This conversation centers on how as we continue to transition to a digital economy, every business needs to also transform to become a technology business. Peter Williams and Nick Birk from Allspring’s Technology team and Discovery Growth Equity team, respectively, discuss this with Alison McGlincy, global head of talent acquisition for Allspring Global Investments.

 

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Alison McGlincy: Hi, everyone. I’m Alison McGlincy, global head of talent acquisition for Allspring Global Investments, and you’re listening to On the Trading Desk®.

Joining me today are Peter Williams and Nick Birk, representing Allspring’s Technology team and Discovery Growth Equity team. Today we’ll be discussing how as we continue to transition to a digital economy, every business needs to also transform to become a technology business. Thanks so much for being here today, Peter and Nick.

Peter Williams: Great to be here, Ali.

Nick Birk: Thanks for having us.

Alison: Awesome. So, Peter, maybe we could start with you. I think a good place to start perhaps is for you to maybe elaborate on what we mean by a technology-first company. And maybe could you give us a few examples of what we’re doing here at Allspring to transform ourselves into a technology organization.

Peter: Awesome. Every company today is, quote-unquote, a technology company. I don’t think that this is a new concept. However, there are characteristics that I would say differentiate certain organizations from others.

You introduced me as, I think it was, business strategy for technology. However, what we’re trying to do is evolve that nomenclature to include engineering. Technology and IT (Information Technology) are how we used to look at things and how we keep the lights on each and every day, whereas engineering and technology really allow us to start to frame the future as we build the target state of what Allspring has the potential to be from a technical standpoint.

But really some of those characteristics that I’d love to dive into, for certain organizations, not just in our ecosystem but beyond financial services, a lot of technology organizations embedded inside companies are very siloed. And they stand alone. Their interactions with their clients, which are across the organization or externally, are very limited. A lot of times you’ll have product managers or folks that are managing stakeholder relationships. And technology, really, and those engineering characteristics of an organization, they’re not embedded across a company.

What I’d like to see is more so how is a technology organization horizontally integrated across a company. With that, you can start to see how different parts of the company are also hiring technologists to face off with their traditional engineering and technology organization, as well as being part of what is building a tech-enabled culture.

I think here at Allspring we have a tremendous opportunity. We’re starting from scratch. I mean, how often does an organization have the ability to build not only the foundation but from the ground up? It’s an exciting opportunity that we have to build a future target state technology and engineering organization that’s really going to allow us to deliver for our clients’ future needs, not just their needs today.

Alison: So, Nick, let’s turn to you now. What are some examples of companies that you think have been successful at this? And maybe from an investment perspective, why are these businesses compelling?

Nick: Yeah. So, on the Discovery Growth Equity team, we invest in companies that can change faster than the world around them is changing.

It’s no secret that today technology has caused an acceleration of change in just about every corner of the world. It shows up in several different ways on companies that are trying to make the successful digital transformation.

So successful companies that are transforming to become technology companies generally are ones that can grow faster than their industry. They can show greater margins or higher returns than some of their peers or competitors. That’s what we will really look for as the telltale signs of companies that are making this transition successfully.

Really, there are two goals when you’re making the digital transformation.

The first is finding companies that are improving their customer experience. As Peter said, technology is becoming pervasive across the organization, but it’s a way in which customers can interact with businesses that’s key to making the transformation.

The second is finding businesses that are able to enhance their agility by using technology. So can they leverage technology tools and experiences within their organization to change faster than their competitors or peers?

I think a perfect example of that is the company John Deere. Most people would think of John Deere as this old-line farm equipment manufacturer. But if you look at the last 5 to 10 years within that business, they’ve transitioned to a technology-first organization. That shows up in a number of different ways.

But, historically, if you think about John Deere, they had a relationship with their customers that was essentially one time in nature and maybe somewhat recurring if the farmer happened to go into a John Deere service center to get their tractor or their combine serviced.

If you fast forward to today, the John Deere operation center provides, through a cloud-based interface, a reoccurring ongoing relationship with their customers. And so that’s a perfect use of technology for John Deere going from a one-time relationship where the customer only interacts with John Deere at the time of purchase to now an ongoing, almost daily interaction with the company.

A couple of really cool technology tools that they use that can kind of bring that to life: The first is something they call AutoPath, which if you log in to the John Deere operations center that’s based in the cloud, and you can do that as a farmer from your phone, from your tablet, from your computer, sitting really anywhere in the world, you can map out, through your farm, the route in which the tractor or the combine goes and plows or harvests the field. You can keep from going over areas of the field multiple times. It increases your efficiency and your yield and makes for a better experience for the farmer.

Another really cool technology is something they call See & Spray where they mount cameras on the booms of a lot of the sprayers in the field. What that does is those cameras use machine vision technology to look and see where there are weeds in the field, where insects have infested plants in the field, so they can target herbicide and spraying of insecticide so that they’re not over-spraying. If you look back at the data of farmers who have used this technology, they’ve saved two-thirds of the amount of herbicide and insecticide that they’re putting on their plants just by using the technology.

When you pull it all together, you’re getting farmers who are more efficient, who are happier, who are completing their tasks well before the sun goes down just by leveraging the technology that John Deere has created. It’s a really cool example of a company that traditionally is this old-line farm manufacturing company that no one would have thought of as a technology-first organization. They’ve really transformed into something that is technology-first that’s created a digital ecosystem where they can connect with their customers and improve the customer experience.

