90% of organisations are undergoing some form of transformation, but statistics are showing that a shocking 70% of those transformations fail. The good news?
A recent study released by McKinsey has brought to light that the vast majority of organisations could have missed something quite obvious – the Chief Transformation Officer.
Chief Transformation Officer – not to be confused with Chief Technology Officer – is a relatively new concept for businesses.
Let's delve into the subject, and find out how some organisations are witnessing significant progress on their change journey and enhancing their overall competitiveness by adopting the role into their C-Suite.
In this blog, we will break down:
What is a Chief Transformation Officer?
A Chief Transformation Officer is the key executive responsible for overseeing a company’s holistic organisational change and improvement. They play a crucial role in guiding the organisation through changes, whether this is Digital Transformation and technological advancements, process improvements, or broader strategic shifts. The Chief Transformation Officer can also be referred to as the CTO or CTrO (both acronyms are being used by the likes of McKinsey and Deloitte).
A relatively new but an increasingly more common role in business today, the CTO/CTrO will partner with the CEO and collaborate with C-suite members to successfully navigate and accelerate change on large-scale change programmes.
Much like a running mate collaborates with a presidential candidate, the CEO and CTO work together to shape and execute the company's transformation agenda, ensuring alignment with strategic goals.
Summarised – The Chief Transformation Officer:
• Known as CTO or CTrO
• Is the key executive responsible for business change, transformation and improvement
• Partners with CEO and collaborates with C-suite
• Accelerates and navigates large scale change programmes
• Shapes and executes the company's transformation agenda, aligned with strategic goals.
Why are we seeing an ever-growing number of organisations appointing a Chief Transformation Officer (CTO/CTrO)?
Digital Transformation, while somewhat less complex than today, has been a part of the business landscape since the 1970’s.
Over the years, businesses have become used to change. They have become better at managing it and many have become skilful at navigating it - adopting new business processes, revenue models, and organisational structures. So much so that, over time, transformation and change efforts have become ingrained as the combined responsibility of the CEO and the rest of the C-Suite. This has worked well up until now.
Transformation is taking a prime position on the agenda for businesses like never before. Anyone working within an organisation right now will understand that change activity is rapid. In fact, in the Digital Era, the rate of change is not only faster than ever, but it's also accelerating and at the same time it is becoming more complex.
Accenture reports that over 90% of businesses are already engaged in some form of transformation, but data is showing a shocking failure rate of 70%. Why might this be? Whilst businesses are facing unprecedented challenges and opportunities, it is the scale and complexity of these challenges that make business transformation a more substantial undertaking than in the past.
In today’s fast moving corporate world, a business’s ability to keep up with the rate of change not only affects its competitiveness, but its survival.
Blockbuster and Kodak are prime examples of this. Despite being pioneers and dominant forces in their respective markets, their reluctance to pivot quickly and adapt to industry transformations left both businesses bankrupt. Blockbuster failed to shift towards digital streaming quickly enough to compete with emerging digital streaming services, and Kodak couldn’t establish a strong presence in the growing market for digital photography.
That’s the sombre lesson of not transforming your business quickly enough - even household names can be here one day and gone the next if it fails.
Summarised - Why is the Chief Transformation Officer role growing in popularity?:
• Greater urgency and importance for transformation than before
• Change is more rapid than ever and accelerating
• Change is bigger, riskier and more complex than before
• Keeping up with change is a matter of survival
Why does your organisation need a dedicated Chief Transformation Officer (CTO / CTrO)?
Transformation today is a complex major change for organisations. It has the potential to make or break a modern business, which is why it is vital that it receives close oversight, steer and day-to-day direction. In the past, the CEO and the C-Suite would have responsibility for change alongside usual responsibilities of directing and driving the normal daily running of the company.
Change in the Digital Era is bigger, riskier, has more moving parts and greater potential for failure. It is arguably the most critical activity that an enterprise can undertake. And as such, demands undivided attention and specialised expertise.
Enter - the dedicated Chief Transformation Officer.
