Making a move from CTO to CEO

Former CTOs describe their journey to the top executive position

Chief technologists are moving closer to the revenue and into the halls of the enterprise as they adapt to meet corporate needs and take on the CEO's role

Chief technologists are gaining strategic influence in the enterprise as they are increasingly asked to help produce revenue for their company in tough economic times. As a result, these IT leaders are seeing opportunities to move up and achieve CEO-status — outside the now familiar CTO-founder path, industry experts say.

Those who have already made the leap to the top say there is no clear path for reaching a CEO-level position. But one who has made the change, Mike Wilens, president of West Group, the Eagan, Minn.-based legal publishing giant, says ambitious technologists should focus on two tactics. “I tell people interested in management to try to get varied experience early in your career and get close to revenue,” he says.

By moving beyond the IT shop and into the corridors of the enterprise with the finance, sales, and marketing teams, chief technologists will gain invaluable insight into what it takes to achieve the CEO position, adds Dan Woods, a consultant at Evolved Media Networks of New York, an IT industry author, and a former CTO.

“Successful CTOs find a way to beat back their fascination with technology and pay attention to the business issues,” Woods says. “Companies will recognize it and reward it.”

Experience tells

Enterprises are increasingly looking to CTOs for leadership as technology soars in strategic importance, and CTOs can leverage this by expanding their horizons within the company, says Mark Minevich, an IT consultant and writer in New York . “The CTO has to take a leadership role in the company,” he says. “In the past, the CTO was the enabler of the technology applications. In the future he will be the technology thought broker in the enterprise, helping to figure out how to commercialize and monetize technology.”

But to operate in a corporate climate, technologists should know how their company works. Wilens says enterprise boards of directors will need to see that CTOs have acquired business skills before expanding their role.

As a young graduate of the University of Michigan , Wilens says he gained invaluable experience on day-to-day business needs as an entrepreneur with small startups. “I was half CTO and half salesman,” he says. “Making payroll really focuses your mind. CTOs in small businesses are forced to wear many hats, and that can be a tremendous educational experience.”

Wilens, who has held the CEO role since 2000, joined West Group as a CTO in 1997, after serving as CTO for Lawyers Cooperative Publishing and then as CEO of Legion Ltd., a London-based provider of services for the telephone company market.

Once at West Group, Wilens leveraged his experience to develop the company’s online strategy, which includes its popular Westlaw online legal research service, with more than 15,000 databases. “I got involved in putting us on the Web, which drove our product,” he says. “You can see how I moved close to revenue.”

Business experience also was essential to the success of John Hansen, appointed recently as CTO of the Colorado governor's Office of Innovation and Technology in Denver . After a transition period, he is slated to become secretary of technology. Hansen says that although he was most recently CEO of the Colorado Institute of Technology and before that CEO of Boulder, Colo.-based Solant, his early years with startups were invaluable experience.

According to Hansen, his experience at network product developer Networks Northwest in 1990, which ultimately failed, was one of his most valuable lessons. He belatedly recognized he had little understanding of the dynamics of collaborating with sales, marketing, and finance divisions. “I don’t know where that is taught, but it was a lesson that cost thousands of dollars for me to learn, he says.”

A chief technologist's education

Still, there are no rules that say chief technologists must fail in the business world to get experience. As the strategic importance of CTOs gains further recognition, educational venues are in place to help in a transition.

“I see people in our organization, which includes 2,000 technologists, who might be candidates for executive management courses,” Wilens says. “It gives one the opportunity to move beyond your business area. We are trying hard to identify people who have management capability. You want somebody — to use a technical word for it — who has a clue. You’ll know them when you see them.”

Hansen also emphasizes business education. “I feel passionately about this,” he says. “CTOs have to understand completely the business principles. They need to find the skills to do cost benefit analysis. They have to have the knowledge to go before the board of directors.

“You’ll see more CTOs with technology degrees combined with business education,” Hansen says. “There are executive business courses offered now at the top business schools, such as Harvard (University), Stanford (University), the Wharton School of Business, (the University of California at) Berkeley, and Duke (University)."

Hansen failed when he first had to deal with sales and marketing units in his first CEO position at Networks Northwest because he had an engineer's mentality.

“In my first company, my biggest problem was not understanding that sales, marketing, and finance people had different motivations than I could imagine,” Hansen remembers. “I was using my leadership skills like I did successfully with engineering,” except the sales and marketing staff were not responding, he says.

Hansen took business as well as communications courses to relate better. He learned that engineers wanted “just the facts” to be able to carry out their mission, while sales and marketing staff liked supportive speeches.

After talking to vice presidents of sales and marketing divisions of his next startup Metapath, Hansen says he worked out ways to lead the entire company. “I discovered what were the motivating drivers for different people; what were their incentives and disincentives, and how you get them to change behavior,” he says. “By the way, that is not taught in any business school.”

Culture club

In the end, CTOs must expand their culture from an exclusively technology-based approach to one embracing the entire company, the chief technologists themselves say.

“There's no substitute for a for market-facing experience,” says Laurence Bunin, CEO of Handshake Dynamics, a New York-based IT management consulting company. “When technology executives reach the highest ranks, they can’t do it without having had their feet on the ground in a sales and marketing role," he says. "So, very much like management training programs, the companies send these executives to spend some time in these areas.”

Chris Lofgren, the former CIO and now president and CEO of  Greenbay, Wisc.-based Schneider National, the truckload carrier with $2.4 billion in revenue in 2001 and some 14,000 trucks and 40,000 trailers, says his willingness to learn from other divisions and adapt to their business needs was the secret of his success.

Lofgren says he came to Schneider as an engineer specializing in supply-chain distribution, then served as CIO, COO, and in 2002, CEO. “The great thing about the CIO role was I got to visualize the whole area of the company,” he says. “When you start to see how the company thinks about technology strategically, you get visibility into customers, business processes, and services. In our company, it was an opportunity to move into an operating role.

“You’ve got to adopt the perspective that technology is merely the enabler of the business,” Lofgren adds. “The ability to have an impact on the business helped me. … To me, the sales, marketing, and finance people all make the business run," he says. “You find you can learn from all of them.”

The transition from CTO to CEO is more difficult than many executives would expect. CEO candidates are expected to have a solid understanding of all aspects of their business and industry. To develop these skills and understanding, CTOs have no substitute for frontline experience — meaning a sabbatical may be in order to develop the market-facing skills needed to fill the top slot.

Survey the landscape — Consider acting as a management consultant. Consultants often act as business advisors to CEOs, allowing an opportunity to understand issues within given industries and address business challenges before taking them on alone as the chief executive. Consultants also have an opportunity to develop longstanding relationships with clients and industry leaders.

Look over the horizon — Get involved in companywide or cross-divisional steering committees that focus on meeting future market challenges. Becoming a part of the larger team develops a long-term vision based on industry changes, and determining competitive challenges will offer invaluable experience.

 

Keep sight of the trees — Develop a true understanding of the customers your company serves through the product development process. New product development efforts often benefit from the participation of strong technology thinkers. They also offer ample opportunity to study customer needs and industry competitive intelligence.

 

Inventory available resources — Accept a position as the president or general manager of an operating unit within your company to hone knowledge of how the company makes money, what drives revenue and profits, how the company is organized, and how to make tradeoffs to negotiate agreements that achieve strategic goals with limited resources.

 

Build a network — Strengthen trusted working relationships among executives in your own company as well as throughout the industry. Use each step in your transition plan as an opportunity to get to know — and to be known by — executives who can play a key role in your next career move's success.