Peter: And, Nick, I think you hit on something, too, there, which was really interesting. Those farmers are seeing John Deere as a tech-enabled brand each and every day that they’re working. They don’t have to go into a store. They don’t have to engage with their John Deere rep. So, how a brand is becoming tech-enabled, just by the technology that they’re rolling out and through the user experience, I think is phenomenal.

Nick: That’s right. That’s a good point.

Alison: It really is so interesting. Thank you for that. I had no clue that that was the case. So, Nick, just to continue with you, what do you believe are some of the challenges that these companies have faced in trying to transform into tech-first organizations?

Nick: Yeah, I think this is something that goes back to something that’s near and dear to your heart, which is finding the right talent. There’s really a war for good technology talent not just in the United States, but globally.

If you go back to the John Deere example, if you were to go to their U.S. careers website, there are currently 600 open jobs at John Deere in the United States. 40% of those jobs are open for software developers and software testers. 40%. This is a company that manufactures tractors. I think that is a microcosm of what’s happening with all businesses everywhere, which is the war for strong technical talent is showing up everywhere that you would not imagine.

That’s been the biggest issue for a bunch of companies that are making the digital transformation is where do they find the right resources and talent to make that transition?

The other stat that I like to use a lot with our clients is for every qualified software developer that’s out there, there are five open positions. So, we really just have a massive shortage not just in the United States, but globally.

What we look for from an investment perspective, first of all, are our companies that we’re currently invested in doing the right things to attract and retain that talent? That’s a question that we ask almost every management team when we sit down and interview them is how are they doing that? Because that’s one of the biggest problems with making this transition.

The second thing we’d like to look for are companies who can match Fortune 500 and Global 2000 organizations with resources that may not be in the United States. There are companies like Globant and EPAM and Endava that match large organizations looking for software developer talent with software developers in Eastern Europe and Latin America where they’ve got the resources and the training to be able to do the tools and the technologies that we’re looking for.

Then, finally, we look for companies, technology companies that can improve the developer experience. So, can they make developers more efficient to get their job done easier and more seamlessly? And there are companies out there like Atlassian, GitLab, Microsoft’s GitHub that help improve the developer experience for every company that’s out there.

Those are kind of the three main areas we look for to help solve this war for talent that we think is going on from a technology perspective.

Alison: Peter, in listening to Nick discuss some of these hurdles, what are we doing here at Allspring to address these challenges?

Peter: It’s a great question, Ali. I mean, I think for starters, we’re partnering with folks like yourself. At the end of the day, our talent management and talent acquisition organization is going to work closely with our engineering and technology organization to really start to be more proactive about telling the Allspring story.

We have an incredible opportunity. So, how are we delivering our value proposition to the street, to university campuses, to the communities in which we operate? Because I actually think that value proposition is incredibly unique. There’s not many organizations out there that get the start from where we’re starting while we have a very well-established book of business, a loyal client base, and folks like Nick who are working on an investment team with over 30 years of experience and a 30-year track record.

We have minimal tech debt. At the end of the day, there’s, I think, a lot of people out there who are looking for something extremely entrepreneurial. They want to build something and they don’t necessarily want the proverbial instruction manual for how to do it. I think that that’s what we have to offer.

I think our challenge is given this huge transition that we’re going through as a company and an organization, how are we going to get that word out there? How are we going to reach those talent pools that Nick was referring to? That’s the challenge that we have.

But I know that from just a handful of people I’ve met within the last week or two that we’re hiring, there’s incredible talent out there. We just have to figure out how to better tell our story.

Alison: So just to leave our listeners with one last thought from each of you, if you wouldn’t mind, could you tell us how you two work together to help Allspring tackle some of the technology-first challenges? Maybe Peter first and then Nick.

Peter: Happy to. Yeah, I think Nick, given the research that he’s doing on behalf of the investment team that he works on in addition to so many of our other investment experts across Allspring, we have an incredible opportunity to collaborate. Our technologists are in the sandbox, experimenting with new solutions, new technologies, meeting with new organizations, startups that have tools and solutions that will help Allspring create the path for the future. I think that we have an opportunity to work with Nick and other investors in collaborating and sharing what we’re learning and what we’re discovering in the broader marketplace.

Nick: Yeah, and part of my job as a researcher is not just to talk to companies but to talk to the users of the companies we’re interested in investing in. There is no better way to do my research than to look in my own backyard and find teams like Peter’s that have significant experience in doing this from a range of backgrounds.

We have hired, I think Peter may or may not have given the numbers, but we’ve hired a number of new technologists inside of Allspring that have industry experience outside of financial services and inside of financial services. And, so, leveraging that team to bounce ideas off of, to talk potential research investment ideas, to get their perspectives on what new technologies are coming to market that might be good potential investments. I mean, there’s a lot of value there for our clients. And that’s one of the places where we’re going to start when we’re thinking about investing in a new business is talk to Peter’s team and see what they think about the business.

Alison: The true definition of collaboration. Excellent. Well, Peter and Nick, thank you for being with us today and sharing your insights. We really appreciate it.

Peter: Thanks, Ali.

Nick Birk: Thank you so much.

Alison: You are so welcome. Well, that wraps up this episode of On the Trading Desk. If you’d like to read more market insights and investment perspectives from Allspring Global Investments, you can find them at our firm’s website at allspringglobal.com.

And to stay connected to On the Trading Desk and listen to past and future episodes of the program, you can subscribe to the podcast on Apple Podcasts, Spotify, or wherever you get your podcasts. So, until next time, I’m Alison McGlincy and thank you for listening.

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