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The Team at Laudale

Alec Laurie
Alec Laurie
Managing Director
alec@laudale.com

Hiring your first CTO? Ask yourself these 5 questions.

Strong digital and technology leadership will be crucial to our economic recovery in the coming years.

Business models need to change and the main lever is technology. Whether that’s to enable a remote workforce or to engage with customers through new channels.

As a result, boards and execs – especially in small-medium firms – must consider the type of leadership that will see them thrive in the new normal. And, for many, this will mean appointing new skills around the top table.

With that in mind, I’ve pulled together 5 questions to ask yourself before hiring your first CTO*. This is advice I regularly give to two types of companies:

  1. Services business that want a more tech-enabled operating model.
  2. Tech scale-ups for which the next phase of growth means hiring the right leaders.

 

  1. What do we really need?

First things first: what problem are you trying to solve with this hire?

All too often I hear companies state that they need ‘a CTO’ having performed inadequate analysis on where the real capability gaps are.

This usually happens when investors or non-execs influence the decision to hire based on what has worked well elsewhere. Which is fair enough.

But, I don’t recommend jumping straight into a search for an ‘off-the-shelf’ CTO. For some of the reasons listed below.

Where are you today, and where you want to get to? Make this your starting point and refine the skill set. Partner with a specialist if you don’t have the in-house skills to perform this type of exercise.

  1. What does a CTO mean to us?

Job titles are broad and can be mis-leading. A CTO in a tech start-up is often an experienced software engineer. A corporate CTO looks very different.

This can be both an opportunity and a risk. On one hand you have a broad and diverse talent pool to select from. On the other hand, it takes a considerable amount of diligence to ensure you make the ‘right sized’ hire.

Research your target candidate market thoroughly before you start your search.

  1. That CV’s great…. But, can they perform here?

Say you’re an e-commerce scale-up and you receive the CV of an Amazon exec. “Bingo”, right? Not always.

Think about the ‘3 Cs’ of talent search: competence, chemistry, and character**.

The Amazon exec is likely to have the desired competence. But do they balance the leadership team (chemistry)? And consider their motivation (character) to work for your specific business at this specific point in time.

For further reading on the ‘portability’ of performance, see Boris Groysberg et al on ‘Hiring Stars’1.

  1. How will we know what good looks like?

It’s rarely straightforward for a ‘non-tech’ business to hire its first CTO. At the same time, the rewards for getting the appointment right can be game-changing.

But who’s going to interviews the candidates? Are the current directors really qualified to?

Look to your trusted network of investors, advisors and NEDs for support. A good executive search firm will guide you through an effective selection process.

Remember that, when it comes to interviewing, it’s important to get the balance between being thorough and being tedious. According to Claudio Fernández-Aráoz2, the optimal number of people on the hiring team is 3.

In my experience, 3 is optimistic for those with few in-house experts. But it’s a useful benchmark to help you avoid overkill.

  1. Who says so?

Finally, you can never take too many references. Just make sure you gather well-rounded opinions. Peers might think the CTO is great. Though, I’m always keen to know what CEOs and the CTO’s teams think of the candidate.

If you’re about to hire your first CTO, CDO, whatever, then good luck. I hope some of this has been useful.

And, if you’d like to chat about it please contact me here.

 

Further reading:

1 The Risky Business of Hiring Stars by Boris Groysberg , Ashish Nanda and Nitin Nohria.

2 A helpful summary of Great People Decisions by Claudio Fernández-Aráoz, by Ben Munoz.

* I use ‘CTO’ as shorthand throughout this article. It could equally refer to a range of leadership roles, regardless of job title.

** Credit to the proprietor of the “3 Cs”. It’s something I’ve used over the years, but I don’t have an original source.