Linking new technologies with organisational strategy

If ‘digital transformation’ was already a buzzword, then 2021 will put the term in a whole new light. As many companies suddenly shifted to remote work and online business models, agile CTOs were key to accelerating transformation and ensuring the smoothest transition possible.

2020 marked a turning point in the evolution of the CTO role. Technological know-how is no longer enough; today’s CTO needs the skills to bridge business strategy with emerging digital trends, now and in the future.

But short-term decision-making, while necessary, doesn’t define the purpose of the CTO. Successful technology leaders must embody McKinsey’s ideal of the ‘third-horizon thinker’: driving continuous innovation within the current business model and expanding that model by breaking into new markets, while ultimately creating new capabilities to seize disruptive opportunities for growth.

So how can organisations find the best fit for this critical role?


 

KEY TAKEAWAYS

The modern CTO needs more than digital mastery. Today’s technology leaders should be ‘third-horizon thinkers’, envisioning opportunities for the current business model, helping to define its expansion, and plotting long-term growth for the organisation through technology. Their success depends on their ability to match current and future business needs to the right technologies. At the same time, CTOs must have the leadership skills to ensure that all stakeholders are on board.

  • Today’s CTO needs to bridge technology market trends with business needs, all while communicating effectively with C-suite peers and remote, diverse teams.
  • The roles of the business-minded CTO and tech-savvy CEO are not interchangeable, but together, the pair is an ideal team for aligning technology with business strategy.
  • The decision to hire a CTO internally or externally depends on each organisation’s needs; many seek external executives to bring fresh perspective and innovation to the business.
  • When assessing executives for the CTO role, executive search consultants should look for examples of past behaviour that reflect innovation, leadership and the ability to think critically

 


THE MODERN CTO PROFILE

What skills should companies look for in a CTO? The role often requires leading diverse and remote teams, so communication skills should come top of the list. Fernanda Amorim, Global Head of the Technology Practice, says, “Organisations often look for CTOs who work with ‘liquid’ structures, who are able to assemble and dissemble teams for different projects. These companies know their potential CTO needs strong interpersonal skills to do that in a successful and effective way.”

A CTO is an ambassador for tech. The challenge is to match the idea of transformation within the company with the vision of the potential CTO. They must convey a vision and inspire people, translating business needs into technology.

-Stefano Cavaliere, European Head of the Technology Practice

Technological competency is a given for the role, but the ability to translate data and technical jargon into simple, clear language is key for CTOs to engage stakeholders. “A CTO is an ambassador for tech,” says Stefano Cavaliere, European Head of the Technology Practice. “The challenge is to match the idea of transformation within the company with the vision of the potential CTO. They must convey a vision and inspire people, translating business needs into technology,” he concludes.

As part of this interpretation of the role, modern CTOs should embrace an entrepreneurial mindset and take this ‘third-horizon’ approach to innovation. Monitoring the pulse of digital trends, their job is to leverage new technologies to achieve results over time and support business growth. “The CTO must be restless in searching for opportunities to make businesses more viable, agile and appealing to the consumer,” Amorim explains. “Many clients say, I don’t want a CTO who will say ‘no’ to my requests. I want one that will say ‘how’.”

Addressing that ‘how’ involves building the right talent to be able to respond in an agile way to an organisation’s ever-evolving technology goals. “The CTO has a crucial role in the recruitment and hiring process, especially for global teams,” says Cavaliere. CTOs need to be involved from the beginning to identify the best executives based on technical skills and cultural fit, alongside C-suite alignment.

BUSINESS-MINDED CTOS AND TECH-SAVVY CEOS

According to Amorim, “There is no business these days that doesn’t depend on technology to evolve. Because of this, leadership teams want the CTO to be someone who is in lockstep with the CEO, sharing an equal view on the technology future of the business.” Taking a strategic view is a must for modern CTOs. And in today’s fast-changing business and tech environment, the ability to make quick decisions is an essential leadership skill.

There is no business these days that doesn’t depend on technology to evolve. Because of this, leadership teams want the CTO to be someone who is in lockstep with the CEO, sharing an equal view on the technology future of the business.

