The Chief Transformation Officer (CTO) as a value creation manager

By Stefan Treiber

Transformation is becoming the new normal – and with that, the importance of the Chief Transformation Officer (CTO) in the boardroom is growing. Private equity firms, too, are looking increasingly to this key role: Value creation and operational excellence originate not in middle management but in the C-suite. What’s needed at the top is transformation experience, the right mindset, and the right setup.

The tide is turning – or until recently it seemed to be. The latest escalation in the Middle East shows just how fragile the situation is. Despite all the uncertainty, Europe may be approaching a turning point. After years of structural inertia, regulatory hurdles, and rising costs hampering the continent’s competitiveness, signs of hope have lately emerged: Roland Berger’s European Future Readiness Index , which uses 24 indicators to measure how ready Europe is for the future, is showing a slight upward trend again after a long spell without improvement.

This positive change is also being reflected in companies. Alongside crisis management – which remains crucial – the first businesses are once again focusing on value-creating and forward-looking transformation. That does not mean things are any easier. Profitable growth and sustainable competitiveness require future-focused programs that challenge the status quo. Companies must reimagine their core business and tap new business areas. They also need to develop a clear and compelling roadmap for AI integration ; otherwise, they risk falling behind industry peers. At the same time, businesses must not overlook necessary performance improvements and restructuring efforts.

A pacemaker in the business

The demand for external CTOs is rising noticeably. Companies are becoming aware of two main shortcomings in internal solutions. First, their own teams often lack transformation expertise – reliable growth phases in the past made any major restructuring unnecessary for many firms. Second, an attitude has crept into some top managements of playing for time and clinging to existing strategies and structures, thinking “things will work out, and we’re on top of it.” Yet there is often a gap between intention and implementation. Results fail to materialize.

Experienced CTOs are the pacemakers in the transformation marathon. Especially for private equity (PE) funds and their portfolio companies, the ability to rapidly and sustainably create value is becoming a key differentiator in a highly competitive market. With financial leverage alone no longer being a guarantee of sufficient returns and ongoing global uncertainties making quick exits difficult, the focus is shifting to value creation (VC).

A question of leadership

Numerous examples offer compelling evidence of how a confident CTO in PE companies can be a game-changer – in every mission-critical situation. During the holding phase, they manage a holistic VC program and ensure rigorous target achievement. In a buy-and-build strategy, they handle the integration of new entities with precision and systematic rigor. And when it is time to exit, they are the key figure: responsible for early readiness planning, developing a compelling equity story, and ensuring a stable EBITDA run rate.

Without a doubt, the success of a CTO mandate depends to a large extent on the personality, leadership strengths, and transformation experience of the manager appointed. When projects fail, it is rarely down to the strategy or the concept. Almost always, a lack of leadership is the decisive factor. Companies are therefore well advised to seek CTO candidates exclusively within the top tier. Industry expertise is frequently overrated and sometimes even hinders the job of thoroughly realigning existing business models – because long-time industry experts have a tendency to stick with conventional approaches.

When we deploy our experienced CTOs to the client front lines, we consistently follow five golden rules that go a long way to ensuring a mandate’s success.:

First: A clear transformation playbook. Implement a comprehensive and methodologically sound Full Potential program with actions, success factors, and milestones, as well as robust governance with clearly defined roles. A limited number of critical KPIs, progress monitoring, and action tracking must be clearly defined. And all actions implemented need to be visible in the P&L.

Second: A powerful team. This provides support for a strong CTO, who would otherwise risk fighting a losing battle as a lone wolf. A well-oiled, supportive team enables a faster pace of transformation, being able to anticipate missteps early on and ensure the flexibility and quick adjustments that complex future-proofing programs always require.

Third: Early evaluation of leadership and the organization. Transformations live or die by the people who drive them. If corporate leadership shows weaknesses – like a lack of competence or an unwillingness to change – take action fast: fill posts, provide training, or replace people.

Fourth: Effective and professional communication. Transparent and consistent messaging is crucial for engaging the workforce and winning them over for the necessary change. On-the-ground presence through appropriate dialogue formats is more effective than even the most carefully crafted PowerPoint presentation landing in people’s email. Building trust still works best in person.

Fifth: A focus on speed. Transformation programs need to move at a consistently strong pace throughout; otherwise, the forces of inertia within the company will gain the upper hand. Be willing and brave enough to accept even 80% solutions, because constant readjustments will be needed when circumstances are always changing.

The five rules demonstrate that in the end, the right mindset makes all the difference. Previous transformation experience, leadership skills, and methodological expertise are absolutely essential. A successful CTO lives and breathes the kind of future-focused mindset that says: be bold, not hesitant; act now, not later; take responsibility, don’t dodge it; and speak with actions, not words.

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