In this CXO Talk interview, Alan Trefler, CEO of enterprise vendor, Pegasystems, discusses digital business and the relationship between IT and business functions. This episode presents lessons on innovation and working with enterprise startups as a part of corporate technology and business strategy. (Below is a transcript of the broadcast.)
Build for Change - The Industrial Revolution of Software
Presented by: Alan Trefler Founder and Chief Executive Officer of Pegasystems
Michael: (00:01) You’re watching episode number 104 of CXO-Talk and today we’re going to be talking about enterprise software and empowered -- I was going to say computers, but I meant consumers and digital transformation. I’m Michael Krigsman and my co-host is Vala Afshar. Hey Vala, how are you?
Vala: (00:24) Michael I’m doing great how are you?
Michael: (00:28) Excellent. Vala, we’re here today with Alan trifler, who is the CEO of Pegasystems.
Vala: (00:35) I’m super excited to learn from Alan. Alan, thank you very much for joining our show. Could you tell us a little about your background and also a little bit about the company Pegasystems.
Alan: (00:45) Sure, well my background is actually a traditional computer science going back a long ways. I started as an English major, but in my freshman year I realized I wasn’t going to make a living from that. I’ve worked in a variety of capacities since then, and when the genesis of Pega came when I as working as a systems integrator, trying to help large companies and really trying to figure out how to improve service and get better effectiveness out of the whole business in IT dialog.
(01:18) And as I was looking at that problem in the 80’s I thought to myself, boy, these computers are getting really fast. Why are we still sort of doing the programming and suffering the service dislocations like they might have done in the 70’s.
(01:34) And from that came this idea and inspiration that it should be possible to enable organizations to do a better job of engaging with their clients, by making it possible in business and in IT to be able to interact differently. To be able to allow the business people to really drive the show much much more.
(01:54) And that really was the synthesis of the idea that ultimately led to Pegasystems and to where we are now.
Michael: (02:01) And so this was something that you were thinking about 30 years ago which is kind of amazing because of the issue of the relationship between business and IT and connection with the customer is as contemporary as any issue in enterprise software today.
Alan: (02:16) Well that said, it might have been a little advanced, and now it’s so mainstream, yet you see so few organizations being able to do a really good job of connecting with their clients across the entire lifecycle, or doing a good job of having business and IT work effectively together.
(02:37) And by changing the fundamental way that business and IT work together, we think you can bring a culture of responsiveness and customer engagement, changing the very way the company works.
Vala: (02:46) So Pegasystems is known globally as a BPM platform, and yet you’re focusing the company towards customer relationship management and other strategic applications. We have an audience that include venture capitalist, tech analysts, CXO’s but we also have folks that are trying to learn about business and enterprise software. Can you talk in simple terms about BPM.
Alan: (03:16) Yeah, I can try, but let me tell you that before the pretty acronym BPM was used, the ugly TLA acronym was in use. And before that, the space originally was sort of described by another ugly world, workflow.
(03:32) People thought all they needed to do was to manage the workflow of customer in the business and inside the business. We always thought that that was really horrible, because you don’t really want to flow the work around. You want to do it.
(03:46) We never got the word ‘do’ to stick, and likewise, when we’re in the BPM space, we really see what we do is much more than just managing business processes, but this is about bringing together processes, case management, analytics, customer interaction, and self-service by creating a model of how the institution wants to deal with its customers. How it wants responsiveness to work, and from that model our system rights the code.
(04:16) Now, the right way to position this is customer in, which is why we wholeheartedly embrace the concept of customer relationship management as being actually the most effective description of the ultimate value we think we are bringing to the organisation.
Michael: (04:34) So you’ve been shifting the company a way from BPM or is that not quite right and you’re really building upon BPM in order to emphasize that interaction with the customer, is that correct as I understand it?
Alan: (04:49) So I think that having core elements of BPM technology, and by the way if you look at both Gartner and Forrester, you’ll see that we are rated staggeringly highly in terms of really leading the BPM space. But we think if you are going to serve the customer and go beyond the old school CRM to what it needs to evolve to, you really need to bring together a whole host of customer orientated concepts, that build upon concepts like BPM but also bring in predictive and adaptive analytics.
(05:26) Also, bring in case management to manage the customer across channels from front to back, and bring in self-service and dynamic responsiveness to the whole user experience that means you don’t have to write custom systems for your mobile phones and for your websites, but you are able to have one brain across the mobile.
(05:44)We think that the customer moniker, the customer orientated description is the right umbrella and we are in a unique position with the technology that really unifies all these elements and makes it much much easier for organizations to respond to clients.
Vala: (06:00) Where do you see your primary role of the CEO of Pega in terms of shepherding this transformation and creating real compelling value to your customers.
