Why you need a CTO and how to make one successful (2023)

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the dizzying ascentThe speed of technological change makes it critical for businesses to stay ahead of technology trends and be able to anticipate disruptions. Because technology and technological change, which, as Exhibit 1 shows, can involve pure information technology or technology in the sense of materials and processes, is changing the ground rules for everything from products and services to business models and processes. .

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In fact, the speed with which technological disruptions are unfolding means they can cripple a business virtually overnight – look at what ride-sharing apps have done to taxis. Technology, especially information technology, is also dissolving the boundaries between industries and creating new business models, as we see in companies like Airbnb in accommodation or Katerra in construction. And along with these external disruptions, companies are facing internal ones from technological innovations that break down the boundaries between functional silos and force companies to work end-to-end and back to the customer, something often associated with digitization. Organizations that fail to keep up with such disruptions can quickly see their performance and competitiveness erode.

Meanwhile, recent McKinsey research shows that companies that keep up with new technologies and integrate them into their strategies and operating models are more successful than those that don't. Our colleagues identified eight "essentials of innovation," including translating technological insights into winning value propositions.1— and found that the more of these fundamentals a company masters, the better it performs (Exhibit 2).

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However, despite the importance of being aware of potentially disruptive new technologies and being prepared to exploit them, many companies tell us that they are not prepared for the big technological changes that are already underway, let alone prepared to detect the new ones. as they arise (Annex 3).

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We believe that one of the main reasons for this lack of preparation is that many companies today have no one on the executive team responsible for navigating these changes. (In a 2016 survey, McKinsey asked companies which of several CXOs were responsible for "identifying and implementing cutting-edge technologies for the business." Every company needs that person, which is why we believe every company needs a CTO. (CTO ).

Clarify the role of the CTO

As our colleagues Richard Dobbs, James Manyika, and Jonathan Woetzel have observed, “accelerating technological change,” one of thefour global forcesnow creating "a world of near-constant discontinuity" - means that "understanding technology is now an essential skill required of every business leader."2However, this is not to say that all leaders in an organization need to "understand technology" in the same way or for the same purposes. Nor does it eliminate the need for a company to have someone in the C-suite responsible for knowing what potentially disruptive new technologies are emerging, for understanding the dangers and opportunities they pose to the company, and for seeing and acting across the organization to help. . Formulate and execute an enterprise-wide response. That someone should be the CTO (see sidebar, “The Evolving Definition of CTO”).

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The evolution of the definition of CTO

While the title of chief technology officer (CTO) has been around for decades, its definition has varied over time and across industries and types of organizations. In our experience, as the role was originally envisioned, the CTO provided a single "stops here" point of view on technology trends, policies, and procedures critical to developing or improving a company's products and services.

One cause of confusion surrounding the role of the CTO today is that "technology" can mean many different things, from materials science to the implementation of robotics in internal processes to the more recent "everything as" models. service". Another cause is the widespread proliferation of CXOs with portfolios that are somehow related to technology: when companies have CIOs, CIOs, CIOs, CIOs, CIOs, design directors, and more, what is the CIO's job? official anyway?

With the IT explosion of the 1990s and 2000s, the role of the CTO has sometimes been confused with that of the CIO, who is generally more involved with the technologies that support and facilitate the management of information and knowledge within an organization. company than with that of the CIO. those who drive the product strategy. In this article, we do not take a position on how these two roles should be distinguished from each other. Instead, we believe that any large product-based company today should have someone at the CXO level who is explicitly responsible for understanding how emerging technologies will affect their customers and products. That person, we propose, should be the CTO.

The fact that "digitization" now permeates all aspects of so many businesses can also make it difficult to draw a line around what a CTO's areas of responsibility should be and, in particular, to distinguish between the responsibilities of a CTO and a chief digital officer. official. The difference mainly lies in the fact that a CTO is just as concerned with product development as technology development per se, whereas a chief digital officer is more oriented towards business models and digital products and also tends to be more internally focused. than a CTO. (meeting).

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The critical importance of the external aspects of the CTO's job was outlined in a statement attributed to former Sun Microsystems CTO Greg Papadopolous, who reportedly said, "The CFO isn't responsible for generating revenue each quarter, but if there is, it's a Big surprise". , fire him. The CTO is not responsible for delivering products every quarter, but if he loses internet or a similar technical inflection point, fire him." However, along with this role of monitoring the external environment for significant and relevant new technologies, the CTO must be able to ensure their effective implementation within the organization.

