Host Intro (Gene Kim)

So over the last several years, we've had many leaders from Vanguard present. So this is the firm that pioneered the concept of mutual fund indexing, and now has nearly $9.5 trillion of assets under management. That's up from the number last reported last year. So one of those leaders is Christina Yiamouyiannis, who I'm so grateful is now part of our programming committee. So earlier this year, I got to attend their amazing three-day internal technology conference on the Vanguard campus, because I got to see firsthand how they are building what they call "one team," where business and technology leaders work together to achieve goals for the clients and fellow crew members there. I also got to meet Mike Carr, their Chief Technology Officer, who will be speaking next. He'll talk about the reason why they run this incredible internal learning event and some of the highlights out of that, as well as how his group is helping make it easier for everyone within Vanguard to do their work easily and well. And so, by the way, the talks at that conference were so awesome. Mike is one of four Vanguard talks being presented at this conference. So here is Mike.

Mike Carr

Good morning everybody. It's a real honor to be here among DevOps fellow travelers.

I'm Mike Carr, Vanguard Chief Technology Officer, and I'll try to talk about three things. One — I'll tell you a little bit about Vanguard, probably not too much, but a little bit about Vanguard. To get a little meta on you, Gene mentioned, we want to share some highlights from our technology conference — at his technology conference. And then talk a little bit about our modernization journey, and sort of how it gets entwined with our mission.

So first — Vanguard is a very, very mission-oriented company. Here's our core purpose: "to take a stand for all investors, to treat them fairly, and to give them the best chance for investment success." It's easy to write that, it's really hard to do that well.

Let me click forward here. Here is Vanguard by the numbers. We have roughly 50 million customers — investors. Collectively, they've entrusted about $9.5 trillion in assets, in their money, their assets, with us. We serve them with roughly 20,000 employees. We call them crew members. We are primarily a US-based company, but we have 16 global offices and growing. Our footprint is growing internationally. And between crew and contractors, we have about — within IT — about 10,000 people supporting all the technology at Vanguard.

And I mentioned I'm the Chief Technology Officer. It's a bit of an amorphous title. It means different things at different companies. I'll share a little bit about what it means at Vanguard. I report to our Chief Information Officer, who reports to our CEO. And my team — we have really two broad missions. One: to help our awesome developers be even more awesome. We have about 800 or so digital product teams. So we look to figure out: what's the right combination of modern infrastructure, modern methodology, modern tooling, and modern organizational principles to allow them to go faster, to create better results for our customers and our crew, and to do it more safely? Really the whole DevOps credo.

I forgot to mention, though — there's one other function within the Chief Technology Office. We are responsible for hosting our annual technology conference, which we call Unlimited. And what you're seeing here is our Chief Information Officer, Nitin Tandon, kicking off this year's conference. This was our fourth annual — we might have skipped a year during COVID — conference.

This year, we had — over the course of three days — we had about 8,500 of our 20,000 crew participate in one or more sessions. And it was interesting. It was roughly a 50/50 split — our audience between IT professionals and business partners — which was really gratifying, to know that they cared enough to spend time with us, to talk to us and to listen to us.

So what do we do at our technology conference? We bring IT crew up to the stage to share with their peers what they're working on, why they're working on that, how they're doing it, and their results. And it's really great for IT crew to be able to share stories with each other. We bring IT senior leaders to the stage — like me and my peers and my boss — to talk about Vanguard's technology strategy, how important technology is to the success of Vanguard's mission.

We bring senior business leaders to the stage — our CEO and all of the members of his team — to talk about how technology is enabling them to execute on their strategy and even to imagine new opportunities with customers.

And then of course, we bring in external speakers. That could be CEOs of companies we admire. This year we had the CEO of Adobe, for instance. But also industry experts like Gene, to talk about what's going on in the broader world, bring that to us and inspire us to get even better at what we do.

We had been working — Vanguard crew had been working with Gene on conferences for years. We finally decided, "why hadn't we already invited him?", but we invited him this year. And it's probably no surprise to people who know Gene that he said, "yeah, I'd love to speak, but what I would really love to do is be there for all three days of your conference." Like, okay. So here's Gene talking at our conference. Here is Gene kind of the rest of those three days, just a kid in a candy store — feverishly taking notes, running up to presenters as soon as their presentations were over to interrogate them, to learn more from them. I think he learned more from them than they knew themselves. I don't know how he did that. But it was just fun, infectious, to see how much joy he took out of our conference.

