What do you need from your chief transformation officer?

by | 4 Oct 2020 | Business transformation

It’s a question that often gets asked. Our belief is leading a business and transforming a business are two very different skill sets. With ever increasing corporate turbulence, it’s likely we will witness a rise in the number of chief transformation officer roles and business transformation opportunities.

When organisations are about to embark on a transformation (transformation in this context defined as an organisation-wide performance improvement and organisational health effort to improve critical business drivers e.g. top line growth, capital productivity and operational effectiveness) have a few options for designing and delivering the transformation and finding a themselves a chief transformation officer (CTO):

  • Bring in a management consulting firm.
  • Bring in a networked firm (consultancies but with lose affiliations of people).
  • Hire independent consultants and/or interim executives.
  • Do it themselves, potentially moving people into temporary transformation roles.

When you are thinking about the chief transformation officer role you need someone who orchestrates a number of different disciplines and who is an agitator and partner to the CEO. They have to be at the table with enough gravitas and clout to carry weight with the executive and the board. You also need someone who has done it before, but builds learning into the programme, so the organisation and individuals build a competence in transformation. Effective CTOs inspire employees and act as role models for the sort of behaviour needed to encourage and embed change.

The hiring of the right chief transformation officer (CTO) will no doubt significantly improve the chances of a successful transformation. Good CTOs drive the organisation forward and hold accountable those responsible for the many daily actions and initiatives that underlie a typical program.

At the heart of the CTO’s role is an ability to strike the right balance between carrot and stick, between short-term improvement and long-term value, and between making sure line managers themselves take responsibility for change and personally ensuring they deliver results quickly and with suitably high ambition. Such judgment is also important when it comes to deploying the often limited resources at their disposal to the different priorities of a transformation.

CTOs should be relatively independent, have experience of leading several transformations, and have support from the board, the CEO and executive. Their mandate, responsibility for ensuring that the full bottom-line target gets delivered, must be clearly defined at the outset. They need to be fully integrated into the executive team and their compensation or fees must be linked to performance, with a significant incentive for over delivery. For consultancies, this would be a risk/reward type contract. Ideally the CTO is an extension of the CEO or even the board, and as such, be able to hold the top managers accountable.

The CTO is a high-level orchestrator of a complex process that involves large numbers of discrete initiatives. Responsibility for making the day-to-day decisions and implementing those initiatives lies with line managers, but the CTO’s job is to make sure the job is done. This is not always easy as they must have multiple capabilities.

Thinking across the transformation journey — in the independent diligence phase you need strong strategy and financial analysis to perform the due diligence. As you move into bottom-up planning you additionally need strong business case formation skills. In portfolio reconciliation you need portfolio planning (take the business from the 100 things we could be working on to the 10 that we are going to focus on), alongside strong organisational diagnostic skills e.g. capacity and capability. In addition, you need experience in setting up a transformation office, establishing a team and putting in place the required cadences to create the right operating tempo across the business.

Getting buy-in to the transformation draws on storytelling, narrative building and big idea creation. When the execution starts skills in agile delivery, performance improvement, programme and change management become important. Change management often means drawing on organisational psychology, behavioural economics and communication and engagement specialists. Putting in place the infrastructure, whether that’s processes, technology or tools, requires an understanding of process design and the use of a platform and apps. Last of all are the benefit tracking, financial planning and analysis skills required to plumb the transformation outcomes into financial planning.

To this end, it’s important that CTOs have a strong cross-functional background (as opposed to having expertise in one area) and have seen a variety of different business situations and challenges during their career. Only with this experience will they know when to encourage and when to go in hard.

The CTO is also the face of the transformation, sets the tone, spurs enthusiasm and challenges current wisdom. Their objective is to make the organisation fitter so as to sustain the effort over the long term with the majority of time devoted to helping define and contribute meaningfully to the value creation agenda.

Great CTOs are strong at balancing facts and independent analysis with intuition and are adept at pattern recognition of what works and what doesn’t. They are not only good problem solvers and business leaders, they have a high level of emotional intelligence and strong interpersonal skills. They ignite passion and leverage the efforts of a range of individual talents. They recognise and reward outperformance.

Being a skilled CTO certainly requires significant development — think of the 10,000 hours Malcolm Gladwell popularised in his book Outliers.

Based in London and with over 24 years’ global experience, Karen Thomas-Bland is often cited as one of the top business transformation consultants and coaches in the world. She is a trusted advisor to boards, executive teams and investors, creating sustainable, long-term value for FTSE/Fortune businesses and PE funds. She writes for many publications including The Times, FT, Association of MBAs and Management Today.