieve efficiencies through scale. You can do things on a lower cost basis as an organisation if you have more transactions going through an organisation and hence you can do things more cost effectively. Then you get to a point where you start to add in overhead through layers of management.

So as an organisation gets larger, you typically have a manager who might have seven people reporting to her and then those people have another seven people reporting to them and so on and so forth. So as the organisation gets larger, you need to put in more layers of management which then create discrepancies in the way people do things. And for those organisations, we typically find that there's a lot of inconsistencies in the way they approach things.

So if you go to one person and apply for a mortgage within a bank, you might get a different result from if it's processed by a different person in a different location within the same bank. And we find those discrepancies across an organisation which then results in greater risk they undertake. They involve rework for those organisations. I think for a small or medium-sized organisations, I'm not talking about maybe the very small ones, but medium-sized organisations can more easily capture the way they do things because before they get out of hand, and become less efficient.

So that enables them to scale more efficiently and better than what the larger organisations have. So when they already have that inefficiency built into the system or that complexity built into the system, I should say, it's more difficult for them to capture that knowledge and for them to change. Before you get to that point as an organisation, if you capture what you do more effectively so that you have greater consistency built into your business early on, then you are more able to compete. you can start to get those efficiencies into your business and you naturally get an approach of always looking for improvements in your business if you actually understand how things are working in far more detail.

Caroline Kennedy (09:58)
Yeah, that's a very valid point and I think that that also comes back to, you know, I suppose the leadership as well around the business and the priorities for the leadership. If you prioritise early and actually get those efficiencies and systems and processes in place, then it makes life as you grow and as you scale much easier.

Bruce Nixon (10:22)
Yeah, I think so. I think once you've got to a very large scale, the natural tendency is to protect. You have a market share, you have certain product lines, you have processes, so you're all about protecting your business and defending what you have rather than looking to be more innovative and coming up with new ideas and challenging the status quo. But when you're still growing, when you're a smaller organisation and you really want to challenge those organisations, you want to take them on, you want to do things better.

You want to things differently; you want to bring about new ideas, new products you can bring to the consumer. And that's a much bigger opportunity then compared to just trying to protect what you have. And there's been many examples, of course, of organisations overprotecting what they have to their own detriment, whereby a new business model challenged what they did and they lost the whole business.

Caroline Kennedy (11:14)
Yeah, yeah. And I've witnessed that somewhat and I'll talk about that a little bit later. And I think going back to that point is there is huge opportunity for those larger businesses to perhaps look at innovation as opposed as a component, as opposed to just trying to maintain what already exists.

Bruce Nixon (11:36)
Yeah, I think there's a great opportunity there. It's not a natural tendency, I think, for them to put innovation on the front line. If you look at organisation structures for large organisations, you compare the number of people working in innovation to the number of people in risk management. And well, it's just a pittance they put into innovation compared to the risk management of the business. So the risk management is largely about protecting what they have rather than really defending themselves or looking at the risks that may come about through innovation from other organisations. And when they react, they often react too late. Yes. Because they find it very cumbersome, they find it very difficult to implement that change because the vast majority of the people are concerned with the current operations of the business and trying to make that effective rather than looking outside the square as to what might be better.

Caroline Kennedy (12:29)
I certainly don't agree with that process, but that's just my humble opinion. Now you stated that 70 % of organisations, their change initiatives fail. Now this is a high failure rate. So can you tell us a little bit about that?

Bruce Nixon (12:47)
I think there's a lot of statistics around about change in organisations. So whether it's a large organisation acquiring a new business, we've seen many of those fail to achieve what they intended to deliver. If we look at banks, for example, they all went through a phase of acquiring wealth management organisations and now they're going through a phase of divesting wealth management organisations.

So they never quite achieve the efficiencies and the cross-selling that they're intending to by bringing those businesses into the traditional banking space. If we look at the implementation of IT systems, there's many failures from government organisations in particular have had many failures as far as implementation of big IT systems in organisations.

Private organisations have had many similar failures but perhaps aren't on the public record and it's subject to the same scrutiny. So there's lots of those changes that are difficult and I think the cause of the failure rate is often the lack of understanding of, the detail of understanding of what they're actually doing. Without understanding what you're starting from, it's very difficult to determine how you're going to make that transition to a future state of operations very effectively.

And that's what we often find is that they really don't have a handle on what they're doing with all the detail about things before they implement that change. And hence they discover those things along the way and often too late after they've made the change or partially made the change.

Caroline Kennedy (14:22)
Yeah, so how do they prevent that failure? How do we improve those rates?

