Role of the Chief Strategy Officer Within the Organization Remains Ill-Defined

Tuesday, 25. March 2014

While the position of the Chief Strategy Officer (CSO) has been around for some time now, his role within the executive team and the company as a whole is still evolving. Surveys show this sobering trend time and again. In a recent study by the Boston Consulting Group on the subject, the authors Nicolas Kachaner and Sam Stewart interviewed 48 CSOs of companies from around the world and a wide range of industries to address four key questions which, as they say, invariably arise when working with CSOs.


What Are the Typical CSO Responsibilities?

The responsibilities of CSOs fall into three broad categories: strategy development, resource allocation, and strategy implementation. The activities within these categories vary greatly, however, from company to company and industry to industry, the authors state. When it comes to strategy development, the majority of CSOs are responsible for identifying growth opportunities (84%), strategic planning (82%), developing strategic planning content (77%), monitoring and forecasting long-term trends (64%), and collecting competitive intelligence (64%). Key responsibilities regarding resource allocation include M&As and divestments (82%) and portfolio management (57%). Responsibilities in terms of strategy implementation tend to be less sharply outlined. 68% percent of respondents said that the development of cross-business-unit initiatives was part of their current duties. An additional 59% mentioned innovation, including business model innovation. Less than a quarter of respondents, however, are involved with post-merger integration (20%) or the identification of cost improvement opportunities (23%). The authors conclude that "the CSO has the least-defined role among C-suite-level executives."


Why Are Some CSOs More Effective Than Others?

The authors identify the following key factors determining the success of a CSO:

  • The most effective CSOs have a clear role and well-defined objectives allowing them to stay focused on what is essential and put together a suitable support team.

  • The most effective CSOs guide the strategic planning process top-down and ensure alignment between business unit plans and the overall corporate strategy and goals.

  • The most effective CSOs drive growth by identifying new markets and developing promising market entry strategies.

  • The most effective CSOs drive business model innovation to set their companies apart from competitors and create competitive advantage. 

  • The most effective CSOs built credibility and trust both with the CEO and the department heads, particularly in the first 100 days of their appointment.


How Should CSOs Work With Line Executives?

There is no standard model for how the role of the CSO within the organization should be shaped, the authors point out. But four common archetypes can be identified:

  • Portfolio Manager (26% of respondents)
    This type of CSO focuses on long-term goals and is little involved with the operations of the business units. His main duties include strategic planning, monitoring of the external environment, portfolio management, and M&A. Portfolio managers tend to have small teams of five to seven people and maintain close relations with the finance department.

  • Strategy Orchestrator (42% of respondents)
    This is the most common role which comprises a broad range of tasks and, consequently, requires many different skills from the CSO. Strategy orchestrators typically have large teams of ten or more people and are in charge of strategic planning, growth initiatives, portfolio management, competitive intelligence, and cross-business-unit projects. To succeed in this role, the authors argue, the CSO must provide added-value that is recognized by the CEO and the business unit heads.

  • Internal Consultant (16% of respondents)
    In this role, CSOs advise and support the business units and their heads, for instance by allocating resources, developing business unit strategies, or driving cross-departmental projects. Key success factors for this role are the ability to work closely with all levels in the business unit organizations, provide excellent consulting service, and develop a talent pool for future line management roles. The authors stress that the internal consultant model best suits companies with relatively autonomous business units, where the CEO tends not to get involved with business unit strategy development.

  • CEO Delegate (16% of respondents)
    Like the internal consultant, the CEO delegate is less common. The latter has a clear mandate from the CEO and reports directly to him. On behalf of the CEO, he is responsible for a variety of high-level strategic projects. Key responsibilities typically include business transformation, M&A, post-merger integration, cross-business-unit projects, and identification of growth opportunities. The authors point out that this model is best suited for companies in which the CEO has great influence on daily operations as wells as for consumer goods companies that must deliver a consistent customer experience across different markets and channels.  


What Role Should the Strategy Department Play in Developing Future Leaders Within the Business?

The results of the study indicate that in most companies the strategy department serves an important dual function in terms of the development of future leaders. On one hand, they are very successful in attracting outside talent. Almost 60% of CSOs are outside hires, many of them coming from consulting firms or investment banks. On the other hand, the strategy department serves as a training camp for the most talented young managers within the company. During their relatively short stay in the strategy department, they are given opportunity to broaden their horizons and effectively advance their careers. 67% of CSOs move on to become heads of business units or take on other roles on the executive committee. For the strategy department itself, this means a high turnover rate, but also a steady supply of young talent.

In summary, the authors conclude: “Despite being the least defined C-suite role, and notwithstanding some of the common frustrations surrounding the corporate planning process, the overwhelming majority of CSOs add a great deal of value, usually by focusing on a small number of critically important functions.” The study helps companies to find out which type of CSO fits them best and how to define the functional responsibilities. The full study can be found on the website of the Boston Consulting Group.




Literature


Kachaner, N., & Stewart, S. (December 2013). Understanding the role of the chief strategy officer. Boston Consulting Group. https://www.bcgperspectives.com/content/articles/strategic_planning_business_unit_strategy_understanding_role_chief_strategy_officer/