CTO Innovation and Commercialization


Innovation is an important part of the CTO's job. It has to be combined with commercialization.

Chief Technology Transfer Office

One of the basic functions of a CTO is to promote internal enterprise technology transfer—serving as the interface for any external transfer and representing the enterprise at technical forums, committees and other appropriate activities. This functional area would benefit the enterprise by the interaction of the CTO with major universities, industry, government research consortia and other groups associated with rapidly changing technology.

Strategic Innovation

Michael Porter explains that, "companies have to find ways of growing and building advantages rather than just eliminating disadvantages." (40) In some industries, new products based on new technology are the lifeblood of the company. In other industries, core products remain unchanged for decades, but the processes used to create them are continually evolving and becoming more efficient. Proctor & Gamble recognized that their products were mature, but that their scientists had a number of good ideas for improving existing products and creating new ones. The company's CEO and CTO created the Innovation Leadership Team to find and allocate funds to support these new ideas. This program quickly led to eleven new products and a number of innovations waiting to be turned into products, giving Proctor & Gamble a significant lead on competitors. (12) Just as Peter Bridenbaugh learned that emerging technology was creating a new class of competitors for rolled metal products, companies that create commodities must apply technology to improve their production processes and add an edge to their products that competitors cannot match. O'Neill emphasizes that established companies need a CTO to develop fundamental technologies offering clear competitive advantages for current and future businesses. (4)

A product vision is one of the key reasons for employing a CTO. Ron Moritz, CTO of Symantec, says "One of the key roles of the CTO is to provide the technical vision to complement the business vision, setting the tone and direction for the company's technologies. Leadership, in this context, comes from being able to set the technical course and from being able to define what the company's products and technologies might look like in two, three, or four more years." (2)

Product vision should be based on an intimate understanding of the power of the current technology component of the product and knowledge about innovations and changes that are occurring in related fields. Michael Earl emphasized that investments in technology and innovation must be connected directly to business strategy. In fact, he found that the most successful approach was when a company did not have a separate technology strategy. Instead, the best technology strategies were those that were fully integrated with the business strategy. (29) CTOs are now expected to contribute technology expertise to business strategies, not to create independent research laboratories and strategies that are only loosely coupled to the company's profit engine.

Few would dispute that information technology is an important facilitator of innovation which, in turn, produces solid business benefits. According to the Accenture study, the IT department is the least likely part of a business to be a primary source of innovation. The Accenture study highlights the need for CIOs not only to run effective IT operations, but also to be active participants in the development of the overall business strategy. (92)

Drawing on an independent global survey of nearly 600 senior executives, "The Innovator's Advantage-using innovation and technology to improve business performance," examined the relevance of innovation to global business and the relevance of IT to successful innovation. It revealed that companies reporting a strong record of innovation also reports that nearly two-thirds (64 percent) of their recent IT investments were successful at meeting their strategic objectives. By contrast, less innovative companies reported only a 28 percent success rate for IT investments. Indeed, more innovative companies report getting more value for their money from IT and are more likely to see IT as a source of competitive advantage.

The study also confirms that the more innovative companies that see IT as an integral part of their business strategy are far more likely to consider IT to a greater extent when they are developing new business strategies than less innovative companies. In doing so, innovators consider the business capability that IT can deliver, not just the IT alone. Given the crucial role of IT as both an operational and strategic asset, tactical management alone by the CIO leads to a misalignment between the company's strategic needs and its own. The IT opportunities to generate value are lost. The CIO's strategic input is vital. Yet the indications are that even among more innovative companies this particular aspect of the CIO's role needs more emphasis.

The Accenture study supports this, suggesting that one reason why the most innovative companies gain more strategic benefits from their investments in IT is because they spend proportionately less of that budget on day-to-day operations and more on new investments.

In most businesses, greater value is generated when a larger proportion is spent on discretionary investment. Spending less on operations and more on new systems is a clear priority of the majority of executives responding to the Accenture survey. Consequently, CIOs must not only run an effective IT operation, but also be able to communicate the strategic benefits that IT-including newer forms of IT-can bring.

