Chief Transformation Officers create 24% more value - could your business benefit?

In an era of constant change, many businesses struggle to execute large-scale transformations. Whether it is commercial transformation, operational improvement, digital adoption, or organisational changes, these are highly complex, cross-functional programmes and are critical to driving value creation.

Enter the Chief Transformation Officer (CTO). A role initially seen more in PE-backed businesses, we have seen huge growth in the number and type of companies looking to hire for this role.

In this article, we summarise what we have heard from Operating Partners at large-cap PE funds and Chief Executives/Chief Strategy Officers at Fortune 500 businesses, as well as recent analysis from Bain & Company. We explain:

• When you should (and should not) hire a CTO
• What role CTOs play in the business
• What differentiates great CTOs from good CTOs
• Examples of where CTOs have made a huge difference
• Final reflections if you are considering hiring a CTO

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When you should (and should not) hire a CTO

Not every company needs a CTO. When we speak with CEOs and Operating Partners, we ask two key questions to understand whether the role is necessary:

• Does the existing leadership have the bandwidth and expertise to drive the transformation?
• How cross-cutting is the transformation; does it require multiple functions to make fundamental changes?

To answer the first question on leadership, we work through a tailored list to assess how prepared current executives are for driving transformation. The areas we typically spend the most time discussing are:

• Have they experienced similar transformations historically?
• Have they worked in an organisation that exhibits many of the qualities of where they want to go?
• How long have the executives been in place?
• How deep is the expertise for the functional leaders requiring the most change?
• Has the executive team got a track record of successfully driving fast change?

In terms of the complexity of the transformation, this is often a faster part of the conversation. We talk through the main drivers of the required transformation and assess how much the current working processes for each function will change.
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If you would like to learn more about how you would bring this type of talent to your team or company, please do let us know.

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This conversation typically takes place when transformation is high on the agenda. This usually coincides with particular stages in a business’s growth:

• Post-merger integration – To streamline operations and align teams following an acquisition.
• Crisis recovery – If an organisation faces declining performance and needs a structured turnaround.
• Major commercial/business model shift – If you are making fundamental shifts to your proposition.
• Technology overhaul – If a company is undergoing a significant digital transformation (AI/new technology adoption).
• Rapid scaling challenges – When a business has received a large injection of growth capital or is already experiencing rapid growth.

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What role does the CTO play in a business?

From the outset, the CTO acts as the strategic orchestrator of change within a business. They work most closely with the CEO and COO, ensuring executive alignment on the focus and progress of the transformation. They are also:

• Responsible for managing communications with investors/shareholders on the transformation. For PE-backed companies, they often work closely with the portfolio operations team, acting as a bridge between them and the executives.
• Working with functional leadership to ensure the transformation is on track and driving the expected levels of impact.
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Bain & Company analysed the typical focus of the CTO role, and how it changes throughout a transformation programme:

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Whilst the CTO plays the part of architect from inception, as a transformation takes shape, different aspects of their role are brought to the fore:

• Integrator – Connecting the value expected from the transformation programme to its delivery is critical from the beginning.
• Operator – CTOs plan and guide initiatives that bridge multiple functions and business units.
• Coach – To the CEO and top executive team.
• Controller – Manages risks, ensuring a “red is good” mindset that values honest reporting and early warnings.

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What differentiates great CTOs from good CTOs

Having hired hundreds of CTOs over the past decade, we have a deep understanding of what makes a good CTO and, more importantly, a great one. Whilst each role is tailored to the company and specifics of the transformation in question, there are two hygiene factors fundamental to this profile.

It is a very specific skill set and requires a true “T-shaped” profile:

• Strategic breadth – Able to see how the transformation fits into the bigger vision for the business and effectively communicate with PE investors/shareholders.
• Functional/industry depth – Over the life of the transformation, a great CTO will spend more time in operator, integrator, and coach roles. To do this well, they need unrivalled knowledge of how the business operates.

In practice, we have found that the balance of 5-7 years in top-tier consulting (e.g., Engagement Manager or Junior Partner at McKinsey, BCG, or Bain), followed by 10+ years of experience in similar PE-backed businesses driving comparable transformations, is a good archetype (albeit not the only one) for an excellent CTO.

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Recent CTO hires on Movemeon

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Final thoughts: Should you hire a CTO?

A CTO can be one of the highest-ROI profiles you can hire. If your organisation is undergoing significant change, ask yourself the following questions:

• Does the existing leadership have the bandwidth and expertise to drive the transformation?
• How cross-cutting is the transformation; does it require multiple functions to make fundamental changes?

Often, the immediate response to “no” is to look at bringing in a consultancy. Whilst this is often a great first step, it is not a long-term sustainable one.

Given our experience assessing different situations on whether a CTO would be helpful, we can provide an independent assessment of what might work best in your circumstances. It is also important to note that the scope of the role can flex with the size of the company: we see the CTO role varying from 12 months to 5+ years, with seniority ranging from 10 years to 30 years. All of these options will have very different budgets.
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If you would like to find out more about how Movemeon can support your hiring, please get in touch.