Alan: (06:13) Well, as the CEO I know we were about a $600 million company last year with over 3,000 staff. So we’ve now got the massive muscle to do meaningful things. The core element to my role is to make sure that the team is working together to set the right strategy, that we are pointed in the right direction. We are thinking a couple of years ahead at all times, not just worrying about what happens this year and next, and that we are really focused – not just on where the puck is, as they say in hockey, but to where it’s going to go. So that strategic element I think is critical.
(06:46) But ultimately, you know at any scale let alone our scale, having a highly capable and committed team that really wants to do a good job for our clients is I think central to the sort of talent management aspects of the job.
(07:01) And I think that the keeper of the culture is the other thing CEOs need to worry about, and our culture here is very much one where it’s open to challenging our assumptions, and making sure that people feel comfortable questioning any decisions. My decision, up to the point to where we decide where its final, at which point we’ve all got to hustle together and make sure that it happens.
(07:22) So I think those are the key elements and I think it’s strategy, it’s team and it’s culture that are not just for me but I think any good CEO. That’s what they worry about.
Michael: (07:32) Alan, how is this changed. Obviously the company has grown over the course of 30 years, but you’ve founded the company and so the role has had to be adapted along with the company. So how has the role changed over time?
Alan: (07:49) Well the role changes at predictable stages in the growth of the company. When you’re the first three and then eight folks operating in a walk up near near Cambridge, Mass., your prime goal is survival. I mean it’s just can we really put together a vision that is both expansive but practical so somebody will actually buy it. We bootstrapped the company, which I think made the early times a bit tougher, but now it means that we weren’t forced to sell out or chopped into bits like a lot of the VC companies are.
(08:26) So, I would describe the early days as a lot of direct heavy lifting. Today, I’m responsible for remarkably little directly in terms of what comes out of the doors. It’s really the team who is thinking about it, and my job today is to have moved very much from doing lots of stuff myself. Although quite frankly, it’s been many decades since anybody has let me write a line of computer code for any clients, and they don’t have to worry, I was kicked out of that business a long time ago.
(08:57) Now is about making sure that we are challenging the right assumptions and that we are digging in to the right problems and the right opportunities.
(09:06) So, to do that involves dealing with clients, which I love to do. It involves doing deep dives in architecture. It involves making sure that I am keeping current with the technology and that we are actually challenging the right assumptions of what we have done historically and also making sure that we are building an engine that is capable of servicing what is now a large client base that does some pretty amazing things for world-class brands, like American Express who we are privileged to work with, and United Health, the largest healthcare provider of the U.S. We deal with organizations that depend on us and we need to make sure that we are both visionary and substantive to how we deliver.
Vala: (09:51) We had in one of our previous shows, John Haggle who is the co-chair of the Deloitte think tank and he talked about the delicious paradox of a digital business disruption, and you know studies that talk about original companies on the SMP fortune 500, average age used to be 75 in the 60s, and today it’s approaching 10 years. And every two weeks a company falls off the SMP 500 and a new one joins. So, as you sit there a CEO of a great and fantastic and successful company, what are some of the challenges that you think about in terms of you not managing what Hagle referred to as delicious paradox where companies can grow and companies can die depending on how quickly they adapt.
Alan: (10:40) Well, you know I see that paradox with sort of two sides to it. On one hand, it’s a wonderful opportunity for us because if you think about what we’re trying to do, we are trying to help meaningful companies engage with their clients and today that’s all about [diligence], and there is so much confusion, so many mistakes being made in the way that companies are doing it.
(11:07) We see a lot of opportunity to be able to try to be thought leaders in this space and show firms about the things to avoid and the things to do.
(11:16) The other side of the page though has more to do with Pega, and how despite the fact that we have got a great customer list, and we are thrilled with how our products are rated and how they perform. We need to be ferocious of avoiding complacency.
(11:30) There are lots and lots of changes out there that we need to make sure we are responding to. Some of them are technology changes, some of them are go to market changes, and all of them can be as dangerous to us as disruption is to the folks in fortune 500.
Michael: (11:48) So you’re talking about strategy and thinking through the components of the market and so forth. And you are a very serious and you’ve been a very successful chess player. As a matter of fact, last year at your conference, I understand you played 20 simultaneous games and you only lost one, and that was also to another chess master.
Alan: (12:21) It is true, that is the first time that we did it, but it was a big hit. And at our next conference, which is June 7- 9 in Orlando, we’re going to do another one of those 20 seat simill’s as well. It was actually a lot of fun and I think a lot of the spectators enjoyed it, because we had live play-by-play, such as calling of the positions to make it live and to make it interesting to the observers. So yeah, I’m going to do that again, but to your question basically how did I get from chess to computers?
Michael: (12:58) Well, I’m really interested in the link between chess and strategic thinking in business.
Alan: (13:03) Yeah, I think it can be dangerous sometimes to sort of draw too much on games like chess, although I understand that one of you on the phone here with me today is a backgammon master.
(13:19) But I do think there is a lot of connection between at least how I think about strategy and how I think about chess. When I think about the thought process that a strong player goes to, it really seems to fall into three phases.