Understanding the Role of the Chief Strategy Officer

Understanding the Role of the Chief Strategy Officer

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Understanding the Role of the Chief Strategy Officer

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    How Should CSOs Work with Line Executives?

    Operating within a clearly defined role that is well understood by the broader management team is critical to a CSO’s success. Although there is no single “right” model, the CSO’s role should be shaped by how diversified the business units are, the CEO’s leadership style, and the company’s organization model. Our analysis revealed four CSO archetypes, each requiring different capabilities.

    Portfolio Manager (26 Percent of Respondents)

    This role focuses on the long-term horizon and has limited operational involvement in the business units. Key responsibilities include strategic planning, monitoring of the external environment, portfolio management, and M&A. CSOs in this role typically report to the CFO. Portfolio managers tend to have small teams of five to seven people, strong links to finance functions, and access to consistent, value-based metrics that are used across the company. Corporations best suited to this type of CSO role are those that have a diverse portfolio of end-to-end businesses with limited operational synergies, those that favor growth by M&A, and those whose business-unit executives have a high degree of autonomy with respect to strategy.

    Strategy Orchestrator (42 Percent of Respondents)

    This is the most common CSO role. It involves a broad range of activities that must be clearly defined to avoid bureaucracy and duplication of efforts. Key responsibilities include strategic planning, growth initiatives, portfolio management, competitive intelligence, and cross-business-unit projects. Because of the wide range of activities, the CSO in this role needs a mix of skills—everything from financial analysis to operational expertise, along with strong communication and relationship-building skills. Strategy orchestrators typically have large teams with ten or more people and may create a pool of junior team members who can be shared across the various functions within the team. To succeed in this role, the CSO must be seen by the CEO and business unit heads to be adding value by translating long-term plans into near-term projects for business unit consideration. An ongoing challenge is to remain effective and relevant to the business across a broad range of responsibilities. This model is typically seen in diversified companies with potential synergies among business units—such as diversified financial services companies.

    Internal Consultant (16 Percent of Respondents)

    In this model, the CSO focuses on supporting the business units and their leaders on a wide variety of assignments and projects, managing a pool of strategy resources as a shared service. Cross-business-unit projects, strategy content, and identification of growth opportunities are key responsibilities. CSOs operating in this mode are more likely to report to the CFO than to the CEO. Given the nature of the internal-consultant role, CSOs and their teams need the typical “consulting tool kit” skills: quantitative analysis, the ability to deal with ambiguity and multiple issues, and customer service. This type of CSO usually has a large team of ten or more people organized as a pool of resources, and a larger proportion of junior staff than is included in most other CSO models. Because of these large teams and the variety of assignments, CSOs need to be strong line managers. To succeed with this model, the CSO must be able to work closely with all levels in the business unit organizations, provide high-quality advice and support, and develop a talent pool for future line-management roles. Strong listening skills are critical. The internal-consultant model is best suited to companies with relatively autonomous business units, where the CEO tends not to get involved in business-unit-level strategy development.

    CEO Delegate (16 Percent of Respondents)

    CSOs in this role have a clear mandate from the CEO and often take on a variety of high-level strategic projects, directed on behalf of the CEO but within the operating business units. Typical responsibilities include business transformation, M&A, postmerger integration, cross-business-unit projects, and identification of growth opportunities. CEO delegates tend to have teams of five to ten people, report directly to the CEO, and interact mostly with the CEO, business unit heads, and functional heads. To succeed with this model, CSOs must be able to build trust and transparency with the business unit heads. Also needed are analytical and operational skills, project management skills, the ability to juggle a variety of projects, and fast ramp-up capabilities. The CEO delegate must be able to set up and deliver on measurable project outcomes, generate valuable ideas and projects for CEO review, and manage all stakeholders to ensure strong CEO endorsement. Many people in this role are former consultants who stay on the job for two to four years before moving into another area of the company. This model is best suited to companies whose CEO is intimately involved with the daily business, such as family-owned companies and consumer goods companies that must deliver a consistent customer experience across different markets and channels.