Building on research initially conducted ten years ago on the role and scope of chief strategy officers (CSOs), our new research finds the role continues to evolve and expand in the face of a quicker pace of change and ongoing volatility. In this episode of the Inside the Strategy Room podcast, three experts discuss their findings and what it means for the future of strategy leaders. Emma Gibbs leads our Strategy & Corporate Finance Practice in the United Kingdom, Ireland, and Israel; Na’ama Alpert is a consultant in our Southern California office whose client experience spans private equity, technology, and electric vehicles; and Whitney Zimmerman leads our research on the role of the chief strategy officer and strategy organizations from his base in London. This is an edited transcript of their discussion. For more conversations on the strategy issues that matter, follow the series on your preferred podcast platform.
Sean Brown: Emma, you led some of our prior research into the chief strategy officer’s role. Talk about what’s different now.
Emma Gibbs: When we first looked at this ten years ago, we already knew the role was challenging. And since then, I think it’s only gotten harder for a number of different reasons. Over the past 25 years, global uncertainty has continued to grow. In the four-quarter trailing average of the World Uncertainty Index, we can see increasing peaks and troughs, and strategy leaders feel this acutely. Of any role in the C-suite, the strategist is the one that the CEO, boards, and executive teams look to for help charting value-creating paths through this kind of volatility.
Our latest survey bears this out. Seventy-nine percent of strategy leaders that we surveyed last year expect to change the way they do their jobs and the mandates they have over the next two years because of the changing environment. If we just reflect on our own roles, that makes a lot of sense: the world is very different even from 12 months ago, especially from three or four years ago. Strategists are not just dealing with the complex external environment and the changes in the way they need to think about their role. They’re also increasingly owning increasing responsibilities. So we’ve seen, in recent times, the rise of the “and” strategist, which is, “I’m the chief strategist, and I also have another role.”
Sean Brown: How common has this “and strategy” mandate become and how much has the mandate changed over time?
Emma Gibbs: In 2011, when we looked at the data, they barely registered. We couldn’t see very many of these “and” strategists. But by this year, “and” strategists have been growing two to four times faster than the overall senior strategy leader population, with strategy and sustainability and strategy and transformation leading the pack with the fastest growth.
The job title is the visible tip of the iceberg, and so in our latest survey, we also asked strategy leaders whether they were responsible for nonstrategy functions. What we found was that 91 percent of respondents reported owning other functions beyond core strategy, with sustainability, digital, data and analytics, and chief of staff being some of the most frequent.
Sean Brown: Why are strategy leaders being asked to take on more of these nonstrategy responsibilities, rather than other senior executives?
Emma Gibbs: I think the first thing is that sometimes these are responsibilities that draw away from capacity that you could spend on strategy, but other times, they are just core to the strategy. If I think about companies that are deep in the energy transition, being strategy and sustainability officer makes a ton of sense, because sustainability is core to the way that the strategy needs to be developed and executed. It’s not necessarily a bad thing that this is happening. In many cases, I think it’s reflective of the breadth of topics that a strategist needs to consider as they think about the strategy. The second thing is that strategists tend to be good at taking on additional responsibilities that don’t really have another home.
The final reason is probably that sometimes, strategy leaders just want more responsibility. Maybe that’s because they want to go into a line role and they want a broader depth, or a broader range, or they want more experience in delivering something, not just doing the strategy and having others deliver. But I wonder if the reason we see more of it now than in the past is simply that people are being more explicit about a set of roles that strategists were probably playing anyway.
Sean Brown: With all these new responsibilities that strategy leaders have, or at least that their titles are more explicitly acknowledging, what impact has it had on the way the strategy function operates?
Emma Gibbs: As strategy leaders take on more responsibilities and deal with more complexities, it appears that their teams are growing, too. But, I think we’d just add a bit of caution here that larger teams don’t always mean more productive strategy organizations or better strategy. One strategist that I know has spoken about how he prefers a small team of very good strategists, a small team of five superstars rather than 25 average people, because strategy teams tend to drive a lot of work in the rest of the organization. If you have a few people asking the right questions to the right people in a very efficient way, you can probably have more impact. Indeed, 87 percent of the strategy leaders that we surveyed recently reported wanting to restructure their teams or at least part of their teams.
Take time to think about defining your role and your priorities. Think about what is and is not in scope, what your priorities are for driving impact, and how they integrate with driving impact from strategy.Whitney Zimmerman
Sean Brown: What did you find in your recent survey about how strategy leaders feel about the impact they’re having on company performance?
Emma Gibbs: Nearly half reported that their teams aren’t fully successful, and less than one-fifth reported being highly successful. That’s a pretty depressing statistic, especially when you think that strategists are responsible for trying to set the direction of a company and help it perform as best it can in the conditions that it finds itself.
