The ubiquitous CTO

I SPOKE RECENTLY about technology leadership at the National Association of Convenience Stores annual convention in Orlando, Fla. Technology leadership is a tough issue in the convenience store industry. Despite dependence on technology solutions (notice all the blinking lights and systems the next time you stop at a 7-Eleven), the participants in the industry -- primarily the convenience store owners themselves -- are hard-pressed to afford CTOs for the three or four stores they might own.

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To make things even more challenging for the owners, companies such as Wal-Mart have made massive investments in technology during the past two decades and are encroaching into the convenience space with their "hypermart" stores, which offer everything from bread to gasoline, opening around the country. They are bringing their management and technology innovations with them, and driving prices down across the retail industry as well as slicing margins for convenience store owners in the process.

In doing research for my presentation, I found a key quote from Robert Solow, the Nobel Prize-winning economist from MIT, about Wal-Mart's technology innovations in the March 2002 edition of the MIT Technology Review. It really got me thinking about what technology leadership means: "The technology that went into what Wal-Mart did was not brand new and not especially at the technological frontiers, but when it was combined with the firm's managerial and organizational innovations, the impact was huge."

My key take away from that is three-fold.

* A company must decide technology is important to succeed in today's business environment.

* The technology used need not be "bleeding edge" or brand new to be effective.

* Technology innovation means nothing without accompanying management changes.

For most companies, the decision to hire a CTO is the first indication that technology is important to their organization. In a fragmented and highly vertical market such as the convenience store industry, however, that decision is made more difficult by the leanness of the typical convenience store operation.

In my limited exposure to the industry during my time at the conference, it seemed that many CFOs were taking on the CTO responsibilities and frankly, they were frustrated by the demands of technology management: How do I know that a vendor is telling me the truth about how well their product works? How do I maintain a complex system once it is installed? I'm gathering reams of data about my customers' purchasing habits, but how do I analyze it on an ongoing basis? As technology and business become completely intertwined, the need for deep knowledge of technology becomes more pressing.

So what's the solution for small, technology-driven businesses such as convenience stores? Not knowing the internals of convenience store operations, I think it would be naive and unfair to simply recommend that these operations hire CTOs to handle their technology issues. But it's clear that they could use the services of a CTO.

Perhaps as the CTO position evolves in larger companies, the understanding of the strategic value of the position will trickle down to smaller companies. The evolution of the operational accounting person to the strategic CFO was probably similar for small business. Ultimately, many of these businesses realized they needed a CFO.

As word gets out that CTOs are as business-savvy as they are tech-savvy, perhaps things will change and the technical help will emerge as CTO business leaders within these small companies.

Everyone will need a CTO sooner or later.