Business smarts

The business unit president informed Mandell that he was holding off on the implementation of an advertising technology project. Mandell could have interpreted — incorrectly — that the solution simply wasn’t needed; in actuality, economics were driving the decision. “We will need to find an answer to the problem for the long run to be competitive. So, I must monitor the economic situation. I learned about key things that will make him more competitive down the line,” Mandell says.

Mandell, who earned her executive MBA from the University of Chicago in March, is one of a growing number of senior-level technologists who actively seek to expand their business expertise. Roughly 12 percent of the 195 CTOs responding to the InfoWorld 2002 Compensation Survey have an MBA; just over 20 percent hold a computer science or other technical master’s degree. [Editor’s note: Full results from the compensation survey will be published in the June 3 issue.]

For Mandell, who holds a computer science undergraduate degree, her experiences with the business side of technology prompted her to pursue an executive MBA. Her business knowledge could not fully support the needs of the small, growing software company that she and her husband owned. Working as a consultant with Tribune confirmed her beliefs. “I needed to know more about the business than about the software. I figured that I could learn more about running a business at Tribune. To some extent that’s true,” explains Mandell, who was CTO of Tribune Interactive from 1998 to 1999. “But in meetings I realized that we would make a decision that didn’t make sense or I wasn’t sure how sound it was. I needed more academic background.”

Now as the vice president responsible for coordination of technology strategy across Tribune’s multiple newspaper units, Mandell is looking to integrate several recently acquired publications and leverage economies of scale through large-scale systems that handle advertising, circulation, editorial, and other operations. “As we replace aging systems I ask, ‘How do we evolve to be more cost-effective?’ ” Mandell says that the MBA financial curriculum helps define the long-term business and financial impact of such decisions.

Communicating on the money

Bob Tuttle also found the financial courses in his MBA program to be both the most useful and the most challenging. “Everything comes down to cash flow,” says the CTO of San Francisco-based flower distributor Calyx and Corolla.

In earning his MBA in 1990 from Golden Gate University, Tuttle learned complex financial analysis of businesses and corporate activities. But more importantly, Tuttle, then the manager of strategic technology at Kaiser Permanente, learned to successfully promote his technology initiatives to the business and financial powers.

In his Kaiser role, Tuttle frequently gave presentations to justify technology projects. His projects often had initial funding but then were scrapped without what Tuttle thought were good reasons. As a result of his MBA curriculum, Tuttle changed his presentation style “to be more than 90 percent business reasons and less than 10 percent technical reasons — more benefit to the business.” Project funding immediately improved, he says.

Tuttle credits his MBA coursework in helping him to save Kaiser millions of dollars. Working with a doctor, Tuttle helped persuade Kaiser executives to implement a computer system to monitor high-risk pregnancies. “One extreme of this problem is the financial aspect. By putting money into managing the high-risk pregnancy on the front end, [Kasier] found that they could shift money [to managing the pregnancies and lower premature births and associated costs],” Tuttle says. “In the first year we saved $2.5 million.”

Financial aspects of technology and technology business take up a huge part of Dwight Gibbs’ workday. Gibbs, who started in IT as a hard-core programmer, is an independent consultant who develops financial models for small startups and works as a CTO-for-hire for other clients. In between, Gibbs founded The Motley Fool, served as its CTO, and earned an MBA from Georgetown University in 1996.

From his perspective as The Motley Fool’s CTO, Gibbs thinks not enough technical executives are interested or understand the financial side the way they should. “What I’ve learned most is that you can’t go through life blindly trusting that [other executives are] taking care of financial details. If you’re at a high enough level, you need to have a grasp on the financial picture. You want to know what you need to contributed,” Gibbs says.

An MBA program, Gibbs says, “drills it in[to] your head — marketing, finance. We did competitive analysis: What’s their cost structure look like? How are they pricing their product? How do we compete on a finance basis? What are the features and functionality? And what are your strengths and weaknesses?”

The lessons have practical applications for any CTO developing an external technology strategy, Gibbs says. He points to a basic business concept. “If the opportunity cost of capital for a company is high, the CTO should look at leasing [equipment]. If the opportunity cost of capital is low, then don’t lease. This is basic but important,” Gibbs says. For the enterprise CTO, Gibbs says a huge issue that his MBA coursework helped him with was normalizing contracts — often an exercise in comparing apples to oranges.

Even with an MBA, Gibbs does what many CTOs do when a challenging business issue arises: He calls on his network. “Find someone who has done it before and pick their brains,” Gibbs says. “Learn from the mistakes that they have made.”

Beyond billions

Gene Rogers has overseen $1 billion in company-and contract-funded technology development. Even with 20 years of experience overseeing complex projects, the CTO of Boeing’s space systems unit doesn’t rest on his business laurels. Rogers takes graduate-level classes and is two courses shy of earning an MS in technology management from West Coast University in Los Angeles.

The most useful courses he’s taken at WCU have been in complex proposal management. The courses have helped Rogers with something that tax many chief technologists: learning to read a customer to extract the most important requirements. “Oftentimes [customers] won’t articulate requirements in detail because they don’t know for sure what they want. The things that they call requirements are soft, subject to debate, and subject to change,” says Rogers, who is also a member of the InfoWorld CTO Advisory Council. “You have evolving requirements as the project unfolds. [The CTO] must manage to keep costs down, distribute these costs between customer and contractor appropriately, and diplomatically tell the customer when they are not correct.”

To a large extent, it’s the soft skills — making risk assessments, managing others, and communicating — that define the difference between implementers and leaders, some of which is learned on the job, Rogers says.

Rogers expanded much of his business expertise and management skills on the job and with a mentor’s help. In the early ’80s at another company, he was promoted to program manager for R&D, a position he says he wasn’t quite ready for. “[My boss] brought me up the learning curve. He actively mentored me first in strategic planning, then in translating business objectives to technical objective and then to project plans,” Rogers says. “Then I learned how to hire and put leaders in place.”