Unveiling the Role of the Chief Strategy Officer (CSO)
In the ever-evolving landscape of modern business, the traditional model of strategy execution, where vision and directives flow from the top, is undergoing a profound transformation. It’s no longer solely the CEO who holds the mandate to proclaim, “What we’ve been doing isn’t in line with the company’s strategy — and we need to fix that.” While the CEO’s role in shaping an organization’s strategy remains pivotal, a different C-level executive is increasingly taking on the mantle of strategy execution — a senior leader, often known as the Chief Strategy Officer (CSO).
Take, for instance, the journey of Brian Schreiber, the strategy chief at AIG, who has served under two CEOs at the insurance giant. During Maurice “Hank” Greenberg’s tenure, Schreiber focused on implementing investment decisions and overseeing acquisitions. Under the leadership of the new CEO, Martin Sullivan, Schreiber’s role expanded to encompass formalizing strategic-planning processes, building synergies across the organization, and enhancing transparency and accountability. Schreiber’s experience underscores the contemporary demands of the CSO role, which now necessitates not only effective processes but also rapid decision-making capabilities. He has become the linchpin in assessing whether strategic initiatives align with the company’s standards and objectives.
Schreiber’s journey is just one example, but it reflects a broader trend that our research and years of experience working with leaders in large organizations have unveiled. CEOs are increasingly entrusting strategy execution to individuals with various titles, but the most common is the Chief Strategy Officer. The past few years have witnessed a surge in CSO appointments across industries, with executive recruiters attesting to the growing prevalence of this role. CSOs are now integral to large multinational companies worldwide.
The decision to add a CSO to the management team stems from several critical factors. First, the business landscape has grown increasingly complex, characterized by intricate organizational structures, rapid globalization, evolving regulations, and the perpetual struggle to innovate. These challenges make it increasingly difficult for CEOs to oversee every aspect, including strategy execution. Moreover, the very nature of strategy development has shifted from periodic to continuous. Successful execution now hinges on quick, effective decision-making. As Harvard Business School professor Joseph L. Bower notes, control over execution often eludes the top team, as line executives seek to define strategy independently.
In such circumstances, CEOs require a trusted executive to share the strategic load and maintain control over a process that constantly teeters on the brink of chaos. While the Chief Operating Officer (COO) or Chief Financial Officer (CFO) may appear as potential candidates, there are inherent risks in delegating strategy oversight to either. The conflicts between what is easy to execute and what is right to execute can lead the COO away from tougher decisions, as observed in the past. Similarly, the CFO may face conflicts of interest in executing strategy.
To help both current and aspiring CSOs excel in their roles and to guide CEOs considering the appointment of a strategy chief, we have conducted extensive research into this class of executives. Who are they? What is their mandate? What defines their success? Our research involved surveying a sample of large global companies to identify executives considered and self-identified as the chief strategy executives within their organizations. We also analyzed the press releases and media coverage of over 100 CSO appointments to understand how the role is evolving. Additionally, we conducted in-depth interviews with chief strategy officers from various industries and backgrounds.
Our findings reveal that CSOs, despite their diverse titles and backgrounds, share common traits and characteristics that define their role — a role that is often misunderstood but consistently vital. In essence, CSOs possess the authority and a complex range of skills to turn strategy into action. In the realm of French cinema, they are the “réalisateurs,” the directors who bring the script of strategy to life.
Don’t Call Them Strategists
The Chief Strategy Officer (CSO) might sound like someone who spends their days drawing up grand plans, but their role is much broader than that. They aren’t solely strategists who sit in a room and think about long-term plans. These are experienced executives with a deep understanding of strategy, and they’ve often led major projects or businesses before taking on the CSO role.
Most CSOs we read about didn’t spend their entire careers focused only on strategy. While they might have learned about strategy at top consulting firms or through strategy-related work, that’s usually not the main part of their background. In fact, very few CSOs came directly from consulting firms. Most started in different roles within their companies and only later moved into the top strategy job.
For instance, take Bob Black, who is the Senior Vice President and CSO at Kimberly-Clark. He says, “I’m not a strategy expert by trade.” He learned about strategy during his time in consulting, but he believes his real value comes from his experience in leading businesses. In other words, he’s more of a hands-on, practical leader.
This reflects a common theme: Most CSOs see themselves as doers rather than just advisors. They’re action-oriented, and while they do guide and mentor others, they’re not just there to provide advice. They understand the importance of getting things done today, not just planning for the future.
If you look at the backgrounds of some CSOs, it becomes even clearer. Before becoming CSO at Campbell Soup Company, M. Carl Johnson led a big transformation at Kraft Foods. Marjorie Dorr, CSO at WellPoint, previously increased membership in the company’s health plans as a regional CEO. William T. “Billy” Edwards, CSO at AMD, had a diverse career, including time as a CEO, managing roles at Motorola, work with start-up companies, and nearly a decade at a top strategy consulting firm.
Sometimes, the CSO’s job is like being a “mini CEO.” They have to see the big picture, just like the company’s CEO, and handle a wide range of challenges, from innovation to finances to international expansion. This role demands a unique set of skills and experiences that few people possess. Many CSOs have strong relationships with their CEOs, often built over many years of working together.
In essence, CSOs are much more than just strategists; they’re experienced leaders who bring a practical approach to making things happen in their organizations.
Making Strategy Work
The job of a Chief Strategy Officer (CSO) is enormous, and it’s not for beginners. It should be filled by people with a lot of experience in business. But don’t think that just anyone can do it. CSOs have three very important tasks that are all about making a company’s plans work.
