Essential Business Concepts Tech Leaders Must Understand (And Why)

Share to Facebook Share to Twitter Share to Linkedin getty Tech leaders are increasingly being asked to work more closely with the C-suite to determine overall business decisions and direction. To do this effectively, it’s essential to not only be well-versed in the impact technology has on organizational operations and growth, but also to know how to communicate the breadth and importance of that impact. A thorough understanding of fundamental business concepts and metrics, the ability to speak in terms fellow leaders can understand, and a drive to find new ways to better support teamwide efforts through technology are all vital aspects of a tech leader’s role in today’s digital workplace. Below, 19 members of Forbes Technology Council explain essential business concepts every tech leader must understand and why they’re so important. 1. The Relationship Between Product And Marketing Great tech leaders know that a strong relationship between product and marketing is crucial for success. They should be invested in understanding their market, developing a clear point of view on competitive differentiation and engaging proactively with market-facing leaders to share insights and inform business strategy. – Oz Alon, HoneyBook 2. ROI And Total Cost Of Ownership Tech leaders benefit from a strong background in finance. Being able to calculate and communicate return on investment and total cost of ownership allows them to provide important context when collaborating on strategic projects that impact the top and bottom lines. This skill helps them connect with and influence less tech-savvy leaders as well. – Phil Alberta, Next Phase Consulting Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify? MORE FOR YOU Crashing Under $50,000? Bitcoin Is Suddenly Braced For Another ‘Crucial’ $9 Billion Earthquake After $2 Trillion Ethereum, XRP, Solana And Crypto Price Wipe Out Today’s NYT ‘Strands’ Hint, Spangram And Answers For Friday, July 5 WBC Expels Ryan Garcia After Racist Rant On X Spaces 3. The Business Value Of New Capabilities No product sells itself; there’s a significant gap between creating innovation and communicating its value to customers. Tech leaders must be able to articulate the relevance and importance of new capabilities in the context of customer needs. Bridging this gap between technical features and business value is critical for tech executives to make informed, strategic decisions alongside the C-suite. – Shailaja Shankar, Cisco 4. The Need To Prioritize The CX Tech leaders must understand the customer experience to become part of the integrated leadership team. When they prioritize CX and understand the needs of the customer, they can align innovations with the market. By aligning customer requirements with innovation, we align R&D with business goals and ensure every investment benefits our customers and the business. – Andreas Pettersson, Arcules 5. How To Clarify The Company’s Vision And Goals A tech leader plays an essential role in driving transparency. No one is in a better position than a tech executive to make the company’s technical progress visible to the board. Engineers need to know their executive team’s product vision and understand how that aligns with the company’s goals. By clarifying these details, the tech leader drives talent retention, investor confidence and the accomplishment of company objectives. – Sam Mugel, Multiverse Computing 6. Revenue Flow In a nutshell, tech executives must learn and understand how revenue flows across the core products of the company. This financial language is common to all the stakeholders in the C-suite as well as board members, and knowing it is essential if you’re to be able to relay the critical aspects of product releases or feature developments for prioritization. In the end, money and technology will drive each other forward. – Sireesha Chilakamarri, AdMedia 7. Technology’s Impact On Business Operations Tech leaders need to know how to use technology to grow the business. Technology leaders who take the time to learn the business and understand how it operates (that is, the operations side of the house) and then partner with different C-suite leaders to implement initiatives that will grow the business—all while educating their partners on technology—are worth their weight in gold. – Satpreet Singh, Pinnacle Digital Advisors 8. The Strategic Planning Process For great tech leaders, the most essential skill is a deep understanding of business strategy and the strategic planning process. Mastering this ensures tech innovations align with corporate objectives, drive growth and create a competitive edge. By bridging technology and strategy, leaders inspire transformative progress and meaningful impact to bring intrinsic value to customers and businesses. – Margarita Repina, RepinaTech 9. Technology As A Business Engine