CTOs: business transformation calls for a special approach

We live in a volatile world where the business climate is as changeable as players in a sports team.

We live in a volatile world where the business climate is as changeable as players in a sports team. A bad tackle, a wrong option — or a bad investment — can stall the game and lead to long-term injury. You play on with the risk you’ll be hurt at some point, whether on the field or in the boardroom, because without risk there’s no growth.

But a new player is entering boardrooms and pushing boundaries across Australia: the chief transformation officer.

Companies have recognised this need and recently we have seen formal CTO roles emerge inside the ASX 200 with Perpetual, Woolworths, Myer, NBN, QBE, Caltex, Network Ten and Coca-Cola Amatil just some of the corporates. This trend should extend to include major sporting bodies, associations and local government given recent scrutiny on management capability and governance.

But let’s not forget about the employees in these corporations, where a collective feeling of apprehension and the fear of the unknown can greatly influence the outcome of a turnaround.

For them, transformation or restructure is synonymous with cost cuts and redundancy, but this not always the case.

The incoming CTO needs to earn respect with a two-way dialogue and explain why they are there, what they do and how.

Employees are crucial to the overall process, through action or inaction. They also shape the direction of the business: whether it will flourish or fail; whether they will take ownership, contribute and be part of the solution; and whether the new arrival can earn their respect and be seen to listen, let them be heard, and play a role in the turnaround.

An example of a CTO in action was in the sale of a dairy processing operation. The CTO had to work with the company to maintain a baseline production schedule for a prospective buyer to enable them to have stock for two to three months post-sale.

In the months leading up to the sale, the staff — representing two generations of families — went about the planning, scheduling and production in what they subsequently described as the most efficient manufacturing process they had experienced in 10 years of operation through two owners.

Even though they knew their efforts might not save the facility or their jobs, they committed with a sense of pride and character. For the CTO, it was truly humbling when the company had to advise the staff that most of them would not have work after the sale, yet they gave a round of applause on the basis of a job well done and recognition of the respectful treatment of their contributions.

Frequent unpredictability in today’s business climate will continue to create conflicts between businesses and their management teams, and demands a specific operational expertise that most companies do not possess internally.

Transforming a business is much more than a cost out objective; it’s about rebuilding and refurbishing company cultures to adapt, embrace more risk, and operate in ways designed to wrest survival, if not profit, from market volatility.

Any company, in every sector, should consider CTOs as a viable option when confronted with economic headwinds or when copping hits out of left field.

Marcus Derwin is Turnaround Management Association Australia’s national board director.