Bruce Nixon (14:26)
I think you need to be able to visualise the future much better. So to create a picture and simulate that, what we do is we help organisations to build a model as to how they may look in the future. If you look at infrastructure building, if you look at large towers, they typically build a model, a scale model of how it's going to look so people can actually see what it looks like. Now that's something that's quite physical. So you can actually quite clearly identify how this is going to work, the architecture is going to be, what the landscape might be around that.

So that picture helps people to understand, this is what it's going to look like in the future. This is how the city is going to be. This is how this road infrastructure is going to work or whatever it might be. If we look at other changes in an organisational sense, they typically don't do that. Now, whilst you can't create a model in the same sense as a physical thing, you can actually create a model to show how the organisation will be structured, how they deal with their customers, what their processes are, what their performance should be in the future. So building that picture as to how they might look in the future should create greater confidence for them as to how to get there.

But you need to understand where you're starting from. So if you miss a lot of the details about where you are today, then a lot of those things will get lost. So that's a lot of the change that we see has failed is because that picture for the future wasn't inclusive of enough of the detail of how they work or what they need to support from a customer perspective, from their internal systems perspective, for compliance obligations, for regulatory needs and so on. So that picture as to how they might work in the future, which in their case is a model that the ⁓ executives and management of organisations can better understand will enable them to make that change more successfully.

Caroline Kennedy (16:24)
Yeah, that really helps with clarity and direction as well and decision making within a business, especially if you have built that model or roadmap and analyse the gaps and where you need to complete those gaps. And especially if that's communicated to the wider team and they buy into that and it's about, as you say, the visualisation. Then at every point when people are making decisions within the organisation, they're doing it based on the roadmap or the structure that's been visualised for the future.

Bruce Nixon (16:57)
Yeah, I think that's really good point about the communication to the broader team and that's quite often what organisations do not do very well is to make sure that you bring people along the journey. So if you can help people to understand what the journey is and where they're going to, then it's going to be much easier for them to understand what the implications might be for themselves. And whilst that's not always positive for everybody, I think there's normally a greater fear when people don't know.

So people typically assume that change is gonna be negative for them if they are kept in the dark. So the greater transparency enables people to buy into that change process and actually understand that and embrace that change and be more positive about the change rather than being kept in the dark and being overly concerned about negative implications of the change.

Caroline Kennedy (17:52)
Yeah, very much so and I think that's a very valid point and also when they're in that state of mind they're also very distracted as opposed to focused on what needs to be done.

Bruce Nixon (18:01)
Yeah, look, think, yes, there's been as many examples of that when organisations go through some sort of downsizing and people typically are overly concerned and just the productivity drops off, the organisation performs worse than what they did before, the results are poorer, then they have to put off more people because it's just a downwind spiral with that sort of negative attitude.

Caroline Kennedy (18:27)
Yeah, so I read an article where you said nine out of ten Australian CEOs believe that technology presented the biggest transformation trend for their business, yet this belief is not translating into a country of innovation.

Bruce Nixon (18:45)
Yeah, think there's many successes in Australia of innovation. I think what we typically do pretty poorly though is the commercialisation aspect. There's a lot of ideas that have come out and have been taken overseas and have been commercialised and somewhere like the United States for example is very good at commercialising on innovation. I think in Australia we do have innovation. There's a lot of the government does a pretty good job, I think, of supporting research and development in the country, but does a pretty poor job of supporting the commercialisation of that research and development. And hence we tend as a country, I think, to miss out on lot of that opportunity from the early stage, research and development. No, exception is someone like Atlassian, who's done phenomenally well and kept a lot of the, they had the confidence themselves to back their own commercialisation of their own ideas and their own product and took that out to the world and eventually then has listed the company in the US but they have built a very strong capability in Australia as a result of their confidence and their continued investment into the commercialisation of their products.

I think with larger organisations, naturally a lot more conservative than innovation as a rule because they're defending what they currently have.

Caroline Kennedy (20:10)
Yeah. Now I once witnessed, we sort of briefly mentioned this before, I once witnessed a business decline because of lack of relevance as the market changed with technology distribution. Now, luckily we were able to be agile, conducted research, we formulated a strategy and executed it to turn the business around. Now, technology was a key component of that strategy.

And I think this experience taught me a few things. However, the relevant one here is that IT and technology are enablers for businesses. And I think we touched on that before. And as such as a key component to any strategy, but most importantly, not managed by third party individuals who are not key stakeholders. And I see that in a lot of businesses, particularly from SME up to larger organisations where they outsource that key component and don't necessarily value the opportunity with it. What are your thoughts on that?

Bruce Nixon (21:13)
Yeah, think outsourcing has been one of the greatest disservices to many large organisations or large and small organisations. I think you don't want to outsource your core business and I think that's been a tendency for many organisations. I think in the Howard era in federal government, they went through a big outsourcing trend to say, let's outsource all the IT as a policy, which I think was a big mistake.

