CEO interview - culture and leadership

Co-Manager, Lucy Bloomfield speaks to Intercede CEO, Klaas van der Leest

In this insightful video interview all about culture and leadership, Co-Manager, Lucy Bloomfield finds out how Klaas van der Leest turned Intercede around, from a company that was loss-making in 2018 to one that achieved new record revenue and cash generation in 2023.

In this interview, they discuss:

• The key changes Klaas adopted to shift culture at Intercede
• Adapting to work in a small company
• How to address the cultural aspect when acquiring a new business.

Read the full transcript below.

Lucy Bloomfield: I am Lucy Bloomfield, Co-Manager of the Hargreave Hale AIM VCT. Today I'm delighted to be joined by Klaas van der Leest, the CEO of Intercede, to discuss the very interesting topic of leadership and culture. Intercede is a cybersecurity software company specialising in digital identities and access control. Intercede's software protects mission-critical data and systems with the highest level of insurance. The company delivers its solutions to many high-profile customers ranging from the UK and US governments to several of the world's largest enterprises. The company listed onto AIM in 2001 and the VCT invested in 2007. Klaas, you joined the company in 2018. What were the circumstances that led to your appointment?

Klaas van der Leest: Quite unusual in as far as the company had struggled for quite a few years and the board decided they wanted to make changes. So I started on the 11 April 2018 when the prior CEO had left the company. So it was an unusual start to my journey as a CEO in a listed company.

Lucy: Yes, it was your first role as a CEO and the first time directing the senior leadership team at a public company. What was it like arriving on day one? How did you prepare? And did you arrive with a clear action plan?

Klaas: Well, the preparation was again, kind of unusual in as far as that I literally signed a contract 48 hours before joining. So there was very little time to prepare. There was no handover from the outgoing CEO who was the founder. So in effect, I was given the keys to the kingdom and had to start the journey from day one. And this was against the backdrop of a company that was losing four and a half million in the prior financial year, so things weren't pretty. So there was a lot of investigation that had to be done very early on. It's always nice to think that there's lots of time to prepare when you start a new role. And particularly from a CEO perspective, there is typically a notice period of three, six months, so you've got plenty of time to prepare. I didn't have the benefit of any of that. I started, and that was the journey on the 11 April 2018, and here we are six years later.

Lucy: Wow. So you got settled in and learned more about the company. What did you find out and how did that compare to some of your expectations maybe you had about the company when you joined?

Klaas: Well, clearly the board set certain expectations before I joined, but I quickly found out after joining that not all of that matched up to reality. Whilst we had some real good products and we had some real good customers, there were also challenges in the company, i.e., it was bleeding cash, there was very little management control in the company. There were when I started, in effect five products, only one of which was driving revenue. There were no go-to market plans. So very early on we had to make the hard calls in deciding where are we going to place the bets? The good news was in the early days, I spent a lot of time with customers and partners and channels, and they were generally saying one thing, "The product is good once it's in production, but to get it in production, it's quite hard."

Essentially, it's got arms, legs, and tentacles in all kinds of directions. So what they were telling me, it's not really an off-the-shelf piece of software, it's more of a system integration play. So we took that back into business and that's how the journey started. So we made quite a few changes. We focused on the main product, we retired the other four products that basically had no sight of revenue in the short term, and we started to heavily invest in the product to make an off-the-shelf piece of software that we could actively take to market and sell successfully. And that clearly takes time, but six years later and we're in a much better position.

Key changes to shift culture

Lucy: And in terms of the culture point, what were the key changes that you made to shift the company's culture?

Klaas: Yeah, culture is an interesting thing, and this was a company that was quite heavily top-down driven, and that takes time to change. But by bringing in some new leadership, by working closely with staff and keeping staff informed that we're on the journey, this was a company that was very much inward-focused, so it was very heavily technology-driven. We've probably got some of the best technical coders, testers, design authorities globally also reflected in the client base we have. But in those days, the company was very inward-focused. We would develop very interesting technology and then try and find a market for it. And what we changed is what I tend to refer to as bringing the outside in, starting with the customers, starting with the channels, starting with the market, taking that back into the company and then we're going to design a product that the market actually wants, and that's probably been the biggest change.

We had our company kickoff a couple of weeks ago and this is the sixth year where we've been running the company kickoffs. They've expanded in scope, but the common theme is that we're bringing the outside in. So we're bringing customers in, we're bringing partners in, we're bringing channel partners in to basically give an outside perspective to the entire staff pool, so they hear straight from the horse's mouth what's going on. We're also bringing more of our coders into the client base. So today's environment, it's easy because you go on Teams, you go on Zoom and that's quite easy. But if we have to, we bring them to site.

