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Management
Does your company need a Chief Transformation Officer?Â
While a CTO can set the pace for change, the responsibility for transforming and driving performance should ultimately be a core competency of every manager.
In recent years there has been an explosion of Chief Transformation Officer (CTO) appointments, as organizations grapple with an accelerated rate of disruption â from Black Swan events like the COVID-19 pandemic and the related disruption to rising geopolitical tension, fast-moving technological innovation, and evolving employee and customer expectations.
Given the ever-increasing scope, scale, and pace of change, it seems that almost every company, regardless of its size or stage of growth, realizes that âtransformationâ needs to become part of its core DNA to not just survive but thrive in the future.
Yet the problem is that the definition of what a CTO is â and crucially, what they are supposed to accomplish â is often fuzzy and inconsistent. In recent months, I have been approached for several CTO roles with responsibilities ranging from restructuring to ensuring performance delivery and holding change initiatives to account.
The variety and vagueness of these job descriptions encapsulate one of the fundamental challenges facing CTOs: a lack of certainty from organizations about what transformation is and why it is needed.
Often, companies reach for the crutch of a CTO because they recognize the need to change but havenât done the homework on the factors compelling their organization to transform. These could be structural (changing industry dynamics, business environments, and regulation), organizational (a need for a new structure to better withstand external shocks or to integrate new technologies), or cultural (mindset or capability issues). It could also be a combination of all three. In many ways, itâs like being sick without knowing what ails you and expecting a doctor to cure you.
So, do companies need a dedicated CTO to coordinate and drive their transformation efforts? It depends.
âTransformation is all about people, so the organizationâs employees must be convinced about the need and vision for change.â
Research from the Project Management Institute and Accenture found that seven out of 10 organizations are struggling to execute business transformations effectively, making the case for a dedicated person who can orchestrate efforts across the company.
On the other hand, a CTO shouldnât be hired as a âcatch-allâ role to handle the kind of complexity that should be dealt with elsewhere in the company. In my experience, it works best at companies that have clearly defined roles and responsibilities for their leaders and discovered a gap where a CTO could step in â for example, to clearly articulate the âfrom…toâ of the change mandate, or to connect the dots across the organization to ensure lock-step execution. Importantly, it must be closely aligned with the enterpriseâs vision, strategy, and growth ambitions.
Based on my own experience, here is what I believe a CTO should be hired to do:
Be clear on the case for change
The first responsibility of the CTO is often to understand where the organization may be getting stuck and what needs to change to unlock the biggest value. Why does the organization need a CTO, vs. demanding its leaders to drive necessary transformation? Whatâs holding the organization back? Is it a hardware problem (structures and processes) or more of a software issue (culture and mindset)? As a CTO, you need to quickly understand how the organization works and, importantly, what is not working. Every company has a number of unwritten rules or sacred cows that could limit the growth and success of the business. You need to speak to those working on the front line and understand their perspectives and frustrations. Once youâve done this, you need alignment from the CEO and top team on what the transformation will involve. My mantra is that transformation is a team sport; it cannot be done by just one person alone. So having the full backing and confidence of the CEO and the board is essential.
Set the pace for change
The CTO needs to set the drumbeat for change, defining the scope, scale, and pace. This involves supporting the CEO to craft an aspirational vision while also creating a sense of internal urgency to ensure people understand what needs to be done to accelerate the change. Ultimately, you want to increase the organizationâs metabolism over the long term sustainably.
CTOs need to be strategists and executors who can implement measures to accelerate decision-making, remove bottlenecks from processes, and foster better collaboration. When I was Chief Transformation Officer at Bayer, one way we did this was to shorten the approval process and empower those operating in local markets to approve decisions (within certain boundaries) rather than sending everything through to HQ. We also encouraged the organization to simplify reporting processes globally and flatten the hierarchy to drive more collaboration.
Be a role model
Transformation is all about people, so the organizationâs employees must be convinced about the need and vision for change. The CTO needs to walk the talk, set the tone, and role model the behaviors that the organization aspires to if they want to inspire others to follow suit. At Bayer, for example, many of us left our corner offices and sat in the open-plan area to encourage collaboration. I also role-modeled making decisions with imperfect information to instill a sense of urgency and empowerment.
âTransformation is a team sport; it cannot be done by just one person alone. So having the full backing and confidence of the CEO and the board is essential.â
What makes a successful CTO?
The above responsibilities require a particular combination of skills and competencies. One crucial factor is the ability to influence people internally. CTOs can often come up against resistance from other leaders who feel they may be stomping on their turf or meddling with processes that have âalways been done this way.â In these situations, it obviously helps if the CTO has the full backing of the board and top management so they can hold senior leaders accountable.
They also need to have strong influencing and communication skills to clearly explain their vision and why change needs to happen to win over those who might be skeptical. Here, it helps to have high levels of empathy, recognizing that change is hard, and knowing when to praise and encourage and when to deploy the stick. But they also shouldnât be afraid to slaughter a few sacred cows and have some difficult conversations to drive forward the transformation.
Another essential skill for a CTO is the ability to zoom out and understand how the system works and connect the dots, but also to delve deep into an organization to identify the first steps needed to unlock the organization for growth, innovation, and speed. Because of this wide remit, a CTO is often someone who has worked across several functions, markets, or business units in the past gaining a broad range of skills.
A cheerleader for change
Often, the challenge that most CTOs will face wonât be strategic or structural, but cultural. This is why I believe that one of the key requirements of a CTO is to build the capability for change across the entire workforce. For an organization to move faster, itâs not a matter of one function; youâve got to have the entire engine firing on all cylinders. This involves encouraging more risk-taking across the organization, fostering accountability, and empowering others. You need to make sure that information is being passed up, and that decision-making is being passed down, through the organization as quickly as possible.
Hiring a CTO can therefore be useful to ignite a change, and to set the processes, governance, and cadence within an organization. Ultimately, however, the person may need to step back to allow every leader to own their responsibility to drive change and performance. The ability to continuously change is a skill that every manager and employee should learn.
At Bayer, I was both Chief Transformation Officer and Talent Officer. While I am not always a fan of lumping roles together, in this case the combination can work well because transformation is essentially all about people. Having responsibility allows you to define the rewards and incentives to ensure they are aligned with the transformation you want to drive, as well as training and developing leaders with change capability. The caveat is that transformation is sometimes bigger than just a cultural transformation so the scope is often bigger than a typical CHRO role. You also donât want this to become another change program within HR, so it needs to have enough teeth.
Lastly, adding a new role to the C-suite can create more layers of complexity. This is the last thing you want when trying to drive change since transformation is all about creating more simplicity so the organization can respond faster and with more agility. In this respect, the CTO role may be counterproductive especially if you already have a well-articulated vision from the CEO and processes in place to hold people to account.
Authors
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