A dedicated CTO/CTrO can ensure continuous, close direction and focused execution, accelerate the pace of change, and maintain a clear and unwavering commitment to transformation objectives, ultimately optimising the chances of success.
They navigate the risks, drive cultural alignment, foster innovation for the change, and successfully steer the organisation through the intricate and all-encompassing nature of the business transformation.
Summarised - The benefits of a dedicated Chief Transformation Officer:
• Continuous, close direction of the transformation
• Focused execution
• Accelerated pace of change
• Maintain clear and unwavering commitment to transformation objectives
• Risk navigation
• Cultural alignment of transformation
• Foster innovation
It is important that a Chief Transformation Officer is an entirely separate role in the C-Suite to ensure transformation is achieved.
The risks of combining the Chief Transformation Officer (CTO / CTrO) with another C-Level role
It is quite common for organisations to assign the role of Chief Transformation Officer to a
C-level leader in combination with another responsibility (e.g., combining CTO and CIO responsibilities). This approach should be undertaken with extreme caution as it carries significant risks. Not only will executive-level focus be diluted, but it will hinder the individual's ability to provide the consistent, strategic leadership needed for successful transformation.
In circumstances where this is unavoidable, businesses should proactively mitigate risks by providing supplementary executive leadership in the form of specialised external change experts on an interim or fractional basis. This ensures a dedicated focus on navigating the complexities of transformation without compromising leadership effectiveness.
Summarised – The risks of combining the Chief Transformation Officer role with another C-Level role:
Diluted Focus
Strategic Leadership Challenges
Increased Likelihood of Encountering Pitfalls and conflicting priorities
Hindered Effectiveness
Increased risk of Transformation Failure
Cultural Misalignment
Overwhelming Responsibilities
Limited Time and Attention
What are the key responsibilities of a dedicated Chief Transformation Officer role?
Organisational change is complex and multifaceted in nature, but with significant business rewards when successful. This is why the Chief Transformation Officer (CTO/CTrO) role is incredibly intricate and time-consuming.
A Chief Transformation Officer requires extensive experience, skills, and a breadth of understanding. They must have a strong cross-functional background (not just an expert in one area) and have seen a variety of different business situations and challenges during their career. This experience is essential as this will ensure they know how to balance interpersonal intricacies with the strategic and operational imperatives of the transformation.
The role of a Chief Transformation Officer spans four key responsibilities:
Acting as high-level orchestrator across all transformation activities
The day to day responsibility for transformation oversight ensuring speed and direction of travel
Be the public face of the transformation, representing the initiative to internal and external stakeholders
Driving activities that will achieve the long-term fitness of the organisation
What are the key reasons organisations benefit from a dedicated Chief Transformation Officer?
Given how high the stakes of transformation are for modern businesses, it is telling that in a recent study by Deloitte’s, the engagement of a dedicated Chief Transformation Officer was reported as a top predictor of transformation success.
If this isn’t convincing enough, Bains & Company data from 2023 confirms that businesses with a dedicated Chief Transformation Officer on their C-Suite are achieving an average of 24% more of their expected value on their transformations and overall achieving vastly greater transformation success.
When undertaking a major change, an organisation should consider the following
key reasons why organisations benefit from a dedicated Chief Transformation Officer:
Specialised Focus
Transformation requires a dedicated focus that goes beyond the day-to-day responsibilities of the other C-Suite roles. The CTO/CTrO concentrates solely on leading and managing the complexities of the transformative journey.
Temporary Nature of Transformation:
Transformations are temporary initiatives with a specific timeline. Creating a dedicated role ensures that someone is accountable for the successful execution and completion of the transformation.
Holistic Oversight:
A Chief Transformation Officer brings a holistic view, considering all aspects of the organisation that need transformation. This involves technology, culture, operations, and other elements, ensuring a comprehensive and integrated approach.
Neutral Perspective:
When your Chief Transformation Officer is not tied to a specific department or function, they provide an unbiased perspective. They can assess the entire organisation objectively and make decisions in the best interest of the overall transformation.
