Not every CEO has technology experience, but CEOs increasingly need to understand why technology is important, what it can do for their businesses and what steps to take to make sure it’s being factored into their decisions and their company’s strategic direction. In this three-part series, CEOs and experts weigh in on the increasingly important role of technology in today’s business landscape. This is Part I.
Technology is key to increasing operational efficiency, building agility, becoming more customer-centric and driving innovation. It is fundamental to the creation of new products and services. And it is reshaping the competitive landscape, lowering the cost of entry for smaller companies and enabling competitors to quickly cross traditional industry boundaries.
“Technology is in everything,” says Stephanie Woerner, a research scientist at the MIT Sloan Center for Information Systems Research. In her research, interviewers have shifted from asking about IT group spending to asking about overall digital spending, because technology is now used—and purchased—by functions ranging from marketing to HR and R&D. Digital technology is woven deeply into the business, and its impact is widespread— making it a clear CEO issue.
Ron Cohen M.D., CEO of the Acorda biotech company, notes that in his industry, companies rely on new technologies to manage R&D data, tap into crowdsourcing to find innovative ideas and improve the management of data from field tests. Soon, he expects artificial intelligence and machine learning to streamline processes even more.
In that environment, he says, “We have an absolute obligation to understand where the tech world is at any given time, and then understand how it can best be adopted to improve what we do.”
To a great extent, the importance of a tech background for CEOs lies not so much in having deep technology expertise, but rather in attitudes and perspectives. Technology changes so rapidly, and the likelihood of disruption is so great, that tech-company executives are generally more accustomed to making product investments that might look too risky to someone with, say, a traditional finance background.
For Vonage, a business cloud communications firm, evolving technology has prompted a dramatic shift from Voice over Internet Protocol (VoIP) platforms for consumers to cloud-based communications products for businesses of all sizes in just a few years.
“Given that the world is changing so quickly, if you’re not betting on tomorrow at a healthy percentage of revenue—and each industry is going to be different—you run the risk of being left behind,” says Alan Masarek, the company’s CEO, and a former Google executive. In the tech world, he says, you have to “be willing to invest, be willing to fail. Because otherwise you’re not going to innovate.”
In essence, technology leaders are steeped in constant technology-driven change.
“People who grow up in technology are expecting someone else to come out with something more competitive and better the next day,” says Margot McShane, executive director at the San Francisco office of the Russell Reynolds Associates executive search firm. “They are constantly assuming that what’s worked in the past will not work in the future. It’s an agile environment of ‘try, optimize, learn, evolve.’”