If the IT department is to contribute to innovation across the business, then CIOs need to be proactive and take propositions to the business units about ways to use IT to create new, market differentiating business capabilities. One aspect of this is the increasingly important responsibility of the CIO to identify how existing and emerging technologies can generate business innovations. Innovation and the imaginative use of IT can create significant wins for companies in many different contexts. (92)

CIOs must work even harder to escape the organizational status quo and venture out of their technologist comfort zone to put the plan into action. As we've known for some time, CIOs must keep enhancing their influence by making sure they and their teams understand the strategies of their internal customers and find people who can help them. As better information inevitably shifts market power toward customers, the innovative use of this information will be at the heart of differentiation. (92)

Commercialization

Commercialization is increasingly becoming an important element for the role of a CTO.

Commercialization has a number of steps, and CTOs are actively involved with a number of the steps in the commercialization process. Mr. Cardullo indicates that the CTO has to be a primary liaison to promote internal technology transfer. The CTO is an interface for external technology transfer and an enterprise technology representative for forums, committees, universities, industry and consortia. (16)

A relationship with a VC and investment source is a major area of cooperation for a CTO. A few years ago, the CTO was a crucial element of Internet start-ups. CTOs must also create convincing presentations and demonstrations for venture capitalists emphasizing technology value. The VCs in turn provide the initial capital investment necessary to turn an idea into a viable product or service.

Another process in commercialization is an alliance with a university research center. The CTO is also involved with linkages and partnerships with research centers within universities and academia. Companies participate in those activities because they have first right of refusal to access the results of the research. A prestigious commercially successful and widely recognized industry/academia partnership is the Media Lab at MIT. Another is an incubator within RPI. ACDC Incubator in Georgia Tech. is another impressive technology incubator within an academic environment. As far as Media Lab, it investigates the application of computer technologies to practical social problems. In 2001, the lab received 95 percent of its $36 million budget from 140 corporate sponsors. (60)

CTOs are also involved in thousands of acquisitions every year. Pre-qualifying, selecting, and identifying the best targets for an acquisition often requires reliable advice on technical issues at the executive level. (5)

Jim Spohrer, the IBM Venture Relations CTO, is heavily involved with the evaluation of new technologies for IBM. (83) Finding and isolating specific gold seeds is a real contribution by a CTO.

Senior technologists are often very eager to investigate new emerging opportunities. It is very important that the technology commercialization strategy is aligned with an overall business and technical strategy. There are several studies that depict that short-term product-focused R&D is positively correlated with the financial performance of the company. The CTO need to spend time and mentor senior engineers and chief scientists, and constantly keep them focused on the overall strategy with contribution to the success of the company.

In some companies, the CTO organizes an internal council of technologists to scout and apply the best technologies available across the company. (12)

In some companies it is important to put together internal summits to bring leading technologists together to share ideas from various geographics in one centralized area. The CTO needs to create leverage across many different business groups to identify potential combinations of technology that could become new products or services.

Safeguard Scientific, CMGI, IdeaLab, Cambridge Innovation, and Morgan Lab are excellent examples of commercialization. Each one of those organizations has a uniquely talented CTO who identifies valuable opportunities and solves local problems. A Global CTO of the holding companies could organize technology summits between technology leaders and portfolio companies. (77)

The CTO is on the search for innovation. A significant part of a CTO job is linked into strategic innovation. It is important that innovation and development of fundamental technologies offer a clear competitive advantage. Walter Robb, former CTO of General Electric Medical Systems, believes that "it is the responsibility of the CTO to push the boundary on risk taking." (77) Furthermore, Michael Earl emphasized that investments in technology and innovation must be connected directly to business strategy. In fact, he found that the most successful approach was when a company strategy is highly integrated. (29) The demands of the environment indicate that the CTOs are now expected to contribute technology expertise to business strategies. At the end of the day, the technology strategy has to be linked to a Profit center.




The CTO Handbook. The Indispensable Technology Leadership Resource for Chief Technology Officers
The CTO Handbook/Job Manual: A Wealth of Reference Material and Thought Leadership on What Every Manager Needs to Know to Lead Their Technology Team
ISBN: 1587623676
EAN: 2147483647
Year: 2003
Pages: 213

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