April 4, 2019 | by Tod Martin
Every organization is coming to grips with the reality that we’ve entered a new era, defined by continual transformation. We’re all learning to succeed in the new normal of relentlessly faster, increasingly complex, never-ending change.
Acclimating to continual transformation is stressful, to say the least. Run-the-business responsibilities are as pressing as ever, if not more so. At the same time, focusing on more ambitious, create-the-future goals feels critically important but difficult to prioritize or push forward. The strategic strength of most organizations struggles under this heavier lift.
You see more and more leadership teams responding to this by augmenting their strategic strength. A growing trend is appointing a new c-suite role, the Chief Transformation Officer (CTO), or establishing a Transformation PMO. This trend is particularly evident in organizations with larger employee populations and significant legacy in last-era value chains, cost structure, and technology.
This is a good but ultimately interim solution to the new reality of continual transformation.
Our view is that many organizations would benefit from re-designing their corporate strategy function into a corporate transformation function. Far more than fiddling with semantics or adjusting optics, evolving corporate strategy into corporate transformation creates an opportunity to re-align other service-oriented functions/resources so that your organization is better able to build the adaptive strength that transformation takes.
Now would be a good time to take a minute to re-center on exactly what transformation is.
Transformation is a heightened level of adaptation. Things adapt in response to changing conditions or new possibilities, and they do it because it is necessary to survive or thrive.
Adaptation can be reactive, proactive or anticipatory. What that means is that you and your organization can wait to adapt until the need to do so is clear and present. Or you can look ahead and act on a rising need to adapt. Or you can sense what’s ahead or imagine what’s possible and have the courage to adapt ahead of the need to adapt.
“If we want things to stay as they are, things will have to change.”
There’s a quote from Giuseppe Tomasi di Lampedusa’s novel The Leopard that goes, “If we want things to stay as they are, things will have to change.” It’s useful in this context as a way to think about adaptation, which can be either neutral or generative. Neutral adaptation is enough to maintain status quo, while generative adaptation imagines and creates greater or de novo value.
Adaptation isn’t wholesale change. Even at the heightened level of transformation, you’re building on the past rather than jettisoning it. The more transformative, of course, the more it does require the willingness to distinguish what is essential to preserve from what is necessary to let go of. The butterfly does keep the DNA of the caterpillar, but it becomes something more than a better caterpillar.
Over the last few decades of the 20th century, strategy became a specialized function in many organizations. Today, most Fortune 100 companies, for example, have a corporate strategy group. Typically, this group is focused on establishing and facilitating an enterprise-wide strategy process, as well as serving as the aggregator of departmental or business unit strategies.
As disruption and transformation have become the norm, the strategy function is too often proving to be a strong but isolated muscle.
Because corporate strategy is a service-oriented corporate function, it relieves most other leaders of some strategic responsibility, by centralizing the strategic muscle of the organization.
This structure worked great when incremental growth was sufficient to sustain success and satisfy Wall Street. But as disruption and transformation have become the norm, the strategy function is too often proving to be a strong but isolated muscle. It struggles to engage the rest of the organization in recognizing the need for stronger foresight and faster, more courageous adaptation.
Getting strategy back into fit-for-purpose condition proves more difficult than many organizations expect. The slack or even atrophied strategic muscle of other leaders result in an organization having a slow “change metabolism.” It struggles to change at or above the pace of change taking place in the world around it.
This is often when a chief transformation officer or transformation office is brought to bear.
Appointing a CTO is an important, positive step. Transformation being at the table, so to speak, means that the choice to disrupt the status quo is validated and given a voice.
In most organizations, a change agent — whether an individual or small group — is usually the initial advocate for transformation. Change agents (even when it’s the chief executive) often have to exceed their authority in building a case and coalition for disrupting the status quo — especially if there is a long tail of the status quo having served the company well enough.
The CTO role needs to be set up so that the role shifts from having high political capital costs to having a clear strategic mandate. This means giving the role the responsibility and requisite authority to be effective in helping the organization develop the level of strategic strength that transformation takes. This doesn’t mean a “transformation czar” with carte blanche authority, but it does mean that some functions will likely need to be reshaped and potentially realigned to ensure the organization improves its ability to adapt.
There are 3 areas where a CTO would be smart to focus, assess and take responsibility for making adjustments in order to build “core” transformational strength.
1. Increasing the strategic capability of the organization.
Rather than an isolated muscle, siloed in a service-oriented corporate function, strategic capability needs to be a connected muscle, capable of helping to coordinate the foresight and planning of the organization.
Building this capability means challenging processes that tend to use the same inputs and result in the same outcomes. Typically, this requires widening perspective, challenging engrained assumptions and long-standing industry orthodoxies, and exploring broader emerging possibilities. You may find yourself conducting “couch-to-10k” strategy workshops or strategic boot camps to build both individual and team strategic strength. It’s the key to shifting into true adaptive strategy.
2. Improving the organization’s ability to think through complex problems and make unfamiliar and often uncomfortable choices — particularly as a leadership team.
If there is one aspect of transformation that most challenges an organization, it is how many complex, integrative choices transformation requires. High levels of autonomy have to give way to coordinated thinking and execution.
Getting better at handling complexity and contradiction focuses a CTO on helping leaders and the rest of the organization grow in effectiveness. This is an area of people development that often gets little if any attention, and yet can leave an organization without the ability to think and act in ways that the future clearly requires more of.
3. Improving strategic internal communications.
Transformation requires a high level of common context and understanding for everyone in an organization. If that context and understanding gets trapped at the top of the organization during the strategy process, it only makes execution harder (if not impossible), because the majority of execution happens deeper in an organization.
Rather than setting up Corporate Transformation as yet another service function, what the future requires is the willingness to make the function a servant leader — focused on creating an advantageous outcome for the entire organization, by building the strategic strength, greater effectiveness, and shared sense of understanding that allow everyone to contribute their best to what the future requires.