Late autumn last year, we flew a group of our technical community into the US to assist one of our clients and partners through a tricky period where they had some instability in their network. But collectively we find out, and they then come back, bring that knowledge back into the business that, "Hey, is there anything we can improve in the product?" So for the next time round, they won't see that.

Measuring culture change

Klaas: Culture is a journey, culture is hard to change, but we see a lot of good, positive attributes from the staff now who become far more interested in where the business is going. And that's also reflected in the very low attrition I think we have at the moment.

Lucy: Okay, because they're more in touch now with the customers?

Klaas: I think again, they're more engaged. Just to put a stake into the ground, we run an annual employee net promoter score. When I ran the first one in probably early 2019 our eNPS was minus 57, so we had significantly more detractors than we had promoters. We ran one after our company kickoff, net promoter score, eNPS, was plus 24, so we can see we can drive change.

Lucy: And what's that specifically measuring?

Klaas: So that's measuring promoters versus detractors. So everybody answers the question, would you recommend Intercede to friends, family etc.? On a score of 0 to 10, your 9s and 10s are your promoters, your 7s and 8s are your passives, your 0 to 6s are your detractors. And you're only focused on your detractors and your promoters, and you calculate the difference between the two.

Lucy: And so a 70 point change is pretty major?

Klaas: It's difficult to do. And net promoter score, even from a customer perspective is very, very hard because you only need a very few people to change and your score can change dramatically.

Lucy: So presumably as you got to know the company, after you joined some things exceeded your expectations in a positive way and you found other areas needed more work. Could you give us a few examples of that?

Klaas: Yeah, I think some of the things that really jumped out in a positive way was, for instance, the client base. We are a very small company based in Lutterworth, nobody knows Intercede. But then when you look at the logos, you think, "Hmm, is this for real?" And particularly in the early stages when I was in the interview process, you see the logos, you think, "Ah, do they work with Boeing? Do they work with Lockheed Martin? Do they work with Department of State? Is this for real?" Then once you're on the inside, you speak to those customers and you find out that these customers are very happy with the software they have, they've used it for many, many years, i.e., they're very, very sticky. Yes, they like to see changes, that's absolutely fine. As I described earlier on, the product was more of a toolkit rather than a piece of off-the-shelf software. So customers very, very good. Yeah, tier one customers.

Product, we knew we had to invest in, but we have invested in. Go-to-market model wasn't particularly well-defined, so that was work we had to do. Yeah, initially we missed the management control, so we put the management controls in. And overall this is a company that delivers very, very solid code. We know once this code is in production, it is very, very stable. We get very few tickets, i.e., customers raising outages, very few code issues. So this is very stable software and we know that from the tenure of our customers. And particularly now again six years on, our customers stay on platform 15, 20 years plus. The longest-serving customer I think is a UK bank, 22 years. So lots of positive things, but obviously there was stuff that we had to work on throughout the process.

Adapting to work in a small company

Lucy: Well, that's a fantastic achievement. You previously worked within large companies. Did you have to adapt your working methods working within a smaller organisation?

Klaas: Oh, absolutely. My early-stage career was very much blue chip with likes of Nortel and Logica. They were the days, the dot-com years. I missed in those years the opportunity to work in smaller companies. Very good reason, I couldn't afford it. I couldn't afford to take stock options instead of salary. So I focused on my blue chip career and developed my career profile there. But then I had a real desire at a point in time to test myself in a small company environment. So I left Logica, I joined a company in Staines called Attenda, it's now rebranded to Ensono, and that was my first foray into a small company, about 100 staff. And it was a real test to see whether I could survive in a small company. And the best example I can use is when I was in my Logica days, we had large departments that would help you with commission plans and all kinds of marketing support. In a small company, you don't have that.

So the first day I walked into Attenda, we had to do a new commission plan and there was no large support team. It was taking off the cufflinks, rolling up your sleeves and write it yourself, but I like the hands-on approach. So I think working in small companies is materially different to large corporates. Many people enjoy large corporates. Many people who go from large corporates into small companies will find it difficult because it is materially different. And unless you're willing and capable of spinning multiple plates at any point in time, it's completely different.

But I enjoy the small company culture. I enjoy the active engagement in the day-to-day business. And as we grow, I'll probably still continue to be engaged into the detail, to a lesser degree because I can see now with the stronger management team in place, I can be a little bit more hand-off and focus more on the three-to-five-year view going forward. But I'm renowned as the person who will ask more dumb questions than 10 wise men can answer, because I will not take no for an answer if I don't understand. I keep asking the questions.

Lucy: Obviously you mentioned after quite a few years of struggling to grow its revenues and making losses, you returned the company to profitability in 2018. And in 2023, the company has achieved new record revenues, profitability, cash generation. What's made that possible?