-Fernanda Amorim, Global Head of the Technology Practice

More than ever, the CTO is responsible for making business-driven technology decisions understandable for the wider C-suite team. As Amorim explains, “Technology is a day-to-day job that takes up too much work to be in any way a shared responsibility. The modern CTO profile has to consider all types of business decisions and needs to dedicate themselves to effectively explaining this evolving tech landscape to the board, the CEO and down the management pyramid.”

While each role has its own priorities, pairing a business-minded CTO and tech-savvy CEO can make for a powerful leadership duo. Leaders in these positions who see eye-to-eye are more likely to build a solid technology strategy that aligns innovation with business goals.

One problem is that many organisations are not ready and willing to make a serious investment in technology. You can hire the best CTO in the world, but if your business model and your stakeholders are not ready to understand and listen to this person, you lose.

-Stefano Cavaliere, European Head of the Technology Practice

In fact, the commitment of organisations as a whole to technology is fundamental to the success of a CTO. As Cavaliere says, “One problem is that many organisations are not ready and willing to make a serious investment in technology. You can hire the best CTO in the world, but if your business model and your stakeholders are not ready to understand and listen to this person, you lose.”

IN-HOUSE OR EXTERNAL?

Should organisations hire their CTO externally to stimulate fresh innovation? Or can the best talent be found in-house? The answer depends on the business needs and goals of the organisation. Each choice offers different advantages.

With deep knowledge of the business, long-standing relationships and a track record of performance, an internally promoted CTO is ready to hit the ground running but may be less inclined to challenge the status quo. An externally hired CTO, conversely, needs time to understand the business and adapt to its culture, but brings a valuable outside perspective to the role. As more companies prioritise digital transformation and innovation, the latter has become increasingly common.

Teaming up with an executive search partner can help organisations to make the right choice. “When looking for a CTO, first talk with an executive search partner to ensure you have a clear picture of your actual governance set-up,” says Cavaliere. Your executive search partner can then help you identify the right profile internally or assess the best external leaders from the global talent pool.

FINDING YOUR NEXT CTO

How do executive search experts assess a senior leader’s potential as CTO? Cavaliere says they look for “communication, attitude and innovation”. He adds, “The CTO should always be aware of new technology trends and be able to communicate them in a simple way: they need to be the translator for the company.”

Amorim agrees that adaptability is vital: “Some CTOs are still very traditional, and they don’t follow market changes as fast as they should. For example, they might be slower to move to the cloud because they can’t effectively measure the risks and returns of that investment.”

Some CTOs are still very traditional, and they don’t follow market changes as fast as they should. For example, they might be slower to move to the cloud because they can’t effectively measure the risks and returns of that investment.

-Fernanda Amorim, Global Head of the Technology Practice

Headhunters should conduct behavioural assessments to evaluate what executives can bring to the table. “I would look for examples in their history. Dive a little deeper into this person’s previous experiences. What would they have done differently if current technologies were available? It’s important to be self-critical because the CTO role is always an opportunity for self-development,” says Amorim.

Finally, the interview process may involve not only the CTO’s potential C-suite peers but also their teams. Particularly in the technology industry, it is not uncommon for teams to have a say in whether a CTO makes the cut. Organisations need to consider if such processes are beneficial to finding the right technology leader to achieve their mission.


 

KEY TAKEAWAYS

The modern CTO needs more than digital mastery. Today’s technology leaders should be ‘third-horizon thinkers’, envisioning opportunities for the current business model, helping to define its expansion, and plotting long-term growth for the organisation through technology. Their success depends on their ability to match current and future business needs to the right technologies. At the same time, CTOs must have the leadership skills to ensure that all stakeholders are on board.

  • Today’s CTO needs to bridge technology market trends with business needs, all while communicating effectively with C-suite peers and remote, diverse teams.
  • The roles of the business-minded CTO and tech-savvy CEO are not interchangeable, but together, the pair is an ideal team for aligning technology with business strategy.
  • The decision to hire a CTO internally or externally depends on each organisation’s needs; many seek external executives to bring fresh perspective and innovation to the business.
  • When assessing executives for the CTO role, executive search consultants should look for examples of past behaviour that reflect innovation, leadership and the ability to think critically

 


Contact the Consultants Quoted in this Article

fernanda amorim

Fernanda Amorim
Partner
Brazil

stefano cavaliere

Stefano Cavaliere
Associate Partner
Italy

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