Change Management Expertise:
Transformation involves significant change management efforts. A CTO/CTrO is well-versed in leading change initiatives and understanding the complexities of navigating organisational shifts.
Cross-Functional Collaboration:
A dedicated CTO/CTrO facilitates effective collaboration across different functions. Their role involves breaking down silos, ensuring alignment, and fostering teamwork, which might be challenging for a C-Suite executive with department-specific responsibilities.
Enhanced Accountability:
Having a dedicated CTO/CTrO enhances accountability. They are explicitly responsible for the success of the transformation, ensuring that goals are met within the established timeline and budget.
Risk Mitigation:
The dynamic nature of transformations involves risks. A CTO/CTrO, specialised in managing transformation risks, can proactively identify and mitigate potential challenges, minimising the impact on the organisation.
Innovation Integration:
A CTO/CTrO is equipped to integrate innovative practices and technologies into the organisation, fostering a culture of continuous innovation, a critical aspect of successful transformations.
Summarised – What are the key reasons organisations need a dedicated Chief Transformation Officer role?
Specialised Focus
Temporary Nature of Transformation
Holistic Oversight
Neutral Perspective
Change Management Expertise
Cross-Functional Collaboration
Enhanced Accountability
Risk Mitigation
Innovation Integration
What are the 10 key roles a Chief Transformation Officer (CTrO / CTO) undertakes throughout the Digital Transformation journey?
A Chief Transformation Officer (CTrO / CTO) must have experience and expertise across a varied set of skills in order to successfully carry out 10 different crucial roles throughout the change journey.
These roles are:
The Strategic Architect:
Develops a comprehensive transformation strategy aligned with organisational goals.
Shapes the overall vision and roadmap for change initiatives.
The Integrator:
Aligns various initiatives and ensures they work cohesively to achieve overarching objectives.
Integrates different business units and functions to foster collaboration.
The Operator:
Oversees the day-to-day execution of transformation initiatives, ensuring they stay on track.
Manages the operational aspects of change, addressing challenges as they arise.
The Coach:
Guides and supports teams through the transformation process.
Provides mentorship and empowers individuals to embrace change.
The Controller:
Monitors and assesses the progress of transformation initiatives.
Implements corrective measures when necessary to maintain alignment with strategic goals.
The Change Champion:
Acts as a visible advocate for change, inspiring enthusiasm and commitment among stakeholders.
The Risk Manager:
Identifies potential risks associated with the transformation and develops risk mitigation strategies.
The Communication Facilitator:
Ensures effective communication throughout the organisation regarding transformation goals and progress.
The Technology Navigator:
Utilises technology as an enabler for transformation, exploring innovative solutions.
The Cultural Steward:
Nurtures a culture of continuous improvement and adaptability within the organisation.
Summarised – What are the 10 key roles of a dedicated Chief Transformation Officer?
Strategic Architect
Integrator
Operator
Coach
Controller
Change Champion
Risk Manager
Communication Facilitator
Technology Navigator
Cultural Steward
Final thoughts
McKinsey report that of over 70% of all major transformation projects fail. This is a scary statistic – especially given that the survival businesses can quite literally hinges on how successful the business change is.
Global investment in digital transformation is expected to reach $2.8 trillion by 2025 according to the latest Statistica report. This highlights not only the speed of change and competitiveness in the market right now, but that businesses are placing extreme importance on getting their change right by putting their money where their mouth is.
The case is compelling for an organisation to engage a dedicated Chief Transformation Officer (CTrO / CTO), given that organisations that use one achieve greater transformation success (typically 24% more of their expected value).
The role of a Chief Transformation Officer has become a critical linchpin in navigating our rapidly shifting landscape. To thrive and emerge as industry leaders, businesses must recognise the indispensable value of a dedicated CTO or CTrO in their C-suite.
Interested in finding out more?
Contact Eight Eights today on hello@eighteights.com to find out more about our Interim, Contract and Fractional CTO services and discover how we can partner with your business or organisation.
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