The Chief Technology Officer: Strategic Responsibilities and Relationships Research Technology Management, July-August 2003

The Chief Technology Officer: Strategic Responsibilities and Relationships Research Technology Management, July-August 2003 The Chief Technology Officer: Strategic Responsibilities and Relationships Roger D. Smith Titan Corporation [email protected] Introduction Origins of the Chief Technology Officer The significant role of technology in In the 1950s and 1960s, many large strategic business decisions has created the corporations established beautiful research need for executives who understand laboratories at locations remote from their technology and recognize profitable headquarters and manufacturing facilities. applications to products, services, and The goal was to collect brilliant scientists processes. Many companies have addressed and allow them to study relevant topics in an this need through the appointment of a Chief environment unhindered by day-to-day Technology Officer (CTO) whose business concerns. The director of the responsibilities include monitoring new laboratory was often a corporate vice technologies and assessing their potential to president who did not participate in become new products or services, decisions regarding corporate strategy and overseeing the selection of research projects direction. Instead, his responsibilities were to insure that they have the potential to add to attract the best scientists, explore new value to the company, providing reliable ideas, and publish respected research technical assessments of potential mergers papers.1 and acquisitions, explaining company By the late 1980s, companies began to products and future plans to the trade media, anoint R&D laboratory directors as Chief and participating in government, academic, Technology Officers. Technology was and industry groups where there are becoming such a prevalent part of company opportunities to promote the company’s products and services that senior reputation and to capture valuable data. management needed an operational Integrating these technology-based activities executive who could understand it and into the corporate strategy requires that the provide reliable advice on its application. CTO nurture effective relationships with key However, executive search agencies, under people throughout the company. These direction from their corporate customers, include the CEO, members of the Executive continued to fill the CTO position with the Committee, chief scientists, research same people they had recommended to lead laboratory directors, and marketing leaders. R&D laboratories.2 Several experiences with these candidates soon made it clear that the responsibilities of the CTO were significantly different from those of the 1 The Chief Technology Officer: Strategic Responsibilities and Relationships Research Technology Management, July-August 2003 research scientist. The CTO position called for a technologist or scientist who could Table 1. Skills and Competencies of an translate technological capabilities into Effective CTO strategic business decisions. Lewis expresses this very clearly. Technology “The CTO’s key tasks are not those of lab director writ large but, rather, The CTO should have been a leader in a of a technical businessperson technology that is an important part of deeply involved in shaping and the corporate business base. implementing overall corporate strategy.”3 Strategy Though large companies such as General The CTO is a corporate executive dealing Electric, Allied-Signal, and ALCOA created with strategic decisions about the future the position of CTO in the late 1980s, the direction of the company. The CTO must position has also played an important role in make the transition from technical expert computer and Internet companies in the late to business strategists. 1990s. Many of these provide products and services that are pure technology. Business Growth Therefore, the CTO can play a prominent role in directing and shaping their entire CTOs must make decisions about which business. technologies are most likely to generate Strategic Responsibilities of the CTO the highest rate of return. The CTO thinks about technology as a The CTO position is far from being moneymaking asset, not as a field of standardized. Each company has unique exploration for its own sake. requirements for its CTO and provides a unique organizational structure into which Interpersonal Skills the person will fit. This section describes some of the more prominently cited All executives, including the CTO, must responsibilities of the CTO. be able to communicate clearly and Monitoring and Assessing New effectively with people from all types of Technologies backgrounds. The rate of change of technology guarantees Executive Relationships that knowledge and expertise gained several years ago will no longer be completely The CTO position is relatively new in valid. This creates the need for a most organizations, therefore, the technologically current person to serve as an individual filling the position must insure advisor to senior executives during strategic that he or she is included in the executive decision-making. Paul O’Neill stated that a decision-making cycle. CTO should be expected to, “identify, access, [and] investigate high-risk, high- return technologies possessing potential 2 The Chief Technology Officer: Strategic Responsibilities and Relationships Research Technology Management, July-August 2003 application within existing businesses or for Bert Thurlings of Philips Research creating new businesses”. 4 Knowledge that Laboratories has arrived at conclusions is several years old cannot effectively guide similar to those of O’Neill and Bridenbaugh this type of assessment. If a company is through his field studies of numerous CTOs. planning to modify its production process or These indicate that CTOs themselves feel add new products, it must understand how that one of their most important the latest technologies can contribute to responsibilities is to monitor, evaluate, and those plans. As an illustration of this, Peter select technologies that can be applied to Bridenbaugh recognized the significance of future products and services.5 A significant technical advancements that made it investment in the active exploration of all possible for mini-mills to operate profitably relevant technical areas is required in order and to assault the markets held by large to identify opportunities buried amid all of metal producing companies like Alcoa.4 the information available. Internal company Because he was actively monitoring new managers and scientists are often qualified technologies and assessing their to perform this analysis, but are so focused applicability to business opportunities, on day-to-day operations that they do not Bridenbaugh was in a position to advise have time to study broadly and deeply Alcoa of this threat while mini-mills still enough to locate the technologies that will occupied a very limited niche in metals be essential in the future. These people production. Though other executives within frequently identify important changes once a Alcoa had come up through the operational competitor has already implemented a and scientific ranks, their focus had changed similar idea. However, by that time, it is too to organizational and financial issues. late for the company to capture the lead in Because they were no longer intimately the application of that technology to familiar with the latest scientific products, services, and production developments in metal production, the techniques. Such a company would find emergence of mini-mills did not appear to itself trying to catch-up to the new leader in be a serious threat to Alcoa’s business. the field. Junior engineers, on the other hand, may The opinions and experiences expressed by have realized that new technology made it large companies like Alcoa and Philips are possible for small mills to produce high echoed by the CTOs of the new generation quality products at prices competitive to of information companies as well. Pavan Alcoa’s. But, those engineers did not Nigam, CTO of WebMD, reports that an possess the experience necessary to support important part of his job is reading and their opinions to upper management. evaluating large amounts of data about new Neither did they have access to those senior products.6 Information service vendors are decision-makers. Therefore, a CTO who so eager to attract the attention of the media embodies current knowledge, is networked and of customers that their claims are often with company engineers, has years of exaggerated. Managers and scientists within experience, and has access to executive WebMD could be misled by these claims decision-makers is a valuable resource in and expend irreplaceable time and money recognizing important new technologies and working with products that are not able to bringing them into the company’s strategic deliver the promised capabilities. Therefore, decision-making process. 3 The Chief Technology Officer: Strategic Responsibilities and Relationships Research Technology Management, July-August 2003 Nigam provides a valuable service by more efficient. Proctor & Gamble remaining abreast of vendor claims and by recognized that their products were mature, learning about the experiences of other but that their scientists had a number of companies using those same products and good ideas for improving existing products services. This allows him to direct WebMD and creating new ones. The company’s CEO away from ineffective products and toward and CTO created the Innovation Leadership others

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