So after the conference was over, we talked a little bit about, "hey, what next?" And he said, "I've got a wishlist. I would love to have the following people come to my conference in August in Las Vegas and share with this audience what they shared with our technology conference audience." So that's what you'll see over the course of the next few days — multiple presenters. And I promise you, they will be better than me.

But since I was one of the presenters at our conference, I will kick things off by talking a little bit about what I did. So I hosted a panel discussion among members of our CEO's team. The theme of that panel discussion was: how were they using emerging technologies to further their strategies?

For instance, we had Greg Davis, who is our President and Chief Investment Officer — the other CIO — talking about how his team, his portfolio managers, and the financial operations folks, are using AI to streamline the non-value-add parts of this really valuable activity. He mentioned that, hey, with AI, they're able to do things that used to take hours and do those things in either seconds or minutes. And what's impressive about that is they're doing that inside really complex portfolios that require a really complex process wrapped around them. Very inspiring.

Amma Boateng, who leads our Financial Advisor Services business, also talked about using AI to further her strategy. What you have to appreciate about Amma's business is that it's a sales organization. They are selling to advisors, almost like a wholesaling organization. And their customers — advisors and advisor organizations — are ridiculously busy. And there are plenty of companies like Vanguard trying to get some time with the decision makers of those companies. So it's very hard to get time with them, and it's very hard to make that time matter. So Amma's team is using AI — they call their Signals program — to find opportunities. When we get signals from advisors that they're interested in something, to turn that into a meaningful interaction with those advisors. The salespeople love it, and they're much more effective. They get more time with advisors because of these signals, and that time is better spent. We feel like the advisors are much more grateful, much more satisfied with the time that they're willing to spend with us.

Matt Benchener also participated in this panel discussion. He runs our Personal Investor division — think vanguard.com. If you have an account on vanguard.com, he runs that division. He talked about modernization, and how end-to-end modernization — from the CX all the way down to the data — is giving him a pace advantage. The ability to make changes quickly, to pivot, to fine-tune, converge on better solutions for customers. And that's really important because we don't want to have a splashy CX. We want to have an effective CX, and a CX that furthers our mission, that makes it easier for investors to achieve investment success.

So he talked a lot about how this modernization journey — and he had the biggest appetite for the modernization effort — how it's making a difference for him, a competitive advantage. And not that we want to compete to win, but it is a very competitive space, and we have to at least have table stakes. But we really want to differentiate in the ability for CX to help investors become better investors.

So, a little bit about our investors. Most of them are self-directed. Vanguard offers great advisory services if you're interested. Hey, it's a really good service, I'm a customer. But most of our investors are self-directed, meaning they're making the choices.

And 99% of customer interactions with Vanguard are through one of our digital channels — our website or mobile app, whatever. 99%. So if we're going to make a difference with our customers, we have to make it in our digital channels.

So maybe let me loop back around a little bit on our mission. To take a stand for all investors, to treat them fairly, and give them the best chance for investment success.

Investing — there are many investors in the audience. Investing is hard. It's really important, so the stakes are high. It's important if you want to have a comfortable retirement, if you want to be able to send your children to college and have them graduate debt-free, if you want to buy a house — whatever it is your goals are, it's really important. And it's going to be hard to do that if you just plunk your money into a bank account. So you probably have to invest. So it's really important, but it's really hard.

There's so much noise out there — so many different people trying to sell you so many different products with interesting claims. So there's a lot of noise out there. And the stakes are high — it's important, the stakes are high, meaning you reasonably worry about losing money. You see market fluctuations that can be stomach-turning. So investing tends to be governed by greed and fear. The classic recipe for investment success is "buy low, sell high." Greed makes you want to buy high. Fear makes you want to sell low. So the odds are kind of stacked against you.

And, oh, by the way, most people who have to do this really important, really hard thing have to do it in their spare time. So good luck with that. But that's what we mean by helping people achieve investment success: take this really hard thing, this really important thing, and make it possible for people to do it well in their spare time. And the reality is, most of the activity that people engage in is probably counterproductive. So helping them realize that they should get closer to the ideal of "buy and hold" really helps them.