Klaas: I don't think there's a single thing that's made that possible. I think it's the result of a number of years of investment starting from, as I referenced early on, we had to invest into the product to really make it a COTS-based product, a commercial off-the-shelf piece of software. We achieved that after two to three years, so that was one step. We invested in the management team, I brought a new COO in, more recently we brought a new CFO in. Andy Walker, who was the longstanding CFO, retired after 21 years. We got a new CFO, again, who's quite hands-on. We invested in go to market strategy. So we decided very early on to go down channel and we knew building channel, building distribution would take time, but we're reaping the benefits of that now. Over 90% of our revenues is booked through channel. We've got far more global reach than we've ever had before.

We've invested in staff, we've got clear career plans and investments. We're having bonus arrangements throughout the company. We still have share schemes throughout the company, share investment plans where staff buy one, get one. So again, lots of change into the company. We've significantly addressed our pricing. I always had in the early days to view that our pricing was too low, so we've adjusted the pricing. As we increased the value of the product, we also increased the value of the pricing. We've done our first acquisition just over 18 months ago, a company in Bracknell called Authlogics. We were looking to extend our product portfolio, and then you go through the classic view of do we build it? Do we partner? Do we buy?

We could see legislation changes coming up, particularly in the US market, but now also in continental Europe that were driving change into the market that we couldn't meet if we had to build it ourselves, so we acquired a company product is now fully integrated. So there's been a lot of change. And then over time you see the changes happening. It hasn't been big steps all the time, but this is I think very much a reflection of the multiple changes we've made throughout the company that have led to the last couple of years showing good revenue growth, showing good cash generation, showing good profit.

Addressing culture when acquiring a new business

Lucy: And in terms of the acquisition, how did you address the cultural aspect of acquiring another company and bringing that within the organisation?

Klaas: Yeah, a lot of that screening already happens when we do the initial process of scanning the market. We have a full-time corporate head of development who is extremely experienced. We got a process that we follow. We have early-stage engagements with potentially target companies. We tend to have a two-to-three-hour session with them where they present to us, we present to them. And that's very much the starting point of where do we feel that culturally there's going to be a fit? And on numerous occasions, there is no fit. We are very much technologically led. We have very technical people.

And what we found in Authlogics, the acquisition we made, is a company that was technically very, very strong, it had very good technology skills, wrote very good code. And we see that now the code is very, very stable. We now have integrated development teams that it really works well. So from that perspective, a lot of that screening takes place early on. And of course, it's always difficult for somebody who's been running their own business to come into a larger environment, even though I still see ourselves as quite small. Well, Authlogics was relatively small compared to ourselves. But yeah, we really try hard to A, welcome people on board, integrate the products, but also integrate the development teams now.

The importance of culture and leadership

Lucy: Clearly culture and leadership and all these things are so critical to the success of a company, as you say. What's been the key lesson for you over the last six years?

Klaas: Culture is hard to change, but I think anybody will agree with that, because the company I walked into had been managed for nearly 20 years in a certain way, and to change that is going to take time and effort. I can be known as impatient from time to time, but if I reflect upon six years, I'm quite happy where we are today. Leadership and particularly change takes time. The leadership I think has also changed. In the beginning, I had to be extremely hands-on because I had to get to know the business. And when it comes to leadership, always look on two sides, well, if anything three sides. There is a leadership element, there's the serving element, there is the management element.

In the beginning there was probably a lot of management that had to take place to basically bring controls into the business. So on a month-by-month basis, I could see whether we were making progress. But as we've moved through the years, I can focus less on management, I can focus a bit more on the leadership. But the third element is the serving. I'm there to make others successful. So I always say to my colleagues, "I'm a resource. I'm a resource for you to achieve what you need to achieve." And that's that, so I don't have an office, I sit open plan. If anybody wants to walk in, they can ask. Leadership, culture, it's a journey. And I think as we move on over the next couple of years, we'll continue to evolve.

Lucy: And if you could go back in time to your first day, CEO of Intercede, what piece of advice would you give yourself?

Klaas: "Klaas, be patient, things will happen positively." But again, that comes back to my nature. I can be impatient from time to time and that needs to be managed. And I always want to drive faster, i.e., in the business, drive faster, get to higher revenues, get to more profit, get to faster product development, get more staff on board. But we also have to realise that things take time. Even though I'd like to move faster all the time, when I look back and say, "Hey, six years ago if somebody had told me we would sign an $8m order in 2023," I don't think anybody would've believed me, now it's possible. So now it's about, okay, where can we set the next targets, the next thresholds? And in the meantime, nose to the grindstone, focus on running the day-to-day business, and then the rest will hopefully fall into place.

Lucy: Klaas, thank you so much. That was a really interesting conversation.

Klaas: Well, thank you for having me and good luck with your event.

Lucy: Thank you.

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