In our prior posting on do I really reed a CTO?, we explained how the role of the Chief Technology Officer (CTO) is often confused and that it’s often best setup as a part-time or advisory role in start-ups. But what makes a CTO successful? What makes a startup CTO successful?
Let’s now compare this recent McKinsey post written about CTOs in large firms and see what applies to startups and other smaller firms.
“Dizzily Increasing Speed of Technological Change”
The Chief Technology Officer in any firm needs to know what technologies could potentially disrupt a firm within some reasonable timeframe. The probability of disruption in that timeframe determines the CTO’s tracking priority.
For a CTO to grasp relevant technology trends and provide strategic leadership, McKinsey lists over 40 technologies with the potential to disrupt a firm.
Some trends, such as “intelligent software systems” may apply to any firm, large or small. But only the largest firms (think Apple or Google) with the most wide ranging operations and products will need to track all 40+ technologies. Even for many S&P 100 firms, a much smaller subset of maybe 10 technology trends are more than sufficient for keeping tabs on potential disruptors, like for example advanced manufacturing technologies.
For startups and smaller firms, the number is smaller still: possibly just a handful or even a single disruptor. Why?
- Startup company products and operations are rarely broad, but “lean”.
- Startup business models are often based on a single or small set of disruptive technologies (e.g., “software as a service”), and thus require no special tracking.
- Startups operate in a short timeframe, lessening the probability of disruption.
Once a CTO is fully aware of relevant technologies as applied to her business, McKinsey then lists eight skills a CTO must master to lead innovation at scale. Let’s see how they apply to startups:
|Innovation At Scale CTO Skills||Startup CTO Skills|
|Does the firm believe “innovation at scale” is necessary?||No. Startups should follow “lean” principles [Ries, Blank]|
|Are the right technologies tracked by the right resources?||Yes. Tracked by one CTO.|
|Are you generating the insights necessary for winning value propositions?||No. CTO’s contribute, but the CEO (or head of Marketing or Product) usually leads.|
|Are you creating new business models?||No. CTO’s contribute, but the CEO (or head of Marketing or Product) usually leads.|
|Are you innovating faster than the competition?||No. Startups need to execute fast to prove their core value proposition and should, by and large, ignore their competition.|
|Are you launching innovations in multiple markets?||No. Startups need to focus on taking beachheads before conquering entire island chains.|
|Are you capitalizing on external networks?||Yes. External networks can leverage a startups core value proposition and startups need all the leverage they can get.|
|Are your people motivated to innovate continuously?||No. Intense agile execution is more important than chasing every new shiny object. The head of developments leads.|
So do theseChief Technology Officer essentials apply to startups? Not very much.
“Evolving Definition of the CTO”
McKinsey presents a model of CXOs in an age where digital technology permeates all business functions which helps clarify things:
|CXO Function||Internal Focus||Internal+External||External Focus|
|Business||Chief Executive Officer, Chief Financial Officer||Chief Innovation Officer,
Chief Marketing Officer
|Product||Chief Digital Officer, Chief Product Officer||Chief Design Officer|
|Chief Information Officer|
|Technology||Chief Technology Officer|
For startups, we think it is better to view these CXOs as functional leadership roles: “heads of”, not “chiefs”. The functional leaders at startups need to be focused on internal execution, which in many cases will be very limited. For example, we don’t believe start-ups need a Chief Design Officer, just a head of Product. Start-ups also won’t have Chief Digital Officers, since most everything a technology startup does is already digital. And the very title “Chief” raises expectations of outsize compensation and a broad span of control and influence both internal and external, which just don’t apply.
Here’s our startup CTO/CXO role table:
|Startup Heads||Internal Focus||Internal+External||External Focus|
|Business||Head of Finance
Head of HR
|Chief Executive Officer||Head of Marketing|
|Product||Head of Product/Design|
|Head of IT Development|
|Technology||Head of IT Operations||Head of Technology Strategy|
The Startup CTO
McKinsey presents a range of management styles based on the degree of decision control and budget. Let’s review how these apply to a startup CTO.
|High Decision Control||Challenger: Use veto power to improve R&D performance.||Owner: Centralized technology and product control.|
|Low Decision Control||Influencer: Sounding board and counselor.||Enabler: R&D continuous improvement.|
|Low Budget Allocation||Higher Budget Allocation|
We think the startup CTO’s role is primarily direction setting and initiation, after which the onus is on the managers in charge of day to day execution. After the technology direction has been set, the startup CTO’s role is primarily consultative, someone to monitor execution and bring rigor to technical business functions. Most startup CTO’s therefore should adopt a “Challenger” style.
Where can I find an Interim CTO?
Telegraph Hill Software provides skilled, experienced and affordable Interim CTO and startup CTO consultants, well versed with startups and smaller firms ready to help solve your most pressing challenges. Our clients benefit from a periodic infusion of experience and discipline, and get long term benefit by retaining our consultants at a fraction of a full-time CTO’s costs.
You can read about our Interim Technology Leadership service here: https://telegraphhillsoftware.com/interim-leadership/