More than meets the eye

Discussion board: Role of the chief strategy officer

The role of the chief strategy officer (CSO) is under the scanner. To quote a recent McKinsey report, "The discipline's professionalisation, which began in earnest in the 1980s as it evolved from the chief executive's domain into a core corporate function, prompted the creation of heads of strategy, strategic-planning directors, and, more recently, chief strategy officers (CSOs)".

Today, the CSO's mandate includes a whole host of functions beyond conventional strategic planning. With complexity becoming the order of the day and planning no longer being the sole focus area, what should be expected from the new age CSO?

Business optimism has resurrected the CSO in a new avatar: Sanjoy Sen

The current wave of US-led economic and business optimism has led to the rise in importance of the chief strategy officer or CSO. Like the proverbial phoenix, he is now rising from the ashes of the recent global financial crisis. Prior to the financial crisis, CSOs blossomed in their earlier avatar. They were responsible for strategy formulation and related advice (like M&A advice), rather than being charged with its implementation. However, the early days of the financial crisis saw the CSO role getting overshadowed by the role of the chief operating officer (COO) who took the reins in many organisations. This phenomenon was followed in some cases by the chief finance officer (CFO) taking charge to ensure survival through profit improvement/cost reduction swiftly following through to the bottom line.

The recent wave of economic and business optimism has now resurrected the chief strategy officer in a new avatar with at least three key additions to the earlier role: 'doing what it takes' to not just formulate but also execute strategy to deliver results; aligning functional and divisional strategies to top management thinking and harnessing innovation; and managing risks through strategic governance.

Larry Bossidy's doctrine teaches us that it is better to have 'a mediocre strategy that is well executed' rather than 'a great strategy that is poorly implemented'. In fact, global experts on strategy such as Roger Martin go a step further to argue that strategy formulation and execution are now so fundamentally integrated that separating them would only result in failure. The evolving role of the chief strategy officer, thus, starts right from managing internal and external stakeholders, getting organisational and stakeholder buy-in, monitoring and communicating progress. Garnering organisational resources is also a related expectation as no project will ever succeed unless appropriately funded.

All these activities demand continuous engagement with different parts of the business, requiring the CSO to now roll up his sleeves and get the hands dirty. CSO roles are also changing in organisations which realise that strategy setting is not just a top-down but also a bottom-up process. Some academics compare this to whitewater-rafting, where an upstream strategy to navigate a rapid influences the immediate next level of downstream strategy and vice versa. The resurrected CSO is expected to ensure alignment between functional and divisional strategies with the overall organisational strategy and channelise any innovative ideas originating from the people who are at the coalface.

In the modern world, risks impacting businesses can assume strategic dimensions in addition to threatening the achievement of strategic results. Accordingly, the chief strategy officer is also taking on the role of a strategic risk manager, enabled by appropriate governance mechanisms embedded in the organisation. In the new avatar, the expectation is that the CSO will not just prevent 'bad things' from happening but will also exploit some of the business opportunities that enterprise governance and risk management offer. These new responsibilities emerging from uniting all strategy-execution-related activities reinforce the power and organisational standing of the CSO to set him (or her) up for success. These role-enhancements should be seen as critical success factors rather than dilution of the role.

Sanjoy Sen
Doctoral Researcher, Aston Business School, UK

Implementation should also be a focus area for the CSO: Guru Malladi

Strategy is the prerogative of the chief executive while the effectiveness of it depends mainly on meticulous implementation. Historically, as organisations have grown in size and complexity, chief executives realised the need for assistance in both strategy formulation as well as implementation. Management gurus labelled that role as a chief strategy officer (CSO). However, along with it came the mismatch in expectations of just how much of the role's focus should be on formulation vis-a-vis implementation. What exactly should a CSO's role entail? Given that the effectiveness of any strategy is as good as its implementation, and borrowing from the 80:20 principle that applies to most aspects of life, it is evident where most of a CSO's attention ought to be.

Over a period of time, particularly in large, complex organisations, the role merely represented a necessary class participation of another corporate function in the planning process. This is a clear deviation from the original intent of this role, which was in guiding the businesses (rudder), or department heads aligning their respective plans (thrust) to the overall strategic goals of the organisation. This is meant to be part of the implementation of the strategy, much like a rudder that helps navigate while the thrust ensures the movement. It is true that progressively the mismatch in expectations, coupled with a growing demand for independence of business functions, has led to the dilution of the importance of this function (a recent parallel can be drawn with the redefining of the Planning Commission of India according to the needs of current times).

In some cases the role has also been seen as encroaching. All of these conflicts are nothing but sharp reminders to redefine and recalibrate the role of a CSO, including asking the uncomfortable question, 'Is the title of chief strategy officer a true reflection of what is expected from the role?' Should the role rather be that of a chief strategy implementation officer (CSIO)?

The success of any business strategy in the current era is a function of innovation, incubation and implementation' (the Grand I trio). Innovation: In this age of constant evolution of technology, a CEO must be equipped with cutting-edge ideas that can act as game changers. A CSO must provide the CEO with ideas for innovation. Incubation: It is the CSO's responsibility to take the CEO's ideas, refine them further and test them. Implementation: Ensuring all steps taken by the organisation are done keeping the strategy in mind.

The relevance of a strategy function will squarely depend on the extent of the CSO's participation in the Grand I trio with clearly defined scope and methods as a support function to the chief executive.

Guru Malladi
Partner, Advisory Services, EY

The CSO is no longer the CEO's man: Sridhar Ganesan

The role of strategy was never intended to be a planning function only. 'Planning', as a term, can have a very limited perspective. Planning could imply allocating resources of all types to achieve different business deliverables. Finance can do this as well and we do not need a strategy function for that. Strategy, as a function, has evolved over a period of time, in terms of its mandate. Mandate is defined more by the person in the role, rather than a generally understood concept. A fundamental change is that the CSO is no longer the CEO's man. Companies that make this assumption will never witness the intended impact of this function. The operative verbs for the CSO are 'facilitate', 'explore', 'question', 'think beyond', 'broaden'. Along with these words, verbs such as 'execute', 'collaborate', 'compliment' are also significant - and being aligned not just with the CEO, but the top team of the organisation is critical.

One of the important qualities for the CSO is to build credibility with business heads while building the long-term direction. The CSO and his team also play an important role in problem-solving by partnering closely with the business teams. By focusing on the 'long-term' and the 'short-term', the strategy team earns its stripes for relevance and then becomes a partner in realising the same.

While engaging with the senior team of a manufacturing company, where the strategy head presented his 'Vision 2024' , I asked him a question on what would be his role when the blocks of 2024 business are finalised. His replied: "I will monitor the different initiatives." The CSO has to have skin in the game. Monitoring is not enough. Sharing some of the execution elements along with the business is critical. If the business is so busy focusing on the 'current', through effective governance mechanisms, strategy has to push the long-term goals and not just monitor.

In a multi-business company, the CSO becomes the adviser for each of the units, in terms of building their business plans. He also plays an important role in terms of checks of the boundary conditions and the overall 'way forward' for the company. A portfolio of being continuum between short-term and long-term will help a CSO and the strategy function become relevant for the company and not just the CEO, being the stakeholder.

Sridhar Ganesan
Country Head, Hay Group India