Academic journal article Research-Technology Management

The Effectiveness of the Chief Technology Officer: The Many, Wide-Ranging Activities Associated with the Chief Technology Officer Role Should Deliver a Measurable Impact on a Company's Financial and Innovation Outcomes

Academic journal article Research-Technology Management

The Effectiveness of the Chief Technology Officer: The Many, Wide-Ranging Activities Associated with the Chief Technology Officer Role Should Deliver a Measurable Impact on a Company's Financial and Innovation Outcomes

Article excerpt

Companies face a global economy marked by increasing rates of competition, significant advances in the rate and degree of technological change, budget pressures, and escalating development costs. In this environment, the importance of successfully and efficiently completing research and development tasks is important, if not essential, for the ongoing success of a company. In the last few decades the Chief Technology Officer (CTO), once rarely used, has become a commonly used position. The CTO is the most senior technical person within a company, typically given responsibility for oversight and prioritization of the research and development activities in an organization. In comparison to other widely used senior positions, such as the Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, the CTO role is less well defined, less studied, and consequently less well understood.

In spite of its increasingly common use, a search of scholarly literature discussing the CTO role identified no papers that attempted to measure CTO effectiveness in promoting innovation and financial results. This raises the question of whether the CTO role is truly valuable or whether its increasing use is simply a fad or a case of groupthink. The CTO role should have a measurable positive impact; in the absence of such evidence, its usefulness is arguable at best.

The creation of a CTO role does signal the strategic importance of research and product development activities in an organization, but the role should do more than this and have a more lasting impact. This paper seeks to increase the knowledge around the CTO role and begin to fill in this important gap in understanding of the CTO position. It seeks to do so by collecting and analyzing various innovation and financial metrics over multiple years before and after the creation of this role in organizations. Having such data not only increases the knowledge around the CTO, it provides support for its adoption or continued use in organizations.

The CTO position

A survey of the literature examining the CTO role provides some support for the idea that the CTO can have an important impact on an organization. The early work has largely focused on identifying the specific roles a CTO may play in an organization. Adler and Ferdows (1990) are credited with the first article specifically discussing the CTO position from an empirical perspective. The authors collected data from questionnaires and interviews of CTOs and, based upon this data, identified five major activities that the participating CTOs deemed most important:

* Coordinating among business units' technological efforts to leverage synergies and create economies of scale,

* Representing technology within the senior leadership team of the organization,

* Supervising new technology developments,

* Assessing technological aspects of major strategic initiatives, and

* Managing the external technology environment.

It is important to note that most CTOs in the study were not responsible for every one of these activities; rather, those interviewed occupied one of two major classifications: line manager or staff position. Line managers have more direct day-to-day involvement in managing research activities than those in staff positions, while those in staff positions tend to be more involved in strategy execution and to act as technical advisors for senior management. Another early study (Thurlings and Debackere 1996) drew similar conclusions regarding key activities of the CTO, identifying as the central functions facilitating technology in corporate strategy, driving intracompany innovation processes, and determining how to best manage large and complex projects.

A question raised by the literature review is the difference between the CTO role and the commonly utilized roles of vice president of engineering or research and development. …

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