It doesn’t work the way you’re describing for a bunch of reasons.

First, while everyone thinks the CEO is the boss, they aren’t. They are hired and fired by the Board of Directors. The Board has a strategic objective for the company and has tasked the CEO with making that strategy reality. So in your hypothetical, the Board may not be interested in developing new features or putting lots of resources into R&D at that time. Its also possible that the Board is wanting to pivot the company into a different business segment where that new features isn’t attractive to that customer base.

Lets assume for the moment the Board does have interest in the result $NewFeature might provide.

CEO does something like this:

• Contact Marketing and confirm our customer base would want this $NewFeature that $competitor developed. Also, we’ll need pricing strategy fairly quickly to know how much we will net out of implementing this $NewFeature or how much of our customer base we’ll lose to $competitor if we don’t have it in our product. Also, Marketing will need to come up with a new name for $NewFeature under our banner.

Those number from Marketing will give us an idea of our budget for building this $NewFeature

• Contact Legal and confirm that $NewFeature is not covered by any filed or pending patent or copyright claims. Take the name that Marketing came up with and search for existing copyright and trademark claims to see if we can use the new name or if we have to come up with something else. If there is existing IP covering the functionality, we need a breakdown on what that is to see if Marketing and CTO can make something else that does all or some of what $competitor’s $NewFeature does. Depending on how important $NewFeature is, don’t rule out licensing the IP from $competitors

• Ask CTO to work with the Project Management Office (which probably works under the COO) to come up with a rough Work Breakdown Structure and folding into a Project Plan with identified Milestones and rough release date. CTO will also need to provide a Resource Allocation (how many people, how expensive of people, and for how long) to complete the development of $NewFeature. This Resource Allocation will be folded in with the additional development costs of tools, etc, and compared against the number Marketing is providing to see if this is a good business decision to even pursue making $NewFeature.

There’s a bunch more, but this is a taste.