The importance of this dual aspect of the CTO role emerges particularly clearly in conglomerates and organizations with multiple business units, where cross-cutting issues risk not being recognized. Companies can often uncover new transformative opportunities by finding the ideas that fit gaps in the organization and scaling new initiatives so that all business units benefit. (For example, the impact of 3-D printing may lead to the formation of a core of competition shared by multiple companies; or a disruptive plastic material such as polyether ether ketone may replace metal components in multiple product categories, thereby requires a joint evaluation method ) Finding and exploiting these opportunities is another responsibility of the CTO.

How to make the CTO role successful

A CTO who can enable an organization to turn this plethora of threats and opportunities into sustainable success in the market must have several qualities: a deep understanding of customers (fluency in design thinking helps) and, for B2B companies, a reputation and networks in the space. from the client; a deep knowledge of the current technology of the company; the curiosity to learn about new potentially relevant technologies that are entering into operation or development; the acuity to see the implications and possible uses of such technologies; external networks (including actors such as universities, emerging companies and venture capital); systems engineering field; and the willingness to challenge the status quo.

Just as important as these personal qualities, however, is how the CTO role is shaped for a given individual and a given company. To execute the right mix of responsibilities listed above, we've identified four distinct styles of potential CTO (Exhibit 4).

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While each type of CTO can be successful, it's crucial to quickly identify which approach will work best for a given company. This is not always easy to do, as there is often little or no time for a honeymoon period to define exactly how the CTO will work with the rest of the organization, and a few missteps can lead to a loss of credibility. with line management. eventual “organ rejection”. The matrix in Appendix 4 is designed to provide some general guidelines for determining what style may be best suited for both the individual at work and the organization.

The style that best suits a particular company has something to do with the type of industry the company is in. level of control over technological agendas and priorities, they are good places for “influencers” or “facilitators”. Influencers (often found in consumer goods companies, for example) are typically explorers, deep thinkers who champion innovation by partnering with new technology providers. Enablers are more managerial and tasked with driving efficiencies in multi-business unit organizations with a high degree of technology and project overlap between business units.

On the other hand, "challengers" and "owners," who generally have a high degree of control over technology agendas and priorities, tend to thrive in technology-intensive companies that spend large amounts on R&D. The challenging style often works well in companies with multiple business units, each with their own strong R&D operations, where someone needs to keep the business units from becoming complacent. Owners are mostly found in single-product companies (or companies whose products are similar) where one person can keep everything in their head. Automotive OEMs are the classic example of companies where owners can be successful in the role of CTO, which is not surprising in a single-product business with historically limited disruption and where technical and engineering excellence must be represented across the board. the core team. (This could change as the industry moves towards multi-business unit structures, given the emerging emphasis on mobility services in the industry.)

Looking at the matrix along the "resource capacity" axis (indicating the degree of formal influence on personnel and resource decisions), we find that owners and facilitators, who tend to possess this capacity to a high degree and have Lots of R&D to really manage – they are generally more internally focused than challengers and influencers, who are better able to focus on the external environment and interfaces.

That being said, the influencer and owner styles are often the hardest to execute. Influencers lack the formal power, such as having control over resources, to command the attention and respect of the R&D pipeline, so only someone with technological and interpersonal savvy can make this style work. Owners, on the other hand, have that power, but they are more likely to become disconnected from market realities, sometimes leading to product development mistakes or business unit resentment.

When implemented correctly, the facilitating and challenging styles offer a more balanced approach that is particularly effective in companies where R&D is more decentralized. The key is to give the CTO the right amount of hard power. Facilitators gain positive power: usually a combination of expert staff and financial resources that they can use to accelerate important projects. Challengers gain negative power: the ability to terminate, downplay, or postpone projects that are inconsistent with the company's strategy, are not on track to achieve the target product profile, or are experiencing significant delays or cost overruns.

However, regardless of which of these four styles makes the most sense for a given person and a given organization, the fundamental requirement is the same: the CTO must have the responsibility, and the wherewithal, to keep the company on the cutting edge. of technology. curve. , capable of not only adapting to disruptions, but also anticipating them and transforming them into a strategic and operational advantage for the organization. If relentless technological change is now inevitable, and it is, having a CTO today seems nothing short of an imperative.

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