The pros and cons of a chief transformation officer
They have the power to transform an entire business, but mistakes can be costly. So what are the factors companies should consider when hiring a chief transformation officer?
Chief transformation officers (CTOs) are increasingly taking a seat at the top table and exerting a growing influence on the long-term strategic decisions of businesses.
With a mandate to drive change, innovation and growth, the appeal of the CTO role is clear and the advantages are many. But there are fundamental mistakes businesses and CTOs make that must be avoided if the role is to be conducive to business transformation.
One of the main advantages of having a CTO is they ensure the transformation does not get lost amid the day-to-day running of the business. With eyes on all parts of the operation and at every level, they are uniquely positioned to balance the everyday with a strategic vision of the company.
For publishing company DC Thomson’s chief strategy and transformation officer Rebecca Miskin, it is about working with all leaders within the business to constantly understand what the biggest challenges and opportunities are. She then pulls these together to create an overall vision that both shareholders and employees understand and believe in.
“Day to day, my job is building bridges, listening and reframing questions, learning from other industries and imbuing that into the organisation, and focusing on outcomes and priorities,” Miskin explains.
“All this is not through control, it’s through influencing. The idea is to ensure that in years to come shareholders have the rewards they were looking for and staff are the most poachable teams in the market, but choose to stay because of the opportunities and the values of the organisation.”
Key to the success of the role is “seeing yourself as an enabler”, says UKTV/BBC Studios UK’s chief marketing and innovation officer Simon Michaelides. Rather than taking ownership for anything away from anybody else, CTOs must see it as their job to facilitate change.
“What a CTO can bring to the party is the ability to pick up some of the work, often quite a lot of the heavy lifting, that others in the organisation don’t have the capacity for because of their day-to-day commitments,” he explains.
“There’s a bridging role between the future and the present. While everyone understands the strategy and has the intention to head in that direction, often you’re anchored in the demands of the here and now. What a CTO does is slot in between the two and act as a bridge. You’re the only person who has the capacity to focus on how you get from A to B.”
One of the major mistakes businesses make when they hire a CTO is they remove ownership of the transformation initiatives from the line or the managers.
“That is absolutely the wrong move,” says McKinsey’s transformation senior partner Richard Hudson. “We fundamentally believe transformation needs to be line owned and line managed, and the people who design these initiatives are the people running the business.
“They need to buy into them and they need to accept them, because they are ultimately the people who are going to have to live with the consequences of them after the transformation.”
Effective CTOs will build cross-functional project teams and involve the day-to-day business with the transformation initiatives from the beginning. This will ensure their role is not seen as siloed from the rest of the business and everyone sees transformation as their job too.
“Where I’ve seen it done badly is where individuals end up building an ivory tower around themselves,” says Michaelides. “What you then tend to see is the day-to-day business units then reject the work, they develop not-invented-here syndrome and they reject it because they don’t feel like they’ve been listened to or they haven’t had a hand in influencing the shape of a project.
“Then equally you have a lot of great work going on in those ivory towers, but it’s not getting any traction because it doesn’t have somewhere natural to live.”
Another mistake businesses make is they “under-gun” the role in terms of seniority and end up with somebody who is more of a process person or a project manager, “who checks in on how things are going, but doesn’t add any value to the transformation”, says Hudson.
“CTOs have to be seen as equal to the rest of the executive committee, if not slightly above,” he says. “Ultimately this person is going to be leverage for the CEO so the organisation needs to understand that when the CEO is not in the room, the CTO and CEO are connected at the hip and therefore the CTO is talking for the CEO. That way you can get the leverage effect from the CEO.”
With this in mind, there are clear advantages to hiring somebody who is already in the executive team. Michaelides was UKTV’s chief commercial officer before taking on the CTO role. This meant strong relationships with the rest of the leadership team were already in place and he was plugged into the day-to-day business conversations and aware of all the work going on.
There is an interesting question of whether the CTO role is time bound or permanent and naturally this will depend on what the business is trying to achieve.
While Michaelides’s time as CTO was a “natural evolution” that happened in phases and came to a natural end after seven months, he has retained all of the future-facing innovation work in his new role as chief marketing and innovation officer.
Similarly, DC Thomson’s Miskin sees her role evolving and is not expecting to be doing what she is today in a year’s time, “let alone three”. Whether that is under the same title or a different job description, Miskin will “embrace uncertainty” because that is what CTOs do.