Do you need a CTO Chief Transformation Officer in M&A?

As today’s business shifts around, gets new priorities, and changes direction and pace, it looks like there’s a new role bubbling up – an incremental addition to the executive team called the Chief Transformation Officer (CTO). According to Accenture, “The role of CTO has emerged as a new permanent role at the executive table to assist companies with the complex transformations needed today,”

Transformation has changed over the last few years – it used to be just ‘find a few new technologies to reduce costs and increase productivity’. Now, we’re seeking far-reaching, deliberate, programmed, value-delivering changes to business strategy, structure, and processes – a continuous stream of ‘revolution THROUGH technology’, not simply “evolution OF technology”.

Many drivers are causing this shift:

• Competition for revenue and for investment $
• Industry shifts and the pace of changes in consumption
• The post Covid pandemic fall-out
• Politics – local, global and even corporate
• Increased ESG focus.
• Ever, risk, changing customers and sales channels.

To survive the new landscape, M&A leadership needs to bring a focus to all this disruption and continuous innovation – hence a CTO position was born.

Accenture also says 7 out of 10 enterprise transformation efforts fail to meet business leaders’ expectations. In M&A, efforts to align transformation objectives are more challenging. They require  a full-time, expert leadership dedicated to success with a clear vision – with a full-time transformation office and a CTO with board access and presence.

The CTO builds a permanent business-wide ability to be open to change and continuous improvement, engaged right across the C-suite and the business(es). This business-wide focus means that C-suite reporting is preferable, likely to the CEO. CTOs need to operate across the C-suite and business functions, serving as the ‘conductor of the orchestra’ for all the facets of complex transformations.

CEOs and boards can support these leaders with the creation of a permanent Transformation Office (TO). Ad-hoc teams no longer work as effectively as planned to co-ordinate the volume of activity a core Transformation Office is required – although still augmented using ad-hoc resources and Subject Matter Experts as required for workload/execution.

The CTO and TO combined can significantly help to facilitate alignment among vision, strategy, and implementation, and coordinate multiple, concurrent efforts.

So, what do you need to seek in a CTO? Again, Accenture suggests credibility, vision, trustworthiness, strategic thinking, and honesty are the most favorable qualities of CTOs – “They must be able to balance short-term and long-term goals, create stakeholder buy-in for these goals, and foster a culture where employees and customers alike feel positive about their experiences.”

Also important are strong communication skills and a high emotional intelligence – they lead by influence not by authority and might find themselves pushing through conflicts with line accountabilities, not a good place to be if they don’t hold these capabilities. Flexibility is key – the ability to talk to everyone, understand their issues and ideas, their problems and opportunities – to roll with the punches.

What makes it work best? To set up for success, even the best need support! Organizations that drive real transparency and encourage genuine employee ownership of the problem and its resolution are the best conditions in which to drive and implement change. The right technologies, tools, and systems are just enablers – the real set up for success is people-driven.

A good CTO balances capabilities – internal and external, manages urgency – short and longer-term, optimisms costs & profit impact, and provides clear governance – escalations up, and resolutions down. Reporting ‘up and out’ is vital to ensure all are appraised of progress – good and bad.

Given all this complexity and multi-dimensional challenges, how does an organization measure the success of a CTO? Much of their work will not yield immediate returns, it will take time. Time is a scarce resource in M&A, and patience is not a strong point! Some final words from Accenture – “While not all CTOs will immediately be measured by profit and loss accountability, universally CTOs need to build and nurture the changing capability and mindset of the organization in order to deliver on expected transformation outcomes in the future.”

At Uptrend labs, we get this challenge – and are perfectly placed to be a trusted provider supporting a CTO or TO in their technology dimension, or even using one of our expert team to perform the CTO position within an organization. At whatever stage of the M&A cycle a company is in, our tech due diligence and value creation services are exactly the sort of third party expertise that can really benefit a CTO in creating actionable insights to improve business operations quickly and efficiently.

Contact us to discover a new kind of collaboration, a new approach to technology and business, and of course the best practices for ensuring you obtain the real value in your next M&A transaction.