In order to stay ahead of digital disruption, enterprises need a strong technical leader to keep them on top of technical shifts and what they mean to the customers, business models, and long-term organizational viability. According to the experts from McKinsey, this is the role of the CTO, who’s essential to track the technological threats and opportunities and match those to product innovation deployments that lead to success in the market.
“The importance of this dual-facing aspect of the CTO’s role emerges with particular clarity in conglomerates and multi-business-unit organizations, where cross-cutting topics are at risk of not being recognized,” write Kimberly Borden, Shivanshu Gupta, Florian Weig, and Jim Williams in a recent McKinsey brief. “Companies can often uncover new, transformative opportunities by finding the ideas that fall between the cracks in the organization and scaling new initiatives so that every business unit benefits.”
They note that many digital transformation failures occur because too many organizations today don’t have someone solely in charge of this visionary leadership function. More than one in four organizations today don’t have a CXO responsible for “identifying and implementing cutting edge technologies for the business.”
According to McKinsey, there’s no one cookie-cutter way for CTOs to take up this mantle as chief technological oracle and rainmaker. Instead, the firm’s experts say successful CTOs tend to fall into four distinct archetypes—each of them suited to different kinds of organizations and industries: influencers, challengers, enablers, and owners.
Here’s a breakdown of how McKinsey sees these styles shaking out:
Influencers
Type of organization: Less tech-intensive industries; typically found in consumer goods companies
Job description: Focusing on internal and external interfaces, advocating for innovation through partnership with emerging tech providers
Management style: Tech scouts and deep thinkers; usually lacking formal power such as control over resources but ability to counsel business leaders
Challengers
Type of organizations: More tech-intensive industries, usually with higher R&D as percentage of revenue and multiple business units
Job description: More externally focused, charged with strategy and portfolio management, and preventing entrenched business units from growing complacent with technology, less direct control over R&D
Management style: Uses creative tension and veto power for improving R&D performance, bringing in outside ideas to drive transformative change to existing activities and processes
Enablers
Type of organization: Less tech-intensive industries; multi-business-unit companies with lots of overlap in technologies and projects
Job description: Tasked with driving efficiencies across business units, process, and personnel management, and generally have a lot of R&D operations under direct management
Management style: More internally focused, improving processes, cross-pollinating ideas, increasing investment in a limited number of business-critical projects
Owners
Type of organization: More technology intensive, higher R&D as percentage of revenue, and single-product business, often found in auto OEMs
Job description: Tasked with centralizing R&D personnel and budgets underneath them, with complete control over product and tech development for the company
Management style: More internally focused, with nose for strategy and portfolio management, with high degree of power and autonomy
A Matrix
McKinsey places the four styles of CTO leadership in the following matrix based on degree of control afforded to them and their ability to directly draw on R&D resources:
“While each type of CTO can be successful, it is crucial to identify quickly which approach will work best within a particular company,” the McKinsey experts write. “This is not always easy to do, because there is often little or no time for a honeymoon period in which to define just how the CTO is going to work with the rest of the organization, and a few stumbles can lead to loss of credibility with line management and eventual ‘organ rejection.'”