Forget “enabler”: Tech is the engine propelling businesses today. Imagine seamless, personalized customer experiences or entirely new business models across industries, all fueled by the convergence of technologies such as generative artificial intelligence, machine learning, cloud computing and more. Tech isn’t a cost center anymore; it’s the solution provider, the revenue generator and the very foundation of what businesses offer today. – Sunil Dixit, FIRST ABU DHABI BANK 10. Transforming Business Requirements Into Technical Action Tech leadership needs to understand the fundamental economics of the business—how it makes money, what the strategies are for increasing revenue and profits, what’s constraining that growth, and how to transform the business and economic requirements into technical action. – Brian Reed, NowSecure Mobile 11. Supporting Business Priorities And Culture Tech leaders can’t work in a vacuum. Considering how tech initiatives align with overall business priorities and culture, serve other departments and teams, and help build toward fulfilling the organization’s mission is critical to being a fully rounded member of the C-suite. – John Milburn, Clear Skye 12. Bottom-Line Impact When speaking to the C-suite, tech executives must stop focusing on technological capabilities and instead provide defensible ROIs and demonstrable impact to the business in terms of increased sales or decreased costs. The majority of the C-suite views technology as an expensive overhead rather than a competitive advantage. When you articulate value in the context of business impact, you will always get funding. – Jim Barrett, Edge Total Intelligence 13. Data-Driven Financial Decision-Making Tech leaders need to develop a deep financial understanding of how a business works to become fully rounded members of the leadership team. This includes understanding financial statements and KPIs and how financial decisions impact the bottom line. Such understanding enables them to make informed decisions regarding resource allocation and investment prioritization, leading to the company’s overall success. – Venkat Viswanathan, LatentView Analytics 14. A Focus On Outcomes Today, more than ever, the C-suite is focused on one thing: “What am I getting for my money?” Conversely, too many tech leaders—especially in software development—have a wishy-washy answer. “The new release is coming along and should be ready in a few months” doesn’t instill confidence. Tie your team’s work directly back to strategic initiatives, and focus on outcomes instead of outputs. – Dave Todaro, Ascendle 15. Budgeting, Forecasting And ROI Analysis A fundamental business concept tech executives need to understand well is financial literacy, particularly in terms of budgeting, forecasting and ROI analysis. Tech leaders must be able to communicate to the C-suite how their projects and initiatives impact the company’s bottom line. This requires the skills to manage budgets, forecast financial needs and evaluate the return on investment from new technologies. – Eric Giesecke, Planet DDS 16. The Primacy Of The Business’ Needs Tech executives need to understand that it is not about the technology; it is about the business. When a tech executive understands how to use technology to support and develop the business, then that tech executive is a valuable, fully rounded member of the leadership team. – Erik Aasberg, eSmart Systems 17. Direct And Succinct Communication Learning to communicate succinctly is of utmost importance for tech leaders to integrate well with the C-suite. Tech leaders are generally very technical and detail-oriented, whereas executives tend more toward high-level strategy, business KPIs and risk management. Tech executives who are able to present projects and initiatives using these constructs invariably see more success. – Carlos Morales, Vercara 18. Value Creation Based On Business Strategy Tech leaders must have a deep understanding of business strategy and value creation. This involves understanding how technology investments support and advance the company’s strategic goals, improve competitive advantage and contribute to revenue development. By understanding these principles, they will be able to work more effectively with the C-suite and ensure effective IT projects. – Ashok Manoharan, FocusLabs 19. Effective AI Implementation Tech executives should grasp the importance of secure and compliant AI integration across business decisions and ensuring the clear traceability of the outcomes of their contributions. Understanding how to articulate the impact of AI on the organization’s goals solidifies their position within the C-suite, demonstrating the indispensable value of their expertise in steering the company forward. – Ged Ossman, Interf Check out my website. Expert Panel® Editorial Standards Print Reprints & Permissions

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