Globally, companies large and small are continuing to create the chief strategy officer (CSO) role. Although this role is desirable, there are signs that companies have yet to explore its full potential.
In a survey of 187 CSOs around the globe, Strategy& – PwC’s consulting practice – found that only 25% of survey respondents felt they were “very successful” at creating value for their company. In our ongoing research into the state of strategy, we found that 65% of executives across industries don’t think that their company has a winning strategy.
Chantal Maritz, PwC Strategy& Partner, says: “The CSO role is a critically important one. The findings of the study tell us that companies need to reexamine how to get the most from this increasingly strategic role. Companies also need to consider strategy itself.
“The large number of choices companies need to make today as well as the unprecedented scale of disruptive challenges they now face makes it a vital role whereas previously it may have been seen as a good to have.”
Organisations of today are being forced to not only operate in Horizon 1, (improved return on investment and assets), but also in Horizon 2 (improved return on equity) and be thinking about Horizon 3 (share of industry, market share of experience, return on experience (ROX)). Organisations that are not maturing their business across the horizon’s are being outcompeted and manuveured by their competitors. The CSO has to help organisations move between these seamlessly.
CSOs need to clearly define their roles and priorities
Most CSOs are stretched across many different areas within organisations – this makes it very difficult for the CSO to really drive the company’s strategy. The CSO role also tends to overlap with other top positions such as the chief digital officer and corporate development. Sixty-five percent of CSOs admit their priorities aren’t very clear.
In addition, CSOs feel they don’t have the authority to influence the company’s direction as much as they’d like. Only 28% of respondents fully agreed that they have a seat at the table equal to those of other senior executives. Almost half don’t meet more than twice a month with their CEO to discuss strategy.
Although many top teams seem to be concerned that the company isn’t addressing strategy properly, CSOs stated that the same teams spend more time discussing operational issues and short-term financial performance than important strategic matters. Although 47% of CSOs expect their industry to be significantly disrupted in the next five years, 68% admit they need to “get in front and drive change, rather than react to it.”
CSOs need to shape the company’s agenda
The study compares the responses of CSOs who report being very successful at creating value for their companies with those of their less successful peers. It makes three recommendations for ensuring the CSO is set up for success:
* Put strategy at the forefront of the executive agenda: Prioritising strategy allows the company to make the big choices that shape its future and command a sustainable competitive advantage. The CEO also need to hold the CSO accountable to work with the executive team to develop answers to the essential strategic questions that all companies need to address.
* Make the strategic planning process more effective: To make the strategic planning process more effective CSOs should aim to: decouple then rethink the strategic planning and budgeting processes; focus the scope of the strategic planning process on the few key strategic questions that need to be answered, rather than doing comprehensive bottom-up planning; improve inputs to encompass a broader set of external stakeholders – not just customers, but also ecosystem partners, technology think tanks, and others; improve engagement to make strategic planning an experience rather than exercise of filling in templates; and hold the organisation accountable by measuring the company’s progress in addressing its most important strategic questions.
* Clarify the CSO’s role and priorities: There is no ‘one size fits all’ model for what CSOs and organisations should focus on. CSOs need to get clarity on which activities the company needs – and what the top team wants – them to focus on. CSOs should also be clear about the role they want to and need to play. These approaches might include playing the following roles – truth teller, challenger, change agent, advantage guardian, facilitator, and outsource provider.
They need to ensure they’re running an effective and efficient strategic planning process. Despite the vast effort put into the strategic planning process (82% of survey participants say that it is a “very important” area), most CSOs are dissatisfied with its output. Forty-percent of CSOs think the strategic planning process is too bureaucratic and prone to “missing many changes in today’s marketplace”.
To be truly valuable, the strategic planning process must be strategic. In the past companies may have used their CSO for many other things. This is to be expected given the broad skill set many CSOs have. “It is now time to have the CSO focus on the fundamental questions of strategy. The executive should also ensure that the CSO is set up to do the job. Finally, the CSO should hold everyone else accountable,” Maritz concludes.