What's interesting is — if we have to do this through our digital channels — creating digital channels is not that hard. Creating really good digital channels is excruciatingly hard. Especially if you're trying to do something — subtly nudge people towards better behaviors in the face of strong emotions. That is not a simple thing to do with CX.

In fact, what we've learned is, it is essentially a complex endeavor. You can't know the right answer in advance. You have to face the challenge with humility and say to yourselves, "we don't know yet what the answer is, but we can test and learn our way towards progressively better client experiences." And you can see some of the results here.

And what we felt like we needed to do — especially to get to digital channels that were a strong influence towards people making better investment decisions for themselves — we needed to help our IT teams and our business partners iterate quickly, test-and-learn iterations, iterate quickly, iterate cheaply, iterate safely, and converge towards progressively better experiences for our customers.

So how did we go about that? Probably a recipe that's familiar to all of you. We moved from — or our critical assets from — our own data centers to public cloud. We went from mostly gigantic monolithic applications to microservices. We were still on a journey from waterfall through various stages of agile to what we hope is something approaching true agile. And we reorganized — five to 10 years ago, everybody was organized into project teams. Ephemeral project teams that would come together for some purpose and then disband. And then they would reform into different groups, and we'd go through the forming, storming, norming, performing loop over and over again. So we pivoted from project teams to enduring product teams, where we could not only avoid the storming-norming recurring loop, but that we could build that really valuable subject matter expertise.

So you fast-forward — we launched a major modernization effort beginning in 2020. You fast-forward five years: we have seen a fivefold increase in the pace of technology change. Fivefold increase. So dramatically different. And probably, a lot of you know that change can be the enemy of stability. But we've seen a 75% reduction in the frequency of occurrence of major incidents. So so far, we've sort of had our cake and eaten it too.

More importantly, we are seeing our customers tell us, through customer satisfaction scores, that they like our digital channels better than they ever have in the past. We're not going to claim that we have the best in the world — I think this slide might claim that, but we're not going to claim that. But for our purposes, to try to have CX do what we want it to do, we feel like we're doing a good job, and we're getting better.

And we have had accolades from J.D. Power and others to say that, for the type of service we're trying to offer, we're among the best in the world. So that is very, very gratifying.

And we're starting to measure this impact that our digital channels have on people's behavior. And we're measuring it in dollars — what we believe to be the benefit that accrues to investors because of specific actions that they took in response to stimuli in our digital channels. And it's a growing number. So we feel like we can measure this, and it's having an impact, and it's a good impact towards our mission of giving them their best chance for investment success.

But probably also, at the same panel discussion where we were talking about emerging technology — towards the tail end, Matt Benchener mentioned this little nugget that stuck with me: "We had teams iterating and pivoting into oblivion for no purpose. Autonomy and empowerment without clarity and accountability is chaos."

And that's tricky, because we've worked very hard to give teams autonomy. But it can't be imbalanced. There will probably be forever this tension between autonomy and alignment. And we want to strike that balance.

This five-year journey we've been on — we resolved a lot of the challenges that we had with the pace of change, the ability to get things out quickly, aligning how we do work with the nature of the work we're doing, the uncertainty involved. But probably like a lot of you, we sailed from one ocean to another into somewhat uncharted territory. We're seeing that we can give people autonomy, and they can do interesting things with it. But we're also seeing that they could iterate — not to complete oblivion — but it's hard to strike that balance properly.

So we also have, with microservices — and maybe many of you have this as well — we're starting to have a bit of a "moving parts" problem. There are a lot more moving parts. It's hard for operations folks to properly understand the totality. We have fewer incidents than we've ever had before, but when we have them, you basically have to get half the company on the call to understand the call chain. So we really traded one set of challenges for another set of challenges. No regrets — but it is new territory for us, certainly, because we've never had the circumstances that would even allow us to experience this new set of challenges. And it's exciting to experience them. It's a little scary.

Which brings me to my ask from all of you. And it's going to be very similar to the asks from others on the stage. Some of you are further along in your journeys than we are. If you've led one of those journeys, my team and I would love to learn from you. How did you attack these new tensions, these new challenges?

If you're earlier on in the journey, we would be happy — as part of this broader DevOps community — to share what we've learned along the way. I've never had one of those conversations that wasn't great and didn't learn something.

So I really appreciate the fact that you heard me out, and you will attend to the sessions from the other Vanguard folks. And I really appreciate if you have a chance to reach out and share your stories with us. Thank you very much.