Chief Transformation Officers (CTO) result in a 24% uptick in value from PE transformations

According to a recent article from Bain & Company, a Chief Transformation Officer (CTO) to oversee a transformation results in a 24% uptick in value.

In this article, we look at where CTOs are most commonly hired, before looking at how Bain saw the role evolving during a transformation. This is a great introduction to both how a CTO could be implemented and the overarching value these hires offer.

When to hire a CTO

Here at Movemeon, we most commonly support PE-backed portfolio companies in hiring a Chief Transformation Officer.

CTOs are commonly hired post-acquisition. The potential for transformation of the business has been identified during the deal due diligence. Now is the complex task of realising the value from the transformation.

Transformations are, by their nature, cross-cutting and reliant upon adopting new technologies and processes. Executed effectively, they are the ultimate driver of an increase in equity value. However, a lot can go wrong.

Whilst not common across all funds, a number we work with have increasingly looked to de-risk this transformation by hiring a Chief Transformation Officer. They are typically an ex-consultant who has subsequent experience driving transformation in businesses, often in a PE-backed environment.

If this sounds like something that could benefit your company, or a company in your portfolio, please do click here to ask any questions.

How does the CTO role evolve

According to Bain, the CTO plays five critical roles: strategic architect, integrator, operator, coach, and controller. Each role is important at different stages of the transformation. 

• As a strategic architect, the CTO advises and aligns the CEO and executive team on the transformation's ambition and goals. 
• The integrator role involves connecting the expected value of the transformation to its delivery, prioritizing initiatives, and ensuring efficient resource allocation.
• As the transformation progresses, the CTO takes on the operator role, planning and guiding initiatives across different business units and functions. 
• They also act as a coach to the CEO and top executives, supporting their journey of adoption, identifying key skills for the organization's success, and offering training and coaching. 
• In the controller role, the CTO manages risks, monitors progress, and addresses roadblocks, ensuring early successes and momentum for the transformation.

They saw the role evolve as follows:

How to help CTOs succeed

CTOs often find themselves in the position for the first time, and external coaching or peer mentoring can be highly valuable in helping them succeed in their roles. Building a strong team of leaders with complementary skills is also crucial for CTOs to effectively lead transformations.

The most effective CTOs report directly to the CEO and are an integral part of the CEO’s leadership team. They should have unfiltered access to the executive suite and should arrive as a peer of the CEO’s other reports.

Speak to Movemeon today about partnering to equip your organisation with top PE strategic talent.

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