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Ron Sege of Virtana: “Keep improving to stay relevant”

Be humble and realize what you don’t know- this fosters reflection and reveals new insights. Instill trust from staff, customers, and partners- companies only grow by keeping customers and adding new ones. This applies to recruiting and retaining talent too. Keep improving to stay relevant- Markets move fast and new competition enters every day. Always take […]

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Be humble and realize what you don’t know- this fosters reflection and reveals new insights.

Instill trust from staff, customers, and partners- companies only grow by keeping customers and adding new ones. This applies to recruiting and retaining talent too.

Keep improving to stay relevant- Markets move fast and new competition enters every day. Always take the long view to future proof a company.


As part of my series about the “How To Take Your Company From Good To Great”, I had the pleasure of interviewing Ron Sege of Virtana.

Ron is a seasoned technology leader, currently serving as the Executive Chairman and recently serving as the acting CEO at Virtana, the leading hybrid cloud optimization platform for digital transformation. It’s AI-based technology and services give innovative organizations the clarity they need to take control of their infrastructure, plan, transform and optimize their cloud operations, and deliver a superior brand experience. Ron has been instrumental in the transformation of two companies and is guiding Virtana in its global scale up to deliver cloud-based control in a hybrid cloud environment. All three transformations occurred during times when customer needs were evolving and markets were changing rapidly, necessitating significant changes in strategy.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started? (original)

I have always been fascinated with new ideas and ways to do things. This has shaped my longevity in technology as I have been involved with public and private companies all around the globe. My undergraduate degree was in Economics and I never would have believed decades ago how profoundly technology would impact how all of us live, work, and play. It has ignited a passion for me to become involved in investing for the most promising technologies to come to market.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

I had to taste a little bit of ‘humble’ pie just after graduating from Harvard Business School. See the next response for details on my hard-won lesson that learning how to manage people rather than processes is the most important thing to do as an effective business leader.During those first couple of years, I learned to be just one of the crew, first pulling cable, then in sales hanging out with the customer. That’s where you develop genuine relationships. I think it’s critical. I believe in the reverse pyramid organizational theory — the front line is not there to serve upper management; upper management is there to serve the front line.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

I went to business school; certain I was an admissions mistake. After all, I was just some guy from the country — or what was then the country — in the Bay Area. After business school, I came back to the Bay Area, interviewed for jobs and took one at ROLM Corporation, which was basically the inventor of the computerized commercial telephone system.

The guy who hired me, also a Harvard MBA, said, “Hey, we like hiring MBAs from Harvard and Stanford. Most of them go into marketing and finance and you can do that and be just like everyone else. Or I would actually like to experiment by putting an MBA on our customer services team because it’s a key part of the company.”

So, being a sporting fellow, I agreed. I showed up my first Monday morning and reported to my immediate boss. He’s a guy supervising crews installing and servicing phone systems, many ex-union guys. He said, “The big boss told me I have to hire you and make you a supervisor of one of our crews.” My immediate boss told me he didn’t like the idea, but he would do it. He introduced me to my crew of ten guys.

So, there I was — a fresh MBA graduate with little hands-on management experience now in charge of a group of front-line workers who had years of on-the-job experience that I didn’t have. A week after I’d been there, I showed up on Monday morning at 7am to face a cold, hard disconnect. None of my crew members had showed up.

By 9am, I got a call from my boss. “Come into my office right now.” I go into the office and he said, “Do you notice that none of your crew is here? They don’t want to work for you anymore. I don’t know what they teach you at Harvard Business School, but obviously they don’t teach you how to manage people.”

I was living the precursor of the NY Times best seller by the late, super-agent Mark McCormack, What They Don’t Teach You at Harvard Business School.

My boss gave me my first big lesson on how to lead people. He told me it’s not all about efficiency and I’ve got to be part of the team: bring them snacks in the morning, ride around and actually help them with the installations, go to class and learn how to do what they are doing. So, I did all that. That was my introduction to the realities of business.

Ok thank you for all that. Now let’s shift to the main focus of this interview. The title of this series is “How to take your company from good to great”. Let’s start with defining our terms. How would you define a “good” company, what does that look like? How would you define a “great” company, what does that look like?

A good company provides a valuable product or service and has a decent balance sheet and reputation. A great company reimagines a product or service or creates an entirely new category. It brings such superior value that customers can’t imagine life without it.

A company that’s great, frankly, has a culture that prizes always asking questions that lead to insights about the customer’s fundamental business objectives and challenges. Too many companies in Silicon Valley have a culture that revolves around building widgets. They focus on widgets that are faster, cheaper, better…that leads to good. But once the technology runs its course, chances are, the company withers away and dies.

Whereas if you’re constantly thinking about how to apply your skills and your technical capabilities to solving customers’ evolving business problems, that’s an important thing that creates a great company.