Sean Brown: That does sound low. Do we know why so many strategists feel this way? Is the issue the range of responsibilities they have, which forces them to have to pick their battles?
Emma Gibbs: That’s part of the challenge of it: you can be pushed and pulled in different directions depending on different people’s views within the organization, because you can’t do everything. You might try to do everything over a period of time, but at any given moment, you’re prioritizing to focus on the things that will really make a difference to the organization given the current context it faces. We should focus much more on how we make sure the organization has a clear view of what it’s going to do about whatever it is facing.
Sean Brown: In the research you conducted, have you noticed any differences among industries in terms of the growth of the “and” strategist roles?
Whitney Zimmerman: Yes, absolutely. If you look at a heat map of the growth rates of the various “and” strategists across industries and also the current shares of how many strategists in a given industry are occupying one of those intersections, you’d absolutely see some very interesting trends.
For example, strategy and customer leaders have been fastest growing in financial services and tech, media, and telecom. Strategy and sustainability leaders are most prevalent in energy companies, although they are not growing as fast anymore, and unsurprisingly, also growing fastest in industrial and consumer companies. We are seeing lots of interesting trends that reflect the challenges and opportunities each industry faces and how, as an organization and executive team, they are seeking to tackle that.
Sean Brown: What does it take to be a successful strategist today and how clear do CSOs feel their mandates are?
Na’ama Alpert: When we started planning our latest research, one of the hypotheses we wanted to test was whether having a mandate for the strategy leader matters to driving performance. Simply put, a clear mandate is the authority and backing from the CEO and the executive team to drive impact on strategic priorities through a core set of responsibilities.
First, we asked senior strategy leaders, “How clear is their mandate to the rest of the company, if they had one at all?” Only about a quarter reported having a clear mandate aligned with the rest of the company. Even more concerning is that about a third reported not having a mandate at all. Next, we asked them to look at the level of success across five different dimensions: running strategic processes efficiently, impacting company performance, engaging effectively with business units or fostering greater coordination across them, steering the strategic direction of the company, and engaging with senior management to execute strategies. What we saw across the board is that having a mandate correlates significantly with higher levels of success, especially in running strategic processes efficiently and impacting company performance.
Sean Brown: If a clear mandate is foundational to being an effective strategy leader, can you take us through the process of creating a strong one?
Whitney Zimmerman: The foundation for aligning your mandate and delivering impact is to take time to intentionally define and align your priorities. In 2012, Emma and our colleague Michael Birshan defined a taxonomy for the role with 13 potential facets for the role of the strategist across three categories.
The first category is insight generation. That includes trend forecasting, competitive intelligence development, and portfolio optimization. The second category is to own value levers. This includes the actual formulation of strategy, business development and M&A, innovation, regulatory strategy, and hands-on delivery of specific projects by the strategy team. The third is to enact and enable strategic decisions. This includes strategy planning management, facilitating decision processes rounds, challenging performance, building strategy capabilities, and reallocating resources.
Sean Brown: Did the survey explore which of these facets deliver the most impact, or which are the fastest growing?
Whitney Zimmerman: We see strategy formulation, which is literally owning the development of strategy, business development or M&A, transformation sponsorship, and capability building leading the pack and being the top four facets chosen, and resources reallocation being the least common.
If we look at those that are fastest growing, we see innovation, ESG strategy, and digital and data leadership. When we look at those that were in most need of improvement in the minds of strategy leaders, we see capability building, innovation, and transformation sponsorship, reflecting how challenging it can be to properly build capabilities and also the challenges associated with blending strategy and transformation in the same role.
Sean Brown: How do these responses compare to the time when the team first developed this framework?
Whitney Zimmerman: With the exception of the two new ones, transformation sponsorship and digital and data leadership, a set of them have increased in focus over time, led by capability building and innovation. It’s encouraging because back in 2013, capability building was the one area that strategy leaders focused on most in saying, “We wish we could spend more time on this.” Now it’s the largest shift forward. Meanwhile, we’ve seen a drop in focus on a number of them, including planned facilitation, project delivery, and performance challenging.
Sean Brown: With all that in mind, walk me through what I should do if I’m taking over the strategy leader role.
Whitney Zimmerman: When we think about counseling strategy leaders on approaching their role, the first step and the step that we’ve recommended for a long time is to actually take time to think about defining your role and your priorities. Think about what is and is not in scope, what your priorities are for driving impact and how they integrate with how you will go about doing strategy and driving impact from strategy. That is the precursor to aligning your mandate, which is the second step. Think about translating the understanding of the role that has been syndicated with your priorities into a proposed mandate, syndicating it with the CEO, who ultimately owns strategy, and key stakeholders, and ensuring that it is communicated in part, or in whole.