1. Making Sure Everyone Understands the Plan:
CEOs and top leaders create the company’s big plan, but sometimes, others in the company don’t really get it. This can create problems when people don’t know how to make the plan happen. CSOs step in to make sure everyone knows what the plan is and how their work connects to it. Sometimes, it’s easier for someone inside the company to do this because they know the company well. But sometimes, an outsider can bring fresh ideas.
2. Making Changes Happen Quickly:
CSOs don’t have time to waste. Many companies are in a hurry to make things better because their industry is always changing. So, CSOs must quickly change things to make the plan work. But each company has different goals, so the CSO’s job can change a lot depending on what the company needs.
3. Making Sure Decisions Match the Plan:
Sometimes, a plan that makes sense one day doesn’t work the next day because things change. CSOs need to make sure that everyone in the company agrees on the plan and that the decisions made every day are in line with that plan. They’re like the CEO’s right-hand person, making sure things stay on track.
But it’s not just about pushing decisions down from the top. CSOs also have to listen to people in the company and figure out if things are going as planned. They have to be good at explaining the plan to different people, whether they’re big-picture thinkers or the ones doing the hands-on work.
So, CSOs don’t just make plans; they make sure the plans actually happen, and they listen to what everyone in the company has to say to keep things flexible.
What It Takes to Succeed?
Being a Chief Strategy Officer (CSO) isn’t easy, and there’s no magic formula for success, but there are some important things to keep in mind. Successful CSOs follow a few key principles:
1. Focus on Different Timeframes:
CSOs pay a lot of attention to three different time periods, or “horizons.” They look at what needs to happen in the short term (horizon one), the medium term (horizon two), and the long term (horizon three). Most of their focus is on horizons two and three. They spend about 39% of their time on horizon two, 36% on horizon three, and 25% on horizon one. This is different from other executives who might focus more on the short term and the long term. CSOs need to think about the near future because the decisions they make today will have consequences in the coming years.
2. Find Balance Between Planning and Doing:
CSOs have to find a balance between coming up with plans (formulation) and making those plans happen (execution). While they spend time on both, they lean more towards execution. They believe that real success comes from putting plans into action. In fact, many CSOs use external consultants to help with their plans, with 47% saying they rely on external experts for strategy.
3. Influence Others the Right Way:
CSOs need to be good at convincing other leaders who might doubt their ideas. More than half of the CSOs we surveyed said that being persuasive is crucial to their success. They use careful research and a deep understanding of their company’s products and partnerships to convince others to support their ideas. Having the CSO title helps, and some also gain influence through their close relationship with the CEO. In this role, you have to be creative and persistent to get things done.
4. Understand Technology and People:
To be a successful CSO, you need to know a lot about two important areas: technology and human resources. Even though these aren’t traditional areas for strategy experts, they’re essential for making plans work in today’s world. More than half of the CSOs in surveys are spending more time on these topics. They’re comfortable working with technology, and they understand people and company culture. This knowledge helps them make strategic decisions, develop new products, and improve how the company works.
So, being a CSO is a challenging role that requires a mix of skills and a focus on different timeframes, finding the right balance between planning and action, influencing others effectively, and having a good grasp of technology and people.
CSOs: Necessity or Luxury?
Is having a Chief Strategy Officer (CSO) really necessary for your company? In the past decade, managing strategies in businesses has become a lot more complicated. Things like rapid globalization, new technologies, and changes in the workforce have made it challenging to stick to traditional top-down planning. That’s why many companies, including big names like Motorola, Marsh & McLennan, and Yahoo, have decided to hire CSOs.
But it’s not just about reacting to today’s complex world. There are good reasons for having a CSO in the short, medium, and long term, even though it might seem like an extra cost and complication at the top of the organization.
Short Term Benefits:
From day one, a CSO becomes the go-to person for all things related to strategy. This speeds up decision-making because they can quickly involve the right people. They make sure decisions are not only financially sound but also strategically wise. CSOs don’t just wait for problems; they take the lead in dealing with strategic issues that busy department heads might not have time for.
Medium Term Benefits:
CSOs add value by building a strong team for creating and executing strategies. They hire people with the right skills and knowledge in areas like business development and competitive analysis. They make sure these skills are used by managers throughout the company. For example, a chemical company named H.B. Fuller hired its first CSO to focus on strategy planning, business development, process improvement, and technology. WellPoint’s CSO was tasked with working across all business units to create specific plans and achieve results.
Long Term Benefits:
Having a top strategy executive can be a smart move for succession planning. Some CSOs eventually become CEOs. For example, at Cadbury Schweppes, Todd Stitzer went from being CEO of one division to becoming CSO and then deputy CEO of the whole company before becoming CEO. Indra Nooyi, the CEO of PepsiCo, also had roles in corporate strategy at other companies before becoming CEO. This means the CSO role can be a stepping stone to running the entire business.
Despite the benefits, bringing in a CSO can be challenging. Not everyone in the company may be ready for this change, and the CEO might need to work hard to get everyone on board. Also, finding the right CSO can take longer than expected. But more and more companies are realizing the value of having a CSO in a constantly changing business world.
Conclusion
In today’s rapidly evolving business landscape, the Chief Strategy Officer (CSO) has emerged as an indispensable asset for organizations facing increased volatility, globalization, and technological advancements. As we’ve explored throughout this article, CSOs bridge the gap between strategic vision and agile execution. They not only clarify and communicate strategic goals but also drive immediate change and ensure decision-making aligns with the overarching strategy. The benefits of having a CSO extend beyond the short term, fostering world-class strategy development capabilities and serving as effective succession planning tools. While there are challenges in integrating this role, more companies recognize the value of a CSO as the compass guiding them through the complexities of strategy in an ever-changing world. Whether your organization needs a CSO depends on its unique needs and goals, but the undeniable advantages of having one are clear in a business environment that demands adaptability, vision, and effective execution.
