Ikon Science is a London-based provider of software and services for the oil and gas industry. Founded in 2001, the company, driven by a continual commitment to innovate and deliver software, provides superior value to their customers. They have weathered the traditional ups and downs of the sector by a laser focus on innovation. This has allowed them to become a global leader in geo-location tools, enabling the efficient exploration, drilling and production of energy by reducing drilling costs and operational uncertainty.
For many years, both the land-based and offshore extraction of hydrocarbons exhibited a familiar ratio formula with respect to expense infrastructure. The largest percentage of costs were associated with personnel and services, the next with equipment, and finally, at the bottom, technology – specifically, the software used to analyze terrain and the software used to manage an overall project. However, the industry shift to hydrofracking and horizontal drilling permanently altered this formula.
While equipment and people/services are still essential, software that continuously monitors and manages horizontal-drilling extraction activity has come to the fore, and the need to deploy this software has become paramount. This type of software provides a real-time analysis of data driving both maximum extraction and minimal environmental impact. Hence, a knowledge management platform that analyzes seismic data within a business context ends up making the difference in the degree of profitability achieved.
Great Hill Partners, a Boston-based private equity firm saw both these shifts occurring in the marketplace and the capabilities of Ikon Science to deliver a SaaS oil field knowledge management platform, leading to their acquisition of the company in October 2018. Post Ikon’s purchase, Great Hill Partners has been working with the company CEO, and Selker Search Partners, to bring in key personnel to drive the expected growth of Ikon to over $100 million in the next five years.
The Challenge for Ikon Science
At acquisition by Great Hill Partners, externally, Ikon’s customers were experiencing the company as a transformational SaaS oilfield knowledge management platform. However, internally, the company had few if any of the internal systems of a larger company. Their overall structure, processes and systems were still very much modeled on an older, more legacy-driven, model.
This legacy model emphasized services over software, on-premises installed applications sold as a perpetual license over a SaaS/cloud platform sold via subscription, and a technically oriented and scientific sales force and model over a strategic and solution-oriented sales force with representative go-to-market positioning. They had a solid controller who oversaw the financial systems but no chief financial officer.
While the company had a new CEO in place after the sale to Great Hill Partners, in many respects, they were still operating as a classic founder-led organization. And even though their headquarters were in the U.K., the real growth engine was found in the U.S. Under the aggressive new owners, the company was on the verge of raising a seven-figure round of debt financing, and Great Hill Partners and the CEO wanted a CFO on board as soon as possible to help drive that process and help steer the quickly growing organization. With the new strategic direction of the company in mind, the ideal CFO would:
- be based in the Houston area, the headquarters of the oil & gas industry
- have a background in the software industry
- have experience leading major internal transitions such as moving Ikon to a SaaS subscription model and enterprise architecture, and, restructuring the sales force from a technical to a solution selling model.
- Ideally, have some grounding in the oil & gas business.
Great Hill Partners and Ikon engaged the services of Selker Search, hoping to identify and recruit a new CFO within 60 days, an unusually aggressive timeline for an executive search at this level.
The Challenge for Selker Search
As Selker Search considered the mix of skills and background needed to successfully conduct this assignment, they realized they would be looking for a candidate that was more of a CFO-plus rather than a pure financial executive. The CFO would become the strong right-hand of the CEO, taking the back office operational issues off his plate by putting in place systems for finance, IT, human resources, legal, development operations and sales operations. The new hire would also help build out the teams necessary to drive these functions at an elevated level as well as overseeing their day-to-day management.
The Houston area, where the new CFO would be based, had plenty of executives with oil & gas experience, but few with a grounding in software. There were also many pure financially oriented divisional CFOs, but not many with both software experience and a CFO-plus background. Adding to the level of difficulty, even if they had software experience, the successful candidate also had to have a track record of successfully overseeing the kinds of operational transformations Ikon needed to accomplish. While an extraordinary “next-step” candidate would be considered, ideally Ikon would hire a “been-there-and-done-it” CFO-plus.
