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

    In many organizations, the strategy department is seen as both the entry point for external talent and an environment for broadening the horizons and accelerating the careers of the most talented young managers. For example, nearly 60 percent of CSOs are external hires, with many coming from a management consulting company or investment bank. Traditional wisdom says that the skills required to succeed in a strategy role form an important part of the skill base of a successful senior executive.

    This seems to be a plausible theory, but does it work in practice? The answer is yes, mostly, but with a few significant caveats. Our interviews highlighted the important role that strategy departments play in attracting talented people from outside the organization. Most of the CSOs we spoke to recruit from a combination of investment banks, top-tier consultancies, and business schools. In general, this model works well, providing both a strong strategy team and an effective platform to bring those people into the organization. Strategy teams tend to have quite high turnover, but in general this is evidence that the model is working.

    Where CSOs report a more mixed experience is in developing and accelerating the careers of talented managers who are already within the organization. Companies that do this well are rigorous about selecting managers to “cycle through” the strategy team and then providing targeted training and professional development to the chosen few. Over time, this creates a track record of accelerating the careers of talented people—and attracting the next wave of talent into the department. Unfortunately, however, the reverse is also true. Without a clear mandate to bring in the best people, a structured development program, and a process for cycling them into line roles, the strategy department can rapidly become a dead end for less-talented managers. This negative cycle can be hard to break once it sets in.

    It is no surprise that CEOs and CSOs alike commonly ask us what CSOs typically do next. Although only 41 percent of CSOs sit on the executive committee or management board, they do tend to rise in the executive ranks, with 67 percent either becoming the head of a business unit or taking on another role on the executive committee.

    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. From the CEO’s perspective, an effective CSO provides tremendous leverage and insight. And from the CSO’s perspective, the role typically provides a solid foundation for an executive-level line-management position.