And what you do when you outsource that, Commonwealth Bank went through that It's one of the earlier outsources of their IT systems and David Murray was on record as saying that what they did was they lost a lot of the knowledge of the organisation with that. So I think it's big mistake to outsource everything. Not that outsourcing itself is a bad idea, but I think a whole of IT outsourcing or a whole of business process outsourcing where it really cuts into the muscle of the organisation, takes a lot of that knowledge out of the organisation, it gives that to a third party, I think that's a big mistake.

You have to be very careful about what is outsourced and make sure that it's more of supporting activities that really are not quality business. For example, in a small business you might outsource bookkeeping because that's something that's really just crunching the numbers and as long as you're presenting those it's not actually running the business, it's supporting the business. But if you wanted to outsource your sales of an organisation where it's more about the culture of the business and understanding of what you do and you want to outsource that. I think that's a big mistake.

I think if you're outsourcing a lot of software development, we don't do that. We do all our software development in-house and we don't outsource any of that. And we probably will not outsource any of that. There might come a time where this might be certain components where it's appropriate to do that, but I think you have to be very careful about what you outsource and make sure that you're retaining all your intellectual property and the knowledge about how your business is set, because that really is the culture of your business.

Caroline Kennedy (23:12)
Yeah, I agree with that completely. And, and as I said, I have witnessed businesses who have outsourced and had no knowledge on what was necessarily going on from a technology point of view within their business and decisions being made by third party who weren't necessarily aligned with the company's vision or goals. And if there's just, there's no alignment there and, it is a key component to any strategy. has to be, especially nowadays.

Yeah. Now I also believe that innovative leadership is the future. And I talk about that a lot because as we see the market evolve and we see technology evolve to remain relevant, innovation is key. That doesn't mean that you need to be a leader in innovation. It just means that you need to understand your relevance and continue to be relevant and use the resources available from a technology point of view to do that. So what are your thoughts on that?

Bruce Nixon (24:14)
Yeah, like I think with any business you really need to be alert and particularly now things are changing much more quicker than they ever have in the past. Technology enables new approaches and if you're not innovative and if you're not continually looking for better ways to do things, you won't survive.

There's examples of that. Nokia is a great example of an organisation that's going through yet another change. They're not dead in spite of what people may think. Maybe Nokia phones are a thing of the past, or almost a thing of the past, but the company itself has been around for 150 years, and they weren't a phone company, so they've reinvented themselves. So that innovative approach to their business and saying, whilst they had a massive write-down in their business, and obviously they lost a lot of money, they're now reinventing themselves yet again to be telecom network service provider.

And I think that type of approach enables organisations to continue to exist. And others like a BlackBerry who are in a similar position, not with quite the market dominance, but certainly a very strong brand and a strong capability, didn't innovate and didn't move on and have paid the price. So I think you need to be alert to that. If you look at banking, FinTechs are coming along with the new ways of doing our payments. So payment to payment systems, or peer to peer payment systems, a threatening part of the bank's revenue line. So they need to be embracing that change and being innovative and looking outside of their organisation to see what is possible, what the capabilities might bring. And that goes beyond just asking your customers about what they want. I think you need to look at investing research and true research where you're looking at some of the trends that are happening in the world and even in third world countries that don't have the infrastructure that we have here and the way they approach things where, well, they're doing peer-to-peer payments on mobile phones. Well, we don't do that here because we don't need to. But some of that innovation may be applied very effectively in first world countries as well.

Caroline Kennedy (26:23)
Yeah, and I think a strategy I've used before in business is cross-industry innovation as well, looking at other industries and technology that's being used in other industries and how that could be integrated into the current business model or a different industry and capitalising on that as well.

Bruce Nixon (26:42)
Yeah, look, think there's lots of opportunities. And that's where someone like Airbnb and Uber are great examples of innovation, which is very much software companies being applied to traditional businesses and also utilising greater capacity that exists in the world. in the case of Airbnb making rooms that were otherwise vacant, available to people to accommodate people. And with Uber making use of cars of a sitting idle and using them for transporting others. yeah, think applying that, looking outside your industry is useful.