Great companies are constantly evolving, constantly reinventing themselves…we’re doing that at Virtana. We are deeply engaged with customers in understanding their business needs, which informs their technology and product needs.

Based on your experience and success, what are the five most important things one should know in order to lead a company from Good to Great? Please share a story or an example for each.

  1. Be humble and realize what you don’t know- this fosters reflection and reveals new insights
  2. Instill trust from staff, customers, and partners- companies only grow by keeping customers and adding new ones. This applies to recruiting and retaining talent too.
  3. Understand the friction and pain points- what is the biggest business or organizational challenge or hurdle that customers need to overcome? Listen — you have two ears and one mouth, use them in that proportion.
  4. Solve a big problem- Focus on the most important friction points and smooth them out
  5. Keep improving to stay relevant- Markets move fast and new competition enters every day. Always take the long view to future proof a company.

Extensive research suggests that “purpose driven businesses” are more successful in many areas. Can you help articulate for our readers a few reasons why a business should consider becoming a purpose driven business, or consider having a social impact angle?

A core human attribute is the search and need for purpose. Employees, customers and investors prefer to work for or support companies that are aligned with their core values and life goals. Savvy employers understand this and showcase their mission and values to demonstrate that the fit is aligned. With so many social causes that matter- homelessness, lack of access to technology or healthcare, it is important to support the causes that resonate with your particular industry and company.

What would you advise to a business leader who initially went through years of successive growth, but has now reached a standstill? From your experience do you have any general advice about how to boost growth and “restart their engines”?

Companies are no different than individuals- we all evolve and change at different rates. Eventually any company that has been in business long enough will face the challenge of change. Scheduled annual brainstorms and strategies with staff or industry analysts can uncover new ideas or future directions. However, the most effective strategy is to have a close ear to the ground with customers and partners for what works, what doesn’t, and who may be doing things better. And don’t be afraid of change — it can be exhilarating and energizing.

Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?

The stock market crash of 2008, the dot.com bubble, and the current COVID crisis were certainly turbulent. Businesses in all of these crises had to learn how to do things in a new way, or to reinvent themselves completely, find new partners, or enter new geographic markets. There is no one-size-fits-all advice that can navigate a crisis except keep calm, communicate, and keep an open mind for new strategies. Stay focused and agile to bend and bounce back for difficult times.

While our high-fidelity performance monitoring is great for customers, as a company, we were flirting with performing at good. We found ourselves in a slowing market, and as a consequence, we weren’t growing at the level that we aspired to.

We were monitoring data centers, but our customers are not accelerating their investments in data centers as rapidly as they are choosing to leverage the cloud. We have great customers and partners, great net-promoter scores, near zero churn in a market that’s maturing. The fast growth market is cloud.

At Virtana, when the pandemic hit, our core market shrunk. Our topline was at risk to shrink as well. Luckily, we were ahead of it. Before that downturn, we were restructuring — cutting costs and moving to a fast-growing market that could benefit from our core competencies and assets. This is a difficult but necessary thing to do. We chose to do it critically, strategically, and as deeply as we could. Again, guided by our customers’ business needs.

Too many companies take an incremental approach. They restructure and cut five or ten percent. Then, six months later they realize that wasn’t enough restructuring, and cut another small percent. It ends up being death by a thousand cuts.

It destroys the culture because team members end up looking over their shoulder wondering when’s the next cut. So, in these kinds of downturns, like the downturn in 2008 or 2000, I recommend companies do as much zero-based lifeboat analysis as possible.

Cut once, and cut as severely as possible, without cutting into your seed corn and without sacrificing your commitments to your customers and partners. This is best to protect the culture and preserve a trusting relationship between management and employees.

And, yes, on the one hand it is tough to do all this during a pandemic, on the other, a crisis can be the catalyst for impactful change. “Don’t let a good crisis go to waste” as they say.

In your experience, which aspect of running a company tends to be most underestimated? Can you explain or give an example?

Front line experience at a company is underestimated. As I shared with my first job out of grad school, I learned more about how companies create value for customers by being right there on the front line, which is, in the end, where it all happens. Because I started in service, and then I went onto the firing line of sales, I learned ten times as much as any of the business graduates who went into marketing or finance. That really informed the rest of my career.

As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies a business should use to increase conversion rates?

Sales conversion rates are dependent on trust, timing and value. Is your sales team reaching out to customers when they are in the decision-making phase? Do they understand the customer’s business and what problems they need to solve? How does your company do what the customer needs better than any other option? All this requires deep, active listening. More questions, less speeches.

Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that a business can earn a reputation as a trusted and beloved brand?

