Chief transformation officers (CTrOs) hold the keys to unlocking an organization's potential through successful enterprisewide transformation. But how can they get transformation right? This article, part of Monitor Deloitte’s CTrO eminence series, outlines how to optimally structure and drive a program using a transformation nerve center (TNC).

Key considerations when starting your TNC

The remit and role of the TNC varies widely based on the objective, focus, starting point, and scope of the transformation program. In our experience shaping transformation programs for clients across industries, we find that leaders need to ask four key questions (see exhibit 1) to effectively characterize their transformation:

1. Why are we transforming? This is your organization’s transformation objective (or “North Star”), such as accelerating growth or improving profitability. More ambitious objectives—such as capturing meaningful market share—typically signal the need for a more involved and visionary transformation program.
2. What are we transforming? This outlines your transformation’s focus or domains, such as process optimization or business model innovation. We observe that the more defined the focus area—such as technology modernization—the more targeted the transformation program scope and approach must be.
3. Where do we begin? Transformations evolve—they are “waypoints,” not endpoints. For example, one global technology company we supported focused initially on technology as the sole anchor for their transformation, which later evolved into a broader, enterprise-wide strategic transformation. Where you start (and the ambiguity that comes with it) influences how you stand up and staff the transformation program of today.
4. Who is involved? Finally, the scope and scale of the transformation indicates the degree of complexity of the program. Not surprisingly, the more functions involved in a transformation, the more the overall program must be able to manage cross-functional complexity and risks.

Figure 1: Program dimensions

The unique dimensions of your transformation have a direct impact on the program approach—specifically, which functions are involved, which stakeholders are engaged, what the nature of initiatives is, and how success is measured.

Once you’ve aligned on the unique dimensions of your transformation program and clarified the approach, the next step is to identify the role and scope of the TNC required to bring that transformation program to life.

Your TNC: A reflection of transformation potential

The role and size of the TNC reflects your organization’s willingness and capacity to change. Rightsizing the TNC is another critical step in ensuring the success of your program. Oversized and overextended TNCs that micromanage workstreams/initiatives can lead to operational inefficiencies and change management complexity. Conversely, undersized TNCs with limited access or insight across the breadth of the program can lead to mismanaged outcomes and a lack of accountability.

In our experience, CTrOs can design their TNC role and size based on two key questions:

1. What is your organization’s willingness to change? The desire—and willingness—of the entire organization to commit to an exponential shift is a critical determinant of what the TNC needs to be. Even if the urgency to transform is high (e.g., significant activist pressure), internal resistance from the organization can reduce the probability of a successful transformation program. In scenarios where resistance to change is high, TNCs need to spend a lot more time on mobilization of workstreams, communication of priorities and activities, and change management.
2. What is your organization’s capacity to change? This question enables the CTrO to assess the effectiveness of underlying capabilities that an organization has to execute a transformation program. Typically, a clearer transformation vision, culture of rapid decision-making, and prior experience undergoing large-scale strategic shifts indicate a high capacity to change and the need for a lower-touch TNC.