Why You Need a Chief Transformation Officer

“Increasing Number of Companies Create Chief Transformation Officer Role.”

That was the headline of a recent press release announcing the results of a new report from PMI’s Brightline® Initiative in collaboration with Accenture. The report – “The Chief Transformation Officer: Why Transformation Leaders Matter, What They (Should) Do, and What They Need to Succeed” – reports on the emergence of chief transformation officers (CTOs) as a new role in the corporate C-Suite.

What interests me, however, is what’s behind this headline – i.e., what’s happening in the broader business environment that’s creating the need for this new role. Why, in other words, is the CTO suddenly “a thing.”

Well, the reality is business transformations are changing. As the report notes, “just a few years ago, ‘transformation’ largely meant implementing new technologies to reduce costs and increase productivity.” It signaled something significant was happening. But it also suggested a one-time event – something exceptional or out of the normal course of business.

That’s no longer the case. Transformations have become a permanent fixture of business life. Given all the challenges and complexity they face, organization leaders “understand that, ultimately, their mandate is to build a permanent ‘changing capability’ – a business-wide ability to welcome and adapt to change and to seek improvements continually. Taking a linear approach to organizational change is not feasible when the need for change is ever-present.”

The report notes that transformations today encompass multiple domains and functions. They span people, processes, platforms and culture. They reach beyond organizational and geopolitical borders. And they extend across a company’s entire ecosystem of customers, suppliers, partners and competitors.

They’re also not nearly as effective as they might be. Our survey – of 350 transformation leaders across 25 countries and 18 industries – found that seven in 10 enterprise transformations fail to meet business leaders’ expectations.

Hence the need for a CTO – a versatile leader who can become the “focal point” for transformation initiatives – someone who understands and respects diverse stakeholder points of view, who is able to build trust and work collaboratively to drive change, and who can mobilize “the power that lies at the intersection of technology and human creativity.”

Indeed, when asked to select traits that they felt were most important in a CTO, respondents to our survey listed these five: credible, visionary, trustworthy, strategic and honest. The top CTOs, they said, are “strategic visionaries who can roll up their sleeves, who understand the importance of building credibility and trust in the process, possess high emotional intelligence and integrity, and are capable of setting and clearly communicating transformation objectives.”

The CTO is thus becoming an essential element in an organization’s transformation strategy. In fact, our survey found that companies that are successful in their transformation efforts share three characteristics:

A well-formulated transformation vision. Ultimately, the success of any transformation depends on people – not only the stakeholders directly involved but the broader organization as well. It’s critical therefore that leaders at the very outset articulate and communicate a clear vision for the transformation. People need to understand what the transformation will accomplish, how it will be implemented and how it will benefit the organization and themselves personally.

A permanent transformation office. As noted, transformations are a fact of life today, and organizations with permanent transformation offices are simply more successful than those with ad-hoc teams. Having standardized governance processes and methodologies in place helps instill adaptability and speed. It contributes to greater alignment of vision, strategy and implementation – especially when an organization is juggling multiple, concurrent efforts. It doesn’t matter what governance model the transformation office uses. What’s important is that such a model exists. Also noteworthy: transformations that use formal project management techniques have a higher rate of complete success than those that didn’t.

A CTO who reports to the CEO. Having a C-level title signals that top management is serious about its transformation efforts and having the CTO report directly to the CEO further underscores that support. Indeed, 43 percent of respondents to our survey report directly to the CEO. And that number rises to 62 percent if the individual holds the CTO title. While only 15 percent of total respondents have that title, fully 95 percent believe that the CTO role is critical for transformation success.

At PMI and Brightline, we couldn’t agree more. The need for someone in the CTO role – whether they have the CTO title or not – will only increase in the months and years ahead. Not only is business becoming more complex and challenging, so is the larger societal context in which businesses operate.

That’s reflected in our survey results. When asked about the factors compelling companies to engage in enterprise transformations today, respondents point primarily to standard business challenges, such as evolving customer expectations and the quest for efficiency. When asked about future drivers, however, respondents are more likely to cite complex socio-political factors, including political, economic and regulatory challenges and the need for greater inclusiveness and diversity. As companies gear up for these new challenges, adding the CTO role to the C-suite makes all the sense in the world.

To dive deeper into the research findings with experts from Brightline and Accenture, watch our “Role of the Chief Transformation Officer” webinar, here.