Many companies are embarking on digitalization and Industry 4.0 initiatives with dedication, enthusiasm, and a willingness to invest to assert themselves against the competition with new ideas and products. But what happens if the organization isn’t as innovative, flexible, and agile as envisioned in the strategy paper? When investments in digital tools and change measures fail to yield results, and deadlocked projects and internal conflicts of interest overwhelm managers who should be shaping change?
Instead of riding a wave of success, company management is suddenly confronted with a threatening tsunami of resistance and organizational complexity. In this situation, a Chief Transformation Officer (CTO) can bring the necessary expertise to executive management to lead change initiatives in the right direction.
Orchestrating Complexity and Creating Synergies: The Role of the CTO
The role of the CTO has been recognized in the Anglo-Saxon world for several years. With the rise of automation, digitalization, and remote working, it is now increasingly important in large SMEs and corporations in German-speaking countries. It can be characterized by the following responsibilities and features:
- CTOs are responsible for leading transformation efforts at the top of the company to ensure long-term competitiveness. They support the Management Board in driving forward the implementation of the company’s value creation agenda as an interface to the business units. To this end, they are usually given a precise schedule; accordingly, the CTO must evaluate and prioritize change projects and then focus on essential projects to achieve desired results within the available timeframe.
- CTOs orchestrate the complexity of organizational change, which often takes place in many individual initiatives with different goals, responsibilities, and schedules. They are where the threads of transformation come together. Responsibility for day-to-day decisions and the implementation of these initiatives lies with the managers in the business units, while a CTO must oversee these fields of action and support or realign them as required.
- CTOs lead the organization into the future. They take an independent and objective look at the structure and working methods of the company. He or she must be able to grasp the highly networked nature of an organization and, for example, break it down into a “big picture” and make it communicable.
- A CTO is the face of the transformation, sets the tone, motivates the team, and challenges established thought patterns, so can be both confrontational and diplomatic. However, CTOs are not just observers and drivers of change. They should also ensure synergy effects by bringing together employees, infrastructures, and information across functions and focusing on innovation and growth.
As part of digital transformation, many change projects are aimed at improving the business infrastructure and customer experience. Some companies therefore also involve their CTO in the market launch of digital products and services as well as in the further development of business processes, e.g., in sales, marketing, or cooperation with partners and suppliers.
Looking Beyond the Horizon: Tasks of the CTO Role
The CTO function can prove to be critical to a company’s survival. In traditional structures, even top managers sometimes lose sight of what the organization could achieve with their skills and qualities. A CTO is familiar with turbulent working environments and knows how to use data and facts to identify a company’s strengths and weaknesses. However, the focus is not on interpreting past errors or results but rather to use the information gained to think ahead about the future – or rather “futures” – of the company and to drive it forward along the best development paths. This “looking beyond the crest of the wave” of transformation is necessary in at least three dimensions of action:
Three dimensions of action
1. Building a Cross-Functional Change Team
Perhaps the most time-consuming task is to set up a cross-functional team to drive change processes forward in a coordinated manner. A CTO should combine the different strengths of the employees to bring about change for the entire company.
2. Mapping and Further Developing Business Architecture
A CTO must know the critical points of the company and know which resources – in particular, which processes – are needed. Knowledge, qualifications, data – where available. With an overview of which people and teams are working on which tasks, CTOs can better orchestrate the necessary resources in the event of changes.
3. Consistently Aligning Business Model with Customers
What attracts customers to the company and retains them? What products or services could inspire them in the future – and what would they spend on them? CTOs know how the competition answers these questions and how disruptive competitors live customer orientation.
For example, the CTO visualizes customer journeys, i.e., he describes both customers and the start and end points of their “journey” when purchasing products, during initial contact, etc. This makes it clear, among other things, how customers can be better reached and how these journeys can be made more pleasant.
Tailwind for the CTO
As the person responsible for this range of tasks, a CTO is particularly valuable for companies with long-established, complex structures and hierarchies that tend to slow down rather than embrace change initiatives. Especially in organizations where the self-image from a previous, successful era is very present, it will take a lot of energy for the CTO to solve these tasks and set a new course.
Successful CTOs therefore receive the full support of the management. For example, the CEO should explain the position and agenda of the CTO to other managers and employees, emphasizing that it has full support all the way up to board level. This support empowers the CTO to engage employees throughout the company, to actually drive change – and to tame the complexity tsunami.
*The designation is understood to be gender-neutral in this text