September 5, 2008

The Role of the Chief Strategy Officer (CSO)

Corporate strategy is a beast of uncertain provenance, in theory falling within the bailiwick of the board and in practice within the purview of the CEO. Against this background, the chief strategy officer (CSO) – a particularly 21st century role – cuts a curious figure.  Certainly the CSO is a respected figure – General Motors has one, as do Sun, Cadbury and Morgan Stanley – but it is less clear what the CSO actually does. An article that appeared in the McKinsey Quarterly this May concluded that the job was poorly defined. But essentially three roles are possible: the CSO may be responsible for the  generation, the facilitation or the execution of strategy.

The CSO responsible for generating strategy is in the weakest position. Strategy is the core preserve of the CEO and the board, and no effective CEO will abdicate her responsibility for formulating it to another C-level officer. A CSO responsible for originating strategy is thus in a delicate dance with the CEO: part counsellor, part idea generator, he or she provides the CEO with strategic options and recommendations, but leaves the ultimate course up to the CEO. Functionally, the originating CSO competes with outsiders – McKinsey, Bain and so on – for the provision of strategic advice. Operationally, this kind of CSO is responsible for the corporate strategy department, but may be weakened in practice, since he or she presides over a staff function (and usually a relatively small staff function at that) without P&L responsibility, and is thus fully dependent on the CEO for support in order to be effective.

The CSO responsible for facilitating strategy is deeply involved in, and usually oversees, the strategic planning process.  This role is transactional, rather than content-driven: the job of the facilitating CSO is, at least in large part, to ensure that the strategic plan is delivered. His or her role may extend only to ensuring the process proceeds smoothly. Ideally, however, the facilitating CSO will challenge the assumptions made by the organisation’s departments so that the plan finally presented for board discussion is as rigorous and stable as possible. Here, too, the CSO relies on the strong and public support of the CEO in order to be effective, since it will be difficult in practice for someone without his or her own corporate fiefdom to challenge the plans developed by business unit heads

The role of the CSO responsible for executing strategy centres on implementation.  Part of the role lies in communicating the strategy to the organisation: here, since execution requires the understanding and cooperation of both employees and managers, the CSO will liaise closely both with corporate communications and with line managers. The CSO responsible for executing strategy is also a controller, verifying that milestones have been reached and implementation is on track.

As an originator or facilitator of strategy, or where responsible for strategy execution, the chief strategy officer can add value to the corporation in a variety of ways. Since the role lacks a common definition, it is clear that, in order for the CSO to be effective, the demonstrative support of the chief executive officer is a sine qua non.


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