Scale-up Board Spotlight: THE CTO
In the first of a new series that focuses on each of the key scale-up leadership roles, we take a more detailed look at the role of the Chief Technology Officer (CTO).
Technology leadership is the cornerstone of any IP-rich company. Not all tech businesses start out with someone officially titled CTO, but this person will exist in some capacity. In the early stages, it is often one of the founders – the individual(s) whose vision and expertise conceived the business in the first place. This person might be the CEO – and there are plenty of technical founders helming today’s tech giants – or, as the company becomes more commercially focused, they may move into an advisory/non-executive capacity.
In any case, commercialisation and scale-up often demands the appointment of a dedicated CTO who can drive the technology forwards and facilitate growth. For many businesses, this means making an external appointment in order to bring in the knowledge and experience to trigger a step change.
Companies at this juncture need to have a clear idea of what kind of CTO is required. This will depend on the skills that already exist within the team, the current and anticipated challenges, and where the business is in its growth trajectory. Broadly speaking, there are three types of CTO and, whilst most scale-ups seek a blend of these profiles, it is important to determine where the emphasis should lie in order to find and attract the best person for the role:
This CTO is highly innovative with a track record of conceptualising new and disruptive technologies. S/he will be able to develop the technology strategy and translate customer / market demands into a product roadmap. A visionary CTO is typically required by businesses whose growth depends on developing new solutions and/or expanding the capabilities of the existing technology.
This is a more operationally-focused CTO, who is able to deliver the technology strategy and roadmap by putting in place the right technical team, processes and systems. They will combine effective leadership with the expertise to navigate roadblocks and bottlenecks in technology / product development. Many companies at growth stage need an executor to help transition the business from being technology-focused to a commercial entity.
The Thought Leader
This individual could be a visionary or an executor, but they will also be a prominent industry figure. Highly respected for their technical expertise, they will be a regular speaker at industry events and very well-networked. This kind of CTO can be a powerful addition for businesses looking to raise funds, enhance their credibility or access key networks.
The ideal CTO profile will be one that aligns with the needs of the business and its growth ambitions, whilst filling skill gaps in the existing leadership team. Getting this definition right also makes a big difference in the company’s ability to attract their desired candidate.
Some of the key factors for CTOs considering a move include:
This is often the most important factor for CTO candidates and it is likely their interest will be captured based on their attraction to the product / solution. For many scale-ups, a CTO from a similar technology space will be the obvious fit, so it is probable that there will already be a strong alignment. In more nascent technology areas, it is usually necessary to extend the talent pool into closely related areas where transferable skills (and potential interest) are most likely to be found.
CTO candidates will likely have a good understanding of the sector and will only want to work with a technology they believe has the potential to disrupt the market and become a viable commercial proposition. Their interest in an opportunity is likely to depend on the stage the technology has reached in its development, the market readiness (and any demonstrable traction) as well as the funding position of the venture.
CTOs brought in at scale-up stage are often replacing – or working closely alongside – a founder (or founders) that have conceived and developed the IP to date. This can be a delicate relationship and candidates will likely want to understand how the CTO role fits into the existing leadership team. Successful commercialisation and scale relies upon the team adapting to new mindsets and working practices, so the CTO will need to gain the respect of the existing technical staff.
The offer of equity is often critical to attracting a high calibre CTO. There is a level of inherent risk with joining a scale-up but the ability to share in the commercial success of the venture is, in many cases, a compelling counterbalance. For CTOs that do not currently have equity, this is especially attractive – and can, in some instances, open up salary negotiations where candidates are prepared to consider a small reduction if equity is part of the package.