Of any role in the C-suite, the strategist is the one that the CEO, boards, and executive teams look to for help charting value-creating paths through this kind of volatility.Emma Gibbs
Sean Brown: Given the breadth of the chief strategy officer’s role, do you find frequent overlaps or conflicts with other C-suite roles? And how do you advise clients to navigate them?
Emma Gibbs: The link that I’ve studied most closely is between the chief strategist and the chief financial officer, because there is such a tight overlap between the strategy and then what happens with resource reallocation, performance management, and other areas. The CFO’s job is essentially a strategic one, which clearly has some overlap with strategy. The same can be said for the chief marketing officer; it’s a strategic role. If the chief marketing officer is doing customer insights, then the chief strategist should not be doing customer insights. Or, if they are, they should be doing it in a way that is complementary.
Sean Brown: In your research, how did you measure the impact of the strategy leader on company performance? What are some of the KPIs that you looked at?
Whitney Zimmerman: It depends on the individual context, but it tends to get down to how you’re running the strategy function, KPIs for the quality of those processes, the quality of insight, and the level of alignment across an organization, and, of course, the facets that you are choosing.
If you are driving on strategic planning, there are going to be KPIs around the effectiveness of the process for driving accountability down into the organization and then, of course, how you are performance managing the resulting strategic initiatives. If you’re doing capability building, there’s a myriad of potential KPIs around organizational health related to strategy that can be employed.
Sean Brown: Earlier we spoke about many strategists reporting dissatisfaction with how their teams operated. How should they set up their teams, especially when they’re first coming in an organization, to get the most impact. Na’ama, what’s been your experience?
Na’ama Alpert: The idiosyncratic nature of the strategy function means that there really isn’t a one size fits all, even when you look at specific industries, or sizes of companies, or things of that nature. More importantly is to start with defining your mandate, aligning on responsibilities and making sure it’s clear to everyone. It’s this very holistic understanding of a strategy function that represents how we would recommend approaching setting up a strategy organization design, which means starting with understanding what the mandate is, defining it, aligning with everyone, and really understanding the priorities.
Sean Brown: Companies face an unusually challenging business environment these days. What kind of experience or intrinsic capabilities do you think they should look for in a chief strategy officer?
Emma Gibbs: It goes back to, “What is it you want someone to be able to do?” If the nature of your strategic issue is that your whole business is being turned upside down by digital, you probably want somebody who’s a bit of a digital native to be able to help an organization gain the relevant insight, work out what to do about it, and make some tough decisions in response.
Equally, you might say, “We need somebody who’s a real industry insider, because there’s something about this industry that’s so peculiar that if they’re not an industry insider, they’re going to struggle to be able to bring any insight.” Or you might say, “I don’t want someone from inside the organization, because the whole point is that I want some external perspective, and I want us to be able to build a new way of thinking about strategy that we’re going to borrow from another industry that has always been much more strategic than we’ve ever had to be, because we’ve always kind of known what we were doing, and it’s been smooth sailing, and now suddenly it’s a lot more volatile.”
Sean Brown: So how do you work with clients to figure out what capabilities they should look for in CSO candidates or that CSOs should seek in members of their teams?
Whitney Zimmerman: I recently helped a new CSO who was taking over an underdeveloped strategy function at a Fortune 500 company. What we did first is run an analysis of the company’s strategy footprint based on publicly available data, compared that to their peers, and found that this company actually seemed to have more strategy skills and strategists than its peers and was hiring for more strategists than most. However, the CSO reported early in our discussions that the lack of a strong strategy function and leader had led to strategy fragmentation and no common understanding of what the overall company strategy was, no common language for strategy, and no strategy community.
But there were strategists everywhere and this was reflected in our analysis. The CSO’s conclusion after doing a prioritization activity was that one of the five pillars of things they needed in their mandate was simply to build strategy talent and that this fragmented network of strategists across the organization was actually an asset to be leveraged to build a common set of skills and language among their existing internal strategy talent.
Sean Brown: Before we close, I’d like to come back to that number we mentioned at the start, that 79 percent of strategists expect their mandates to change. Do you think those changes are likely to be ones they welcome?
Emma Gibbs: What we know about volatility is that it’s a great time to be a strategist. You don’t need strategists when the world is smooth sailing. You do need strategists when the world is volatile in order to be able to create the kind of value that we’re all in this business to be able to create, whether that’s economic value, social value, environmental value, profit, or some other kind of organizational value, or all of those types of value together. We know that volatile times call for adaptability both in the way we do our strategies and in the way we play our roles. That’s how we’re going to add the most value as strategists in the missions that we’re responsible for charting, and it’s also how we’re going to thrive in what I think is honestly the most fascinating of roles.