The CTO as a Horizon Filter

As the CTO for Perot Systems Corporation, I initially look at things with two very different lenses. These two perspectives are formed around my role to provide service to the corporation and service to the clients with whom we do business.

In filtering the horizon inside the company, I believe that keeping a perspective from 18 months to two years is quite sufficient to allow the corporation the time it needs to prepare for new generations of initiatives. Even with some of the far-reaching technology breakthroughs on the horizon, most corporations will not tolerate significant planning horizons beyond that period. To accomplish longer-range initiatives such as this, I've always believed that research and development, or horizon planning, is done by facing the market, partnering with willing partners, and developing prototypes. Interestingly, real-world industry partnering and implementation can validate directionally and isolate the critical problems from more than one perspective. As you grow the products and technologies externally, and you find that the market has validated the functionality, there's always money for further research and development to take the next steps forward. Stand-alone, self-funded technology research and research and development projects are slowly fading into the distance, becoming the exception in creating business value. Open and partnered projects with longer horizons are always under enough scrutiny that they generally establish the right set of circumstances to make the project ready for the market.

The second filter for looking at the horizon is from the market's perspective. Generally, you should keep a list of five or ten technologies you think are profound. Going into an organization and asking about the most significant technologies an organization believes will affect them gives you a relatively clear sense of what they believe are truly the technologies that are affecting their business. Generally, the two lists match closely. Most of the time, one or two technologies will differ and create an opportunity to explore viewpoints.

A ready-to-go list of the "Ten Most High-Impact Technologies" is a great tool to have in many different situations. These list elements give you a place to start exploratory conversations about business initiatives and technology evolution and serve as a barometer to establish just how much tolerance an individual or organization has for the future and how their perspectives get framed. In using the "Top Ten List," you normally do not start with the list itself but try to establish a set of business conditions that represent the drivers, economic constraints, and value propositions. Once those are established, forming a perspective on how they're going to grow and how their markets will change creates the stories that are needed to frame the fantasy. (No one actually knows the reality, even though they may claim they do.) Bets with world-class "guessers" can bring accuracies up, but the market is the only final determiner of reality.

As you begin to list the technology reformations (the Top Ten List), it becomes very evident that you cannot talk about them without telling a story of some of the marvelous implications that will shift mankind's thinking. If you concentrate on the evolving physics of the technologies over the next generation of its Moore's Law cycles, the size of the shift starts to take on a new reality. But translating the physics into business opportunities is clearly one of the art forms of the CTO.

After the CTO makes these types of translations for many years, the art that actually becomes most useful is the final translation of the technologies into the improbable process changes that can appear somewhat unthinkable. Carefully, the CTO must figure out a way to translate what may seem to be almost a fictional glimpse into a story with a solid market presence and a business value proposition. Unfortunately, the dot-com companies used up a significant amount of credibility for such stories. As a result, many business leaders are exercising a significantly higher level of caution about any predictions they may have to absorb, and their energies for risking such change have dropped considerably.

The second level of screening the new horizon is to understand the relationship between the physics of the technology and the management science of the process. I have given this theory the name of "Process Physics." A basic theory about the evolution of business processes continues to perplex me but has served me well in trying to understand the change business faces on the horizon. I am firmly convinced that when I look at new technologies, I see an interaction between the physics of the technology and the business process itself. When Gordon Moore started to evolve his Moore's Law theory, he laid out the fundamentals of the physics process pretty close to being correct. If this curve continues to track as accurately as it has in the past, we will continue to be able to capture a curve that has a high degree of accuracy in its predictive modeling. From that we can predict a lot of the availability of bandwidth, switching capabilities, or computing power. What he didn't anticipate or didn't focus on was that we would integrate those technology changes much more closely into the business process. In some ways the process itself was a function of the technology.

As a result, the technology shifts that are occurring at these exponential levels have started to push business change to occur at some form of a curve that has a direct relationship to the physics of Moore's Law. If you can isolate fundamental breakthroughs in technology that will occur at these focal points; you can begin to understand processes more completely. Process reinvention is no longer a duplication of the same business functionalities on an incremental scale, but represents a fundamentally new type of re-alignment or restructuring of the business process. This non-incremental opportunity is a direct result of the stage we see occurring in the exponential cycle of Moore's Law.

It is at this predictive juncture of physics and business that the role of the CTO gets much larger and becomes one of a process change agent. Ideally, the relationship the CTO has established with the operating divisions, as well as the staff functions of the organization and the senior leadership team, provides a vantage point for creating change in the organization. At this juncture, the role of the CTO must shift to a business strategy perspective, involving discussions among the senior leaders to begin thinking about the possibilities of change they must confront. It is also at this juncture where the Theory of Three comes into play, as trust and credibility become critical tools for organizations to make progress.

These reinventions of the company's thinking and approaches keep the company competitive and become a defining differentiator between the early job of the CTO and the new, evolving role. As time goes on, these curves will become steeper and steeper. Process has a defined relationship to the physics of technological change.