THERE is a growth in the appointment of chief digital transformation officers (CDTO) and chief digital officers (CDO) with the responsibility of charting the technology roadmap of an organization. While there are nuances in the role, these are similar to the traditional chief technology officers (CTO) that are responsible for formulating the technology strategy of an organization and implementing it.
But because of its relative novelty as an area of strategy and management, there is interestingly a dearth of material that directly describes what technology strategy is and how to formulate one. This is partly to blame for the misunderstanding of many companies, leading to missed opportunities or costly technology mistakes.
There is now a sea of supposed chief technologists who err in forecasting and estimating a technology’s potential, costing a company a fortune. For example, the CTO of a local firm invested heavily in buying the software asset of a foreign company with the aim of developing this for the company’s own use, only to discover later on that the company lacked competencies in wielding the software; hence putting the project to a full stop after several years.
So, what is technology strategy? A distillation of various descriptions available leads us to the following definition — that technology strategy is the alignment of technology vision with business strategy by integrating company processes with appropriate technologies. Technology vision should be inextricably linked to business strategy for increased efficiencies and growth opportunities.
A simple framework based on classical strategic management can help CTOs formulate technology strategy. The fundamental ideas of this framework are (1) that technology strategy is influenced by the external and internal environmental forces; (2) the business strategy influences the technology vision; (3) the technology strategy of a company emerges from its technological capabilities and competencies; and (4) the implementation of technology strategy, through the experience it generates, serves to further develop the firm’s technological capabilities and competencies.
The technology strategy is shaped by the constantly evolving business environment, both in terms of new opportunities and new threats, may it be a new manufacturing process or a new software to make operations more efficient. Business strategy is developed to take advantage of or counter changes in the business environment. The CTO then aligns technology vision with business strategy by integrating company processes with the appropriate technologies. If the CTO has a good understanding of technology and changes in the technological environment, he or she can develop a technology strategy in advance of changes in the business environment.
Taking stock of the technological capabilities and competencies of a firm are a crucial starting point for a technology strategy. An inventory of these capabilities in terms of assets, people and other resources will help the CTO baseline his or her standing. From this baseline the CTO can assess the gaps relative to the technological vision.
Implementing the technology initiatives within the organization builds learning and experience among the CTO team members and the whole organization. To maximize the learning from technological mishaps, the implementation team should be accountable yet with enough room to make mistakes. A truly effective technology strategy not only takes into account the technology initiatives but the development of organization members themselves in terms of improvements in competencies and productivity.
The opinion expressed herein does not necessarily reflect the views of these institutions and BusinessWorld.
Reynaldo C. Lugtu, Jr. is the founder and CEO of Hungry Workhorse, a digital and culture transformation consulting firm. He is the chairman of the IT Governance Committee of the FINEX Academy. He is a fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA Program of De La Salle University. The author may be e-mailed at email@example.com