The C-suite is expanding once more, this time to make room for a new role – the Chief Transformation Officer (CTO).
It’s a role, like Chief Sustainability Officer, that has emerged in the wake of today’s shifting business imperatives, as new priorities emerge, and change accelerates in the post-pandemic era.
And it’s a role that will likely be a permanent addition to the executive table given the transformation efforts organisations are undertaking to thrive in today’s rapidly changing and complex business environment.
That’s according to a new CTO report from Accenture and the Project Management Institute (PMI).
“The role of CTO has emerged as a new permanent role at the executive table to assist companies with the complex transformations needed today,” says Accenture’s Global Technology Strategy & Advisory Lead, Greg Douglass, who helps clients achieve high performance through profitable growth, accelerated innovation, organisational agility, and operational excellence.
Enterprise transformation – multiple, technology-powered initiatives
While just a few years ago ‘transformation’ largely meant implementing new technologies to reduce costs and increase productivity, today’s transformations are evolving toward more strategically focused domains and results criteria.
“In the last few years, the nature of enterprise transformation has evolved, becoming far-reaching in vision and pragmatic in execution; deliberate and adaptive; competitive and collaborative; continuous and schedule-driven; value-focused and explorative,” says Greg.
And companies are increasingly engaging in enterprise transformations – multiple, concurrent, technology-powered reinvention initiatives designed to support constant innovation.
These efforts are driven by multiple forces – among them competitive pressures, blurring industry boundaries, residual pandemic effects, evolving geopolitical dynamics, and rapidly advancing customer expectations.
For some companies, transformation might be necessary because their industry is changing thanks to the looming climate crisis; for others, it might be digital disruption, demographic shifts, economic shifts, or labour shortages.
“Companies continue to adopt advanced technologies that promise to support transformative change and continuous innovation due to the competitive landscape, new opportunities to serve markets and evolving customer expectations,” says Greg.
However, Accenture research shows that seven out of 10 enterprise transformation efforts fail to meet business leaders’ expectations.
“While no two transformations are alike, at the core, they must be centred around achieving a strategic vision, fostering financial growth, and enabling a more nimble, responsible organisation in order to be successful,” Greg tells Business Chief.
This means every ounce of effort must be clearly aligned to transformation objectives, while the depth, scope, and complexity of such a transformation requires a leader whose time is dedicated to ensuring success.
According to Greg, organisations that are successful with transformation have three things in place – a well-formulated vision, a permanent transformation office, and a chief transformation officer who reports to the CEO.
What role does the CTO and Transformation Office play
The goal of the CTO is to build a permanent ‘changing capability’ or the business-wide ability to welcome and adapt to change, and seek improvements continually – and as such, must work across the C-suite and with all functions of the business.
Greg says CTOs who report directly to the CEO are most successful, as this increases their chance of success in communicating the value of changes and providing clear objections and intentions. “A Chief Transformation Officer who reports directly to the CEO can ensure that the transformation vision is properly disseminated throughout the organisation and ultimately deliver above expectations.”
He says CTOs need to team across the C-suite and business functions, serving as the orchestrator of all the facets of complex transformations and that CEOs and boards can support these leaders with the creation of a permanent Transformation Office (TO), rather than ad-hoc teams.
A transformation office can help to facilitate alignment among vision, strategy, and implementation, and coordinate multiple, concurrent efforts.
“Our research suggests that there is no dominant model for governance structure or organisation in today’s transformation offices, but governance and related controls are imperative to establish clear decision-making and transparent reporting, so transformations can both move at speed and adapt to change,” adds Greg.
What traits best serve a Chief Transformation Officer?
So, what leadership characteristics are needed in a CTO to make transformation successful?
According to research from PMI and Accenture – credibility, vision, trustworthiness, strategic thinking, and honesty ranked most highly in terms of favourable qualities of CTOs.
Tahirou Assane, Director of Brightline Initiative at PMI, who led the development of the Organisational Transformation Series and pioneered the first Digital Transformation Action Conference, says that while transformation objectives across organisations may differ, the fundamental requirements are universal.
“They must be able to balance short-term and long-term goals, create stakeholder buy-in for these goals, and foster a culture where employees and customers alike feel positive about their experiences.”
Tahirou says CTOs should be strong communicators, as they are in place to frequently make tough decisions and challenge the status quo, and to do so, they must be able to instil confidence in their vision.
According to one CTO working in the luxury retail industry, transformation without high emotional intelligence just isn’t impossible. “All we do is change, and all we do is lead through influence. I have zero profit and loss accountability, no decision rights. All I have to do is to convince people every day to do the right thing for the future, which may actually be in conflict with what they want to do today.”
Versatility is another important quality, says Tahirou. “An enterprise-wide transformation touches all parts of the organisation, so being able to speak to a broad range of stakeholders across many different functions and garner their trust is instrumental in undertaking a successful organisational transformation.”
Setting up the CTO for success
But even the most influential and versatile leaders require the right kind of support if they are to lead a successful transformation.
Tahirou says that an organisation that practices transparency and encourages employees to feel ownership in their work presents the best conditions for CTOs to drive and implement change. Having the right technologies, tools, and systems for communication in place also helps support positive and informed decision-making and sets the CTO up for success.
The CTO and the organisation in general need to balance internal and external capabilities, and transformation leaders need to evaluate the sense of urgency and costs in both the short-term and long-term to effectively strike this balance.
“Our research discovered that implementing a governance body, a transformation office led by the CTO can also help to support broad organisational transformation goals,” says Tahirou. “As transformation offices tend to rely on project management techniques, CTOs then can leverage that type of support to improve their ability to deliver and monitor transformation initiatives.”
So, how does an organisation measure the success of a CTO? Tahirou says the expected outcomes of transformation in 2022 involve organisational agility and adaptability, as well as variables like customer experience, sustainability initiatives, and diversity and inclusion, with the expected transformation outcomes in 2025 and beyond expanding to include financial results.
“While not all CTOs will immediately be measured by profit and loss accountability, universally CTOs need to build and nurture the changing capability and mindset of the organisation in order to deliver on expected transformation outcomes in the future.”