Chief Strategy Officer – Evolution of A New Corporate Role

Chief Strategy Officer – Evolution of A New Corporate Role - Martin Roll

The number of Chief Strategy Officer (CSO) appointments have been growing steadily over the years. This pace does not show any signs of slowing down as organisations increasingly focus on giving corporate strategy a separate remit. CSOs are expected to design, implement and execute the strategic vision of an organisation over a medium and long-term period. But the remit of a CSO as it is currently, was quite different in the past and has significantly evolved.

The foremost aspect to understand in the evolution of the Chief Strategy Officer is the fact that it is a role that has moved up the ranks of influence in organisations. Before the appointments rose in prominence and influence and a formal title was accorded to it, organisations always had experienced strategists. If we examine think tanks, political parties, non-profit organisations, intelligence bodies, financial analysis and ratings firms, “strategists” are important roles. These roles still exist in any organisation that has a strong growth-oriented focus, but they have been superseded by a CSO.

The key trigger is the need to elevate the corporate strategy function to an organisational level (from previous remits of specific functions or business units). Strategic planning and execution is much too important to exist in a fragmented and disjointed state anymore.

The push for a Chief Strategy Officer role in the boardroom

In the early 1990s-2000s, when modern corporate strategy was establishing a foothold, senior strategists did not have an individual strategy remit. Take for example the classical Chief Executive Officer (CEO) role. CEOs were always expected to take overall responsibility of corporate strategy, in addition to guiding the organisation’s other vital functions (e.g. financials, investor relationships, corporate image, devising and implementing growth paths, etc.). During the same time, senior strategists were part of a CEO’s core team, helping him or her address the critical objective of creating a healthy and viable future of the organisation.

But the sad truth of this arrangement was the invariable phenomenon of CEO burnout. Growth challenges, fragmented markets, increasing regulatory pressures, unstable financial markets, jittery consumer and economic confidence levels and uncertainty in global markets were factors that were simply overwhelming for a CEO to manage and mitigate. Global attrition rates for CEOs increased, tenures became shorter and organisations lurched from one initiative to the next as priorities kept constantly changing. These high-level dynamics were the primary factors that led to the emergence of the Chief Strategy Officer as a pivotal C-suite designation.

The evolution of the CSO in terms of responsibilities has been gradual. A clear definition of a CSO’s remit still varies from one organisation to the next, but similarities in responsibilities are now emerging. Nowadays, a CSO is entrusted with one key task – to build best in class strategic capabilities and executional prowess and have complete control over their functionality. This is a transformation from earlier remits, wherein the title did not provide execution powers (which still rested with the CEO or the overall Board). In many instances, a CSO by title was no one else but someone at a Vice President / Senior Vice President level with strategic planning experience.

The evolving role of the Chief Strategy Officer

There are five areas that distinguishes a current Chief Strategy Officer from his or her avatar five to ten years ago:

Remit: The remit of a CSO is now better defined than it has been previously. From a phase when the functioning of a CSO was an experiment (or even a pilot), there are now clearly laid out responsibilities and expectations. This is a clear indication that at both the organisational and industry level, there is more confidence around what a CSO can deliver. Majority of CSOs continue to come from strategic planning and consulting backgrounds. But there is increasing evidence of individuals getting promoted to the role who have had long tenures and have spent sizeable amount of time in different functions or business units. The ability to clearly identify individuals who qualify for the role shows that organisations have developed in-depth understanding of what the role requires

Focus: In the initial years of evolution, the CSO did not have a focused set of responsibilities. As organisations tested the viability and effectiveness of the role, they were unwilling to divest other responsibilities of the individual who was selected for the role. Consequently, the CSO of yesteryear was still managing his or her old responsibilities, along with the newly entrusted ones. The narrowing down of responsibilities of a CSO has dramatically improved the effectiveness of the role and its impact on the organisation’s future. A quick analysis of CSO job descriptions bring out some common themes – strategy development and execution, optimum resource allocation between business units, identifying growth opportunities (organic or via mergers & acquisitions) and enhancing investment and shareholder value

Reporting: Although this is still an evolving area, many current CSOs have direct reporting responsibilities to the organisation’s Board and work at an equal footing to the CEO. But instances of reporting to the CEO are also quite prevalent. This is different from the initial phase, where a CSO would invariably report to the CEO or even to the CFO. The combination of an unclear remit and absence of a focused set of responsibilities also meant that the CSO was never able to assume full control over his or her functions. There was over-reliance on big teams, experts and advisors. Clearer lines of reporting for a CSO means that there is stronger accountability and confidence in a CSO’s role today

Accountability: Building on from the previous point, a CSO nowadays is held more accountable for his or her actions. This is due to the combination of some key factors – higher levels of responsibility, more independence and a higher reliance on a CSO’s ability. In the initial years, a CSO had a fall back option in the form of the CEO or the Board for vetting of decisions before they were implemented. This has transformed into a more results-focused role, in which the CSO is responsible for the outcomes of decisions taken (and not the decisions themselves). In addition to fuller accountability for the role, CSOs are now increasingly being entrusted with advisor responsibilities for CEOs

Teams: The final evolutionary point is around the freedom given to CSOs to build their own teams. This has become a critical aspect that impacts the overall functioning of a CSO. Previously, CSOs did not have access or the freedom to build high-functioning teams. They had to make do with organisational resources that were available. As the role evolved into a critical function, organisations have woken up to the fact that high-performing CSOs need high-performing teams. It is quite common for CSOs to build their own teams, either through internal re-allocation of responsibilities or by recruiting externally

Why organizations need a Chief Strategy Officer

The evolution of the Chief Strategy Officer as an individual who is increasingly responsible for ensuring a healthy future of an organisation is a positive development. Organisations stand to benefit on two specific fronts as the CSO role further evolves:

  • A committed role ensuring that the organisation has a strategic road map
  • Freeing up the CEO to focus on wider organisational aspects

As the role further evolves, there is a need to remove overlaps in responsibilities with other C-suite functions and clearly demarcate boundaries. This will significantly enhance the effectiveness of the CSO role as remits become clearer and goals become sharper. This will also enhance collaboration at the C-suite level, with lesser conflicts and overstepping of responsibilities.

As strategy formulation and execution becomes increasingly challenging in the fragmented global business landscape, the Chief Strategy Officer will become an essential part of the core C-suite and a key representative of the Board.

Is your organization ready for a Chief Strategy Officer?