What: McKinsey reviews the role of the Chief Transformation Officer and how this role is crucial in shaping the future of companies.

Why it is important: It is easy to misunderstand what the words really imply when it comes to corporate transformation. What is a transformation anyways?

The Chief Transformation Officer (CTO) plays a crucial role in guiding organizations through significant changes, going beyond mere cost-cutting or surface-level initiatives. This role involves leading comprehensive, organization-wide transformations that fundamentally enhance performance and effectiveness. Such transformations are participatory, engaging employees in a new way of working, rather than imposing changes on them. This approach fosters a sense of ownership and involvement in the transformation process.

CTOs are unique in the C-suite for their independent perspective and experience in steering organizations through complex challenges. They focus on delivering impactful results aligned with strategic priorities and have strong support from the board, CEO, and top management. Their role includes managing both short-term improvements and long-term value creation with limited resources. Their compensation is directly linked to achieving transformation and enterprise goals.

The role of a CTO is not static but varies based on the organization's needs and the type of transformation required. There are three archetypes of CTOs:

1. Responder: Focuses on crisis management and rapid financial improvements.

1. Revitalizer: Aims for accelerated performance improvements and long-term change.

1. Reinventor: Leads substantial strategic changes, like shifting business models.

CTOs work closely with CEOs, having the authority to make decisions and challenge others in the organization to meet targets and milestones. Financial incentives can be a crucial tool for CTOs, motivating employees to engage in and contribute to the transformation process.

Business transformations, including digital transformations, are essential for organizations to reach their full potential. These transformations involve making fundamental changes in operations and continuously deploying technology to improve performance and capabilities. The Transformation Office (TO) plays a key role in ensuring the success of these initiatives by providing specialized guidance, defining goals, and acting as a steward of new performance standards.

In summary, the CTO is pivotal in driving significant organizational change, requiring a blend of strategic vision, operational expertise, and the ability to inspire and mobilize an entire organization towards a common goal.

What does a chief transformation officer do?