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Management Strategies

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Chief Innovation Officer Madge Meyer Points to Tech as a Key to State Street's Success

Technology innovation has been key to State Street Corp.'s success, according to chief innovation officer Madge Meyer -- and she's been willing to take some risks to prove it.

State Street Corp.'s Madge Meyer says she loves to learn about successful business executives such as Oprah Winfrey and QVC's Barry Diller. "I always like to see successful people, what led them to have the vision," she says. "It's very intriguing to me how they made it. Oprah Winfrey grew up poor, her parents deserted her. How did she become such a successful person? You definitely learn a lot from these people."

But Oprah would do well to pay attention to Meyer, who emigrated from China to the United States as a girl speaking little English and now has her own impressive success story to tell. Elite 8 recognition is only the latest in a series of awards and honors that have been bestowed on Meyer and her teams for their achievements in innovation, IT excellence and financial contribution to Boston-based State Street ($22.8 trillion in total assets under custody and $2.1 trillion in total assets under management, as of June 30, 2011).

In her role as executive vice president, chief innovation officer and technology fellow, Meyer is responsible for leading efforts to benchmark, disseminate and commercialize State Street's new "transformational" technologies. She also is charged with driving awareness of the bank's IT capabilities in the technology marketplace, venture capital community and academia.

Meyer took on this newly created role in February 2011 after nearly 10 years of overseeing State Street's global infrastructure services, where she implemented the Six Dimensions of Infrastructure Innovation/Transformation strategy, which defined three key areas of management focus (business, technology, people) and provides managers and staff with a toolkit (principles, tools, techniques) for each -- resulting in improved performance and reduced costs.

The chief innovation officer role is new, but innovation is hardly a new concept at the nearly 220-year-old State Street, Meyer emphasizes. "We have been focusing on innovation for many, many years -- otherwise we couldn't sustain that leadership for all these years," she points out. "In order for us to be in a leadership role, we must have good technology. I always use this one line: We are an investment bank; however, we think we are a technology company doing business in financial markets. We put a lot of investment in technology."

But innovation is as much a way of thinking as it is about specific technologies, Meyer notes. "Innovation is not creating new hardware or software, because that's not our business," she says. "For a bank, innovation is thinking how can technology impact our business, and impact our bottom line, to help the business to be extremely successful, and to be a competitive advantage for the business."

Drawing on her heritage, Meyer often invokes three Chinese words that help define innovation. "The first word means 'to create,' the second is 'to build,' and the third means 'strength.' These three words mean 'innovation,'" she explains.

Although the new innovation team is small -- Meyer, who reports to State Street executive vice president and CIO Christopher Perretta, has three direct reports -- its potential impact is huge, and it will build on the foundation Meyer has created at State Street over the past decade, she notes. Meyer enthusiastically outlines a number of the team's goals: "With cloud computing coming, how can we develop products for the business even faster? What are the ways of doing that?" she asks. "How can we help State Street be even more successful? How can State Street be the leader of the next wave -- whatever the next wave is -- of the banking industry?"

Cloud Watching

In the near term at least, a lot of that "next wave," according to Meyer, will be focused on the cloud. Under her watch, State Street has made a major commitment to virtualization and cloud computing. "We're in production on cloud," Meyer reports. "We're totally virtualized, our network is a virtual private IP network. Our servers are 72 percent virtualized and our storage is all virtualized for structured/unstructured data."

While many banks hesitate to commit to the cloud, "We were able to move into cloud very easily," according to Meyer. "Cloud basically is all service-oriented -- infrastructure as a service, platform as a service. We built core processing on demand."

To further reduce costs the bank also operates a Linux-based second cloud. "[Cloud] can be more generic," Meyer explains. This can "reduce consumption. You can improve the capacity and utilization. The next generation of ... applications will be developed in that kind of environment, so State Street is way ahead." Going forward, she adds, "What we're doing is taking some of the old application factory into the new platform, and ... trying to reduce the manual work. Any way we can automate, we automate."

This strategy reflects State Street's approach to any kind of technology investment, Meyer explains. Going back to when she began her infrastructure management role, she relates, "We have had a technology infrastructure blueprint [and] data center strategy" that essentially maps out "all the technology, different platforms, where we're going. It was very forward thinking," she says. Now, as legacy technology depreciates, "Before we invest in the next life cycle, we don't just do the old thing. We go back to [our] Innovation Lab, looking at what can we do better."

The Innovation Lab, created in 2001 when Meyer joined State Street, allows for product testing and comparison of vendor solutions, she says. This all is part of a disciplined governance process and clearly defined business case "to help everybody make decisions and understand the direction [in] which we're going," Meyer adds. If the technology or solutions under scrutiny are proved to reduce run rates and expenses, she relates, typically the investment will be approved.

The guiding principles, Meyer says, are "Better, Faster, Cheaper." "Better has to be No. 1 -- we can't sacrifice quality for cost," she insists. "Then speed to market is critical. And then cheaper also is important. If we use that discipline, it usually works out very well."

A Major Gamble

This is not to say Meyer is unwilling to stick her neck out and push the bank to take a risk on something she believes can have a measurable impact -- far from it. For example, shortly after she arrived at State Street, Meyer pushed the bank to implement a multi-protocol label switching (MPLS) network, which at the time was a relatively new, unproven technology. "I had to bet my job," she recalls. "I told my boss at that time, 'We need to do it. I can save you a lot of money. Give me three months. You can fire me if I don't deliver the savings.'"

The end result was the successful implementation in 2003 of a new network that not only delivered four times the savings Meyer had promised, but that also is the foundation of what the bank calls Continuous Availability and a "follow the sun" global operations model. And it's a prime example of Meyer's willingness to take "a calculated risk, but not a bad risk."

It's this balance between passion and common sense, innovation and cost/risk management, that has guided Meyer throughout her career. She summarizes her philosophy with the common phrase, "The best is yet to come!" But the saying represents more than simple optimism for Meyer. "If you have that thinking," she insists, "there is always something you can go to instead of 'good enough.' 'Good enough' will kill us."

And she continuously strives to impart this philosophy not only to her team and colleagues, but also to the students and interns whom she mentors. "I do a lot of lectures [at] local colleges," Meyer reports, adding that these typically result in requests for jobs. "They get excited because we do so many new things, [and] kids all want new things."

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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