I think one of the hardest things to acquire in business is lasting, trusted customer relationships. At Virtana, we’ve developed deep, long-lasting relationships with more than 250 of the Global 2000 companies over a number of years. We have a net-promoter score of over 80, which is almost perfect, and a customer churn rate of close to zero. That coupled with the fact that we excel at high-fidelity performance monitoring that can help them do business better. We also help them leverage their use of cloud solutions to benefit their businesses at the right cost, performance, and capacity. We are core to their business success, and we deliver year after year.

Great customer service and great customer experience are essential to build a beloved brand and essential to be successful in general. In your experience what are a few of the most important things a business leader should know in order to create a Wow! Customer Experience?

A great company delivering a ‘Wow” has solved a previously unsolvable issue or saved money or delivered new efficiencies that exceed customer expectations. At Virtana, we just launched our new platform for migrating and managing the complexities of hybrid and multi-cloud environments. Many companies are in the early stages of migrating to the public cloud because they are fearful of unexpected cost and performance issues. We have harnessed our 15 plus years of cloud monitoring experience with AIOps to provide customers and partners with the confidence to ‘Know before they go” to get the migration right and manage it effectively. It is tremendously gratifying for companies like AstraZeneca to share their experience of a 20% cost savings with Virtana for a ‘Wow’ factor that matters during this crisis.

What are your thoughts about how a company should be engaged on Social Media? For example, the advisory firm EisnerAmper conducted 6 yearly surveys of United States corporate boards, and directors reported that one of their most pressing concerns was reputational risk as a result of social media. Do you share this concern? We’d love to hear your thoughts about this.

I am no expert on social media but understand that companies need a favorable social presence to shape corporate reputation. The real challenge is to balance messages that fit a business audience that are not overly promotional but engage the relevant community with a conversation that is meaningful. Posting and tweeting for the sake of activity rather than relevance is always a mistake.

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

Startups fail at an alarming rate because many founders only have a short-term view of making a splash with a shiny new thing and capturing investors and attention. Once the first round of funding is gone, it is tough to make the case for more investors if the path to profitability and sustainability is not front and center.

In the time I’ve been in venture, the last couple of years, I’ve seen many founders in Silicon Valley make the mistake of way-overestimating the power of their technology, and way-underestimating the importance of the go-to market, which is where the value of the product or service is created for and delivered to the customer.

The critical questions for leaders are, “Who are you going to sell to? What is the positioning? How are you going to explain it to the average 13-year-old? How are you going to get a C-level person interested in thirty seconds?” Often CEOs and founders have a lot of trouble with that. In some sense they are too smart, and too close to their technologies.

When CEOs start to say vague things like “we improve customer service,” or even “dramatically improve customer service.” I ask, “OK, what do you mean by “dramatically?’ and, ‘how does it make a big difference to the customer’s business?’ You’ve got to explain it in plain English. You’ve got to substantiate and quantify claims — and make it relevant to the listening CEO or investor. And it can’t be 20% better to punch through, it needs to be 5x, 10x.

I learned there are two kinds of presentations: lean in and lean back. The minute you start talking to an audience of one, or thousands, one of the two presentation types is established. With lean in, the audience leans forward, and you’ve got their attention. With lean back, they put their cell phones on their lap underneath the table and continue to type — you’ve lost them. To get them to lean in you must be relevant in a fundamental way to their needs, issues and goals.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

We all stand on the shoulders of those who came before us. For me I have stood on the shoulders of many people great and small. For the challenge at Virtana, as one mentor of mine once told me, “If you want to lead a parade, find one that’s marching down the street and jump in front of it.” We’re pivoting the company to a parade that’s marching down the street, which is hybrid, multi-cloud planning, and optimization.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

First, spend a lot of time with customers and with salespeople. I think I have five million actual airline miles to my name in my career. I spend almost half of my time just hanging around with customers and partners and salespeople in unstructured situations. This is where you learn the most, develop relationships and regain your energy.

Pre-pandemic it was having late night dinners, or after work at a bar. It is really getting to know these folks. That’s when they open up and are candid about issues and opportunities. You get to know them as people, and they drop the pretense. It opens the door for open feedback. That’s when you get the best insights into what your company is doing well and what you could be doing better. Today we are doing as much of that as possible through Zoom.

Thank you for all of that. We are nearly done. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I recently became involved with the Montalvo Arts Center. It is a donor-supported non-profit organization dedicated to the arts. Montalvo Montalvo’s mission is to engage people in the creative process, acting as a catalyst for exploring the arts, unleashing creativity, and advancing different cultural and cross-cultural perspectives. In my view, the value of the arts is often under-rated, especially during difficult financial times and this has a very negative impact on our society.

On a professional front for a movement- I stand behind a movement to optimize the cloud to help develop, distribute, and administer a vaccine for COVID-19. It is something we think about.

How can our readers further follow you online?

LinkedIn

This was very inspiring. Thank you so much for the time you spent with this!


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