Does Your Business Need a Chief Transformation Officer?

By Anna Codrea-Rado, Contributor

Disruptive forces from emerging technologies are spurring executives to drive change within their organizations. One in three businesses still fear they will be left behind, according to research from Dell Technologies, and 78 percent believe digital transformation should be more widespread throughout their organization.

In response, businesses across all sectors are embarking on digital transformation journeys. By 2021, spending on digital transformation technologies is predicted to reach more than $2.1 trillion, according to the market intelligence firm IDC. The impact of these transformations is also expected to be high, with the World Economic Forum estimating that the value of digital transformations for both society and industry could reach $100 trillion by 2025.

As digital transformation becomes the new normal, companies are increasingly looking to appoint a dedicated executive to own the change. The chief transformation officer (CTO) is tasked with heading up a business’ digital strategy and leading the organization through change. But what does the role of the CTO actually look like and how can a business benefit from hiring one

The Need for a Digital Transformation Leader

“In these times of VUCA [volatility, uncertainty, complexity, and ambiguity], often organizations have a sense that they are literally on a burning platform,” said Sue Unerman, CTO at the media agency MediaCom. “The problem with the burning platform is that it makes everyone want to jump into the sea, rather than breathe and deal with what they need to deal with.”

The management consultancy firm McKinsey believes one way to navigate these turbulent waters is by hiring a CTO. “An experienced and highly capable leader will significantly improve the chances of a successful transformation,” its report on chief transformation officers stated.

According to McKinsey, a CTO must strike the balance between short-term improvement and long-term value. The role, which is usually independent and held by someone with experience in turbulent corporate environments, makes sure everyone in an organization takes responsibility for change. The report’s authors wrote: “Effective CTOs inspire employees and act as role models for the sort of behavior needed to encourage and embed change.”

At MediaCom, Unerman said her role as CTO is not to own the transformation but be its biggest ambassador. “Transformation is an ongoing process. We’ve been involved in it for probably over two decades and we expect to be continually asking ourselves what should we change, how fast, and where in order to get ahead of the curve.”

The Culture of Change

Corporations are not the only ones turning to the CTO role: The trend is extending into the public sector, as well. Charles Bodsworth is the first assistant director for digital transformation at Britain’s Imperial War Museum, a national museum founded in 1917.

“The museum is value-driven rather than profit-driven,” Bodsworth said, explaining that the challenges he faces are quite different to those that a CTO working in a corporate environment might experience. “I’m embedding the notion, which can be quite uncomfortable, that agility and flexibility is part of the way we all have to work now,” he said.

“”The secret of being a truly transformed organization is to start with culture.”
—Sue Unerman, CTO, MediaCom

What Bodsworth and Unerman’s roles have in common is a focus on the change management—or cultural—aspect of their work. “The secret of being a truly transformed organization is to start with culture, ” Unerman said.

Bodsworth agreed, “You need to be able to bring people with you on the transformation journey.” He believes it’s important for a CTO to get buy-in from the rest of the company than worry too much about the ins and outs of the role. “There’s no CTO school.”

There Is Always More to Change

When UPS announced it was appointing a CTO, it was widely understood as a signal that the CTO trend was here to stay. What was noteworthy about the hire, Scott Price, was that he joined the company from Walmart. According to the McKinsey report, hiring externally, as UPS did, is one way to ensure that the post-holder is not “associated with the decisions of the past.”

As with all aspects of the CTO role, however, there is no blueprint. Ian Mitchell, CTO of the technology consultancy firm 6point6, explained that whether a CTO should be an internal or external hire depends on what the business wants the post to achieve. “Some CTOs I know perform the function of a CIO and focus on maintaining their business’ internal IT systems,” he said. “In this scenario, an internal hire brings with it the benefits of existing domain knowledge and a clear understanding of the business and how it functions.”

Ultimately, what constitutes success for a CTO is tricky to measure because of the inherent implication that once the objectives are achieved, the role becomes redundant. “I have joked with colleagues that once the jobs done, my role won’t be needed anymore,” Bodsworth said. “Success would look like us not needing my role anymore.”

Unerman, however, sees things slightly differently. “Part of the principle by which you work is that you always try and make yourself not needed,” she said. “You’re constantly trying to empower everybody else to work in new ways. But my very real experience is that everything is changing all the time—and there is always more to change.”