Chief technology officer fiasco a spectacular own goal

Friday, 14 September 2018

The Government will pay entrepreneur Derek Handley $107,500 in compensation after telling him he would become the country's first chief technology officer and then withdrawing the offer.

So who is Derek Handley?

Handley was born in Hong Kong, but moved to New Zealand and studied at Victoria University in Wellington.

He went on to become a marketing technology entrepreneur, winning a number of awards before heading off to New York.

* Clare Curran's resignation provides opportunity to change course

* Time for government to grow up on CTO idea****

What have been his high and lows in business?

Handley achieved some prominence in 2010 when he sold mobile marketing consultancy The Hyperfactory – a business he founded in 2001 with his brother Geoffrey – to a United States buyer for at least $10m.

He has won a number of awards, including as 2009 EY Young Entrepreneur of the Year.

But he also founded and is a former chairman of Snakk Media, which is listed on the junior NXT exchange with a market capitalisation of just $813,000.

In 2013, Snakk raised $6.5m from 1200 investors who would now be down about 98 per cent on their investments.

Although Handley left Snakk's board in 2015, before the worst of that downturn, it is hard to be closely associated with a venture that lost people that much money that quickly without some people holding that against you.

Derek Handley said he was still offering to take up the CTO job early this week, but 'understood' the Government's decision to instead rethink the process.

Why did the Government offer him the job of CTO and then renege on the job offer?

According to Government Digital Services Minister Megan Woods, it has decided to 'step back' have a good look at the role, seeing how it fits in with other work the Government is doing.

But there is more to it?

The Government had two attempts to recruit a chief technology officer, the first ending in failure in January when none of 60 applicants were deemed right for the job.

Former communications minister Clare Curran re-scope the role before re-advertising the vacancy in May.

So the 'rethink' does indeed look rather late.

'Former minister?'

Clare Curran said she had 'forgotten' about her meeting with Derek Handley in February when answering a written question on her appointments the following month, and took 'full responsibility for not following proper process'.

Yes. Curran stood down from Cabinet and then as minister after admitting in August that she arranged through gmail to meet with Handley to discuss the CTO position, at his request, in February.

She 'omitted' to mentioned that she had that late night meeting in the Beehive when listing her appointments for the month in response to a parliamentary question, which was the precise reason she gave for leaving the Cabinet.

Later, she stood down as minister after crumbling under pressure explaining why she had been using a personal gmail account for Government business.

Was it OK for her to meet with Handley? Wasn't she interfering in a public service appointment?

Glad you asked that.

The Ministry of Business, Innovation and Employment (MBIE) managed the two application processes for the CTO job.

Government Digital Services Minister Megan Woods said the process that saw Derek Handley offered the CTO job was 'suitably robust' and the Government's decision to retract his appointment 'in no way reflects on him as a candidate'.

But the CTO role was created as a 'one person ministerial advisory group'.

A 'one person group' sounds silly, but the significance is that it was always going to be ministers who appointed the successful CTO candidate, not officials.

The CTO would have reported directly to Curran and Prime Minister Jacinda Ardern.

Still, you can imagine other candidates who applied for the role through MBIE might be cheesed off that a fellow candidate had gone straight to the top.

Has the Government accepted there was wrongdoing in the appointment process?

Actually, no. Woods said a State Services Commission review showed that the process that resulted in Handley being offered the job was suitably robust.

So why did the Government not appoint him?

Derek Handley pictured in 2005 while the mobile marketing consultancy he founded, The Hyperfactory, was on the rise.

It's 'rethinking the role', remember.

But in August, soon after Curran revealed she had met with Handley it also emerged that he was the Government's preferred candidate.

A number of people then came out of the woodwork questioning Handley's credentials for the role.

What was the nub of their concerns?

Basically that Handley was a bit of a 'salesman' more than a technology expert and that some of his more recent ventures had not been successful.

Is that fair?

It is pretty important perhaps to bear in mind that while the CTO appointment process was plunged into hiatus, Handley wasn't unable to respond to the attacks being made on him.

Much of Handley's experience has been in the field of marketing technology, so – to be fair – you'd also expect him to talk a good talk.

And arguably, as it was designed, the CTO role was a bit of a cheerleading exercise.

Now Handley is able to comment, he has attributed some of the criticisms to the fact he was 'not steeped in the local IT community', but argued his broad background could have been of unique service to New Zealand.

Handley has taken the moral high ground by announcing he will donate the compensation he is receiving from the Government (three months' salary plus costs) to a fund to tackle digital inequality.

Did he have to take the money?

Handley said that in order to terminate the contract the Government was required to pay out the $100,000 'as per the contract'.

What happens now?

Woods has asked officials to review the CTO role and provide advice on the best ways to 'drive a forward-looking digital agenda for New Zealand'.

But already industry body NZTech seems to be questioning whether it has done enough damage.

'A right royal mess-up' is how its chief executive Graeme Muller summed it up.

Woods said the CTO role in its current form overlapped with the Research, Science and Innovation portfolio and the Broadcasting, Communications and Digital Media portfolio, as well as other roles like the government chief digital officer.

So the Government appears to be preparing for a very long kick into touch.

Hang on – you said the Government also has a chief digital officer?

Well, no, now it only has an 'acting one', but it did.

Longstanding former chief digital officer Colin MacDonald – who some reckoned might have been a good choice for the CTO job if the Government was looking for an dispassionate expert rather a cheerleader – quit the public service last month.

It also has a government chief technology officer in Tim Occleshaw, who is also highly experienced.

But those two roles are true public service positions, while the national CTO role the Government was envisaging was a bit different.

Xero founder Rod Drury proposed the CTO role seemingly with the idea it would be a bit of trojan horse for businesses that interface with the public sector, shaking up sleepy bureaucracies.

Other people had other ideas of what the job would involve, with Curran most focused perhaps on addressing digital divides and inequalities.

So now we are back at 'square one'?

No CTO, a compensation pay-out, a highly experienced chief digital officer who has left the public service, and Curran's portfolio's divided up between two ministers, Woods and Kris Faafoi.

It's maybe more like square 'minus four'.