Caroline Kennedy (27:21)
Yeah, my example of this is when I was leading a wholesale travel business and we used to distribute our brochures to travel agents, yet there were many other operators who did the same thing and there was no real point of difference. So it was a question about how do we get a point of difference? How do we get the travel agent handing out those brochures to a consumer? And we utilise virtual reality in its very early stages and we're the first to do that within the industry to actually allow you to use your mobile device or your iPad to actually scan the cover of the brochures and up popped an experience that you got to experience the destination based on, it was video based, but you got to experience what you would experience if you went to Egypt, for instance, and you got a taste of it. And so for us, that was innovative because then the travel agents wanted to hand out our brochures because they wanted to talk to the customer about, at this, like look at this technology and the experience that you can have. And, and it really was quite effective. So, I mean, that's just one example of how you can utilise it. And, you know, as you said before, there are quite a few other examples of that. What are your top three tips for leaders in terms of innovation?

Bruce Nixon (28:42)
The innovation within your own organisation, I think you need to look at, number one, you have to remain connected with your customer. So what does the customer needs? What's your core offering to your customers and what could you do better for those customers? And listen to those customers is still number one. But I think you can just do that. As Henry Ford said, if he asked what his customers wanted, they would have asked for a faster horse.

And so that's one aspect, but you still have to be very much involved with those customers to get that feedback from customers. They do have some great ideas about things that could be offered that are better than what we currently do. I think you need to look outside though. I think it's investing in true research. So looking at, you know, reading out upon what's going on in different industries. So for some like the internet of things, for example, whilst it's been talked about for a long time, it's coming, it's making a big difference, it's going to make a huge difference, it enables. information data to be gathered real time when things are happening and that's going to affect the whole supply chain, manufacturing operations and all sorts of things.

But then it being able to apply that in other ways to experiences that people have is going to make a big difference as well. So doing that research I think is still critical to be able to apply to your organisation. And I think thirdly, to really understand how your business operates in detail so that you have that capability to introduce change so that people are not fearful of that change.

Caroline Kennedy (30:15)
Yeah, they're very good tips. What has been the catalyst for success in your business?

Bruce Nixon (30:21)
I think not accepting the status quo I think is most important. we had some capability in our products as I mentioned earlier that we could have capitalised on and continued on that journey but we decided that no we wanted to take a different approach. There is a latent need in the market for helping organisations to better manage their knowledge, better understand how they work as an organisation. We decided to go down that path and set ourselves, as Jim Collins would say, a big hairy audacious goal, which was to create and earn the business management system category. And that's sort of our long-term drive for us. And so that then empowers us to build this capability for organisations whereby we can drive towards that business management system category that is well known throughout the world.

We operate very much in Australia at the moment, but we see the applications of this across all types of organisations, across all types of industries, whether they be private organisations or whether they be government organisations. for us, that driving, that goal that we have, the big hereditary goal that we have is really the key driver. And then we might modify how we go about things and what we might do. And I certainly encourage my people to think of better ways to do things but driving still towards that same big goal.

Caroline Kennedy (31:49)
Yeah, yeah, and that's a very good strategy. Finally, what are the three main tips you have for other businesses in terms of how they can punch above their weight?

Bruce Nixon (31:59)
Yeah, think as a small organisation, we do have many benefits over large one and we most of our customers are those larger organisations and I just see the decision making processes they have to go through. They have so many compliance obligations. They have so much risk aversion. They spend a lot of time, a lot of money making what perhaps should be relatively simple decisions. So it's much harder with them to embrace change and to move forward.

For smaller organisations, take advantage of what you have as a smaller, nimble, agile organisation and don't lose that. I think you have to back yourself. If you've got some great ideas, back them and work with those. If you see that, what you offer is a better approach, is a better product, is a better service. Don't lose faith in that. You're going to go through some ups and downs in your business, but you've got to go work through those and continue the journey. And back your people. I think with any organisations, the people that make a big difference, but think within small organisations, they're allowed to make a greater contribution. And I think backing them and working with them and enabling them to be more effective in the organisation is a great attribute and a great benefit have a small organisation over a large one.

Caroline Kennedy (33:28)
Yeah, very much so and it's about leveraging the resources and the people that you have within the business and I think when you empower them, that's where the ideas happen and that's where you start to challenge that status quo, isn't it?

Bruce Nixon (33:42)
Exactly, a lot of people's, the good idea is not limited to the executives in an organisation. Everybody can have great ideas in the organisation. It's encouraging them and giving them the confidence to express their ideas and to bring them forth that I think can help particularly a small business.

Caroline Kennedy (33:50)
Yes, very much so. And I don't think any idea is a bad idea either. I always take that approach. It's just more about, okay, let's investigate the viability of this idea and test it a little bit.

Bruce Nixon (34:12)
Exactly, yeah or whether it's fact a timely thing.

Caroline Kennedy (34:15)
Yeah, very much so. Well thank you so much for your time today, Bruce. I really appreciate it. Some great insights for our listeners and I appreciate your time.

Bruce Nixon (34:26)
And thank you Caroline, it's been pleasure. Thank you.