A list of appropriate candidates was soon identified and then post outreach, initial screening and deep values-based behavioral interviewing, Selker pared the group to three individuals. These candidates were all interviewed by members of Ikon’s management team and Great Hill Partners and reduced to the finalist. Selker began checking references, and it is here that their signature trait of thoroughness and intellectual rigor paid off.
In performing its due diligence on finalist candidates, Selker talks to many references, more than a dozen--double or triple the industry average, both those supplied by the candidate as well as non-supplied references. These individuals cut across all types of relationships to the candidate—peers, managers, direct reports, customers, board members and partners. Done right, reference checks across this diverse group of individuals assemble the kind of comprehensive picture that emerges from the best 360-degree employee performance reviews.
Yellow flags began to surface as soon as the finalist candidate insisted that Selker could only speak with a limited number of references, none of whom were direct managers. There certainly are reasons why a current direct manager cannot be spoken with as a reference, but the candidate had reported to multiple CEOs over his career. This is not to say that the candidate was hiding anything, but rather that his approach to the reference-checking process was that his track record spoke for itself, therefore, detailed reference checks were not needed beyond the four people provided.
Simultaneously, Selker began the negotiation process and doubts began to emerge here as well. Increasingly, there were questions around the values and cultural fit. For example, it became clear that the candidate viewed himself as more of a turn-around executive with a set of skills that were needed but that could easily be replaced by another candidate with an equal set of skills.
This was in contrast to how Selker, Ikon Science and Great Hill Partners saw this position. While a specific set of skills and experience were desired, it was the combination of these skills and the candidate’s unique capabilities to apply them that would make the difference between a long-term growth trajectory for Ikon versus a relatively short one. This was a critical difference of perception in how the candidate viewed himself and his contribution, and to how the company viewed the potential contribution of the right CFO.
The sum of these cautionary flags resulted in not moving forward with this candidate, and it appeared that Selker was back at square one. Except they were not. While Selker quickly initiated new research, they also reached out to individuals who had previously been identified and either had not yet responded, or the timing of circumstances had precluded engaging in the opportunity. There was one candidate that had been identified earlier as a possible match, but who hadn’t responded to prior inquiries. This time, he responded and Selker quickly scheduled the candidate spending close to four hours over two days in their values-based behavioral interview process, and then having the candidate interview with select executives from Ikon and Great Hill Partners.
The consensus of all was that this individual was an even better fit. Once more, Selker drove a thorough reference-checking process - this time speaking with more than a dozen close business contacts of the new finalist candidate. However, another wrinkle developed which threatened the successful completion. The candidate was considering a competitive offer from a different private-equity-owned company hoping to land his services as well.
Here is where the final piece of Selker’s skills and knowledge of software and the PE community came into play. First off, they were able to present both opportunities from a 10,000-foot view and place them into industry context. Secondly, while this candidate brought a set of skills and experiences which could impact each organization, they would not be impacted equally. Not only was Ikon looking for transformative leadership, but the candidate was also looking to have maximum impact in his next role. In so doing, the candidate would be advancing his career at a faster clip.
Objectively, it was clear to Selker that the opportunity with Ikon represented a better situation for the candidate. And this is where Selker’s earlier in-depth interview and detailed conversations with the candidate’s references created an understanding that ended up making a difference in guiding the candidate to a final decision. Through gentle, persuasive counseling of the candidate about his career path, delivering insights into the differences between options, and gaining clarity on the best path forward for the candidate in his life and career, a decision was made.
The challenges inherent within the CFO-plus role at Ikon created the opportunity for the finalist candidate to have a far more strategic impact. This truly represented the next step forward for the candidate in his career. After conversation and contemplation, the candidate accepted the offer, 83 days post search initiation and 24 days post initial conversation. Feedback from the CEO and private equity team continues to validate the hiring decision. And the candidate’s feedback? He is certain he made the right decision and thrilled at the impact he is having on moving Ikon forward.