Alicia Manning, Chief Strategy Officer Third Wave Industries (T-wI), Security Printing and Packaging Division (SPPD)
Scant research has been undertaken into the role of the Chief Strategy Officer (CSO), that is, the determination of what a CSO does. This contrasts with many other professions that include medicine, engineering, law, and accounting. As specialists in strategy practice, the Strategic Management Institute (SMI), the research arm of Paul Hunter Strategy and Leadership has evolved a representation of the role of the CSO. It is based on raw experience in the field, empirical research, and conclusions drawn from corporate strategy specific publications. Findings are underpinned by content contained in the books Corporate Strategy (Remastered), Volumes I and II (2, 1). As an example of the rigour of our research, the theme of Corporate Strategy (Remastered) is grounded in the work of the ‘Father’ of strategy, Igor Ansoff. Ansoff’s book, simply titled Corporate Strategy, (3) was first published in 1965.
While a description of the role of the CSO is described here, the questions that were asked by the SMI are: “How does our definition of the role of the CSO compare with the theoretical perspective? What are the gaps? ” A comparison is presented in this paper where it will be a surprise for many to learn that one critical component of the CSO’s role is missing from formal job descriptions, even though its existence is vital to the long-term survival of many corporations.
SMI Understanding of the Roll of Chief Strategy Officer
The SMI’s reinterpreted version of the practice of corporate strategy describes a methodology that is referred to in the books Corporate Strategy (Remastered), I and II as Third Wave Strategy. A brief comment on the differences in Third Wave Strategy and Ansoff’s Corporate Strategy is included in the introduction to each chapter. As illustrated in Figure 1, Third Wave Strategy is made up of four key elements, they are: 1) an acknowledgement of a recognition of the interests of all stakeholders in the corporation, not just shareholders, 2) the design of a dynamic and integrated strategy system, 3) an awareness of cognitive behaviours in strategy practice, and, 4) recognition and treatment of the conduct of strategy practice at the level of a profession.
Figure 1: Elements of Third Wave Strategy
Observations gleaned from all the foregoing reference sources provided the SMI with an understanding and appreciation of the essentials of corporate strategy practices and by definition, the role of the Chief Strategy Officer (CSO). It is important to note that while the role of the CSO is encapsulated within a convenient matrix, (Figure 2) there is no one right or wrong quadrant and, in all likelihood, the CSO will occupy all four quadrants at any time, conceivably all on the same day. It is important to understand too, that the basis for the matrix is its horizontal and vertical axis. They consist of the two elements of Inside Out (a resource/core competence based perspective of strategy practice) vs. an Outside In (market-oriented perspective). Each are supplemented with the degree of responsiveness to strategic change which the SMI has recognised as being adaptive or inventive in nature. To clarify:
• an adaptive strategic change (a response) is adopted by an organisation provoked into an action that is the outcome of an expected, or unexpected external, or internal stimulus that occurs beyond its control; thereby initiating programmes of survival, and
• an invented strategic change (an act the SMI refers to as a prosponse) is introduced on terms that are within the firms control and are evoked as a result of a deliberate intent to positively challenge or disrupt an organisations future strategic trajectory; thereby initiating programmes of survival and growth.
Figure 2: Role of the Chief Strategy Officer
Content contained in each of the quadrants shown in the matrix is described as follows:
Captain in Waiting: With a focus on the development of responses to changes in resources and markets the outcome from the CSO’s success in this role will be dependent on a capacity to solve wicked strategic problems, and an ability to exert sufficient influence over two key groups to deliver substantive change. The two groups are 1) the stakeholders responsible for implementing solutions to those problems (a matter of trust), and 2) their customers, those who expect the stakeholders to do their job properly. The CSO may not tackle all these issues on their own. Most likely they will initiate and lead a team made up of the ‘right’ people to work on the problem together. Those most adept at this function are well placed to fill the role of CEO, should that be their ambition. Examples of wicked problems include the conduct of strategically aligned cost reduction/downsizing programs, the identification and preparation of disruptive, business growth strategies and the preparation of responses to aggressive competitors.
An example of such an individual is Tufan Erginbilgic, recently appointed CEO of Rolls-Royce, a manufacturer of aircraft engines, marine propulsion systems, and power-generation systems in the UK. Erginbilgic made some controversial observations about the company following his appointment. They were picked up and reported in the Financial Times (4), the gist of which was his observation that in his view, one particular division of Rolls Royce was a ‘burning platform’ because it has so many problems. Fortunately for all Rolls Royce stakeholders, Erginbilgic is confident he has all the answers. No one it seems is expecting Erginbilgic to be talking about disruptive new strategies at this stage of his tour of duty at Rolls Royce.
Steward: CSO’s in this role will be responsible for the development of short-term responses to internal challenges that are usually predictable, and within their control. They are also encouraged to challenge the unknown through the identification of, and participation in, new opportunities in markets and/or existing markets. The degree of control over resources along with the flexibility in control over any adverse fall out from market exploration ensures limited exposure to risk. Where the CSO is vulnerable however is where events beyond their control, those within the higher-level external environment (industries and beyond), arise. Examples of occurrences in this sphere include sudden changes in economic conditions, emerging instability in geopolitical circles, and emerging threats and opportunities from the digitalisation of technology.
The Australian Mining Conglomerate BHP is in this position. BHP has realised immense success in the steady prospecting and extraction of core commodities such as oil, gas, copper, coal, and iron ore over many years. The company is now in the process of transforming to a supplier of renewable energy and high demand rare minerals, at a pace that is slow enough to remain well within their control. (5) BHP is on continual lookout for new mineral resources and new companies to acquire, the latest being mineral rich, OZ Minerals.
Pioneer: The late Seve Jobs was a pioneer. In founding Apple, he is quoted as saying “you can’t expect customers to know what they want”. Starting from the time honoured source of hi-tech entrepreneurship, the home garage, Jobs built one of the most successful companies in history. He did this through the continual invention of new products which its customers, who could be found in every market category, could not resist. For the typical CSO, one leading a reasonably steady company with a lot of history and potentially one on a maturing trajectory, the spirit of pioneer must be reinvigorated or at least, kept alive. The CSO as pioneer must build on the entrepreneurial spirit and values of the company founders to find new markets for new and existing resources, and/or new resources for existing and new markets, or a combination of both. That responsibility can be exercised at a cognitive level at the least, and in a hands-on capacity when appropriate. To satisfy both requirements, the CSO will likely be the leader of the resource invention process, a task that must incorporate pathways to implementation. Activities here are as basic as leading the development of new ideas from digitalisation, or the development of responses to change in societal behaviours. In a hands-on role the CSO will take the lead in strategy formulation and the oversight of implementation.
Amazon is another high-tech company that exhibits attributes of pioneering. Not only when it was a start-up, but also in establishing satellite businesses. Amazon Web Services (AWS) is an example, it is a subsidiary of Amazon that evolved out of the parent company's core. AWS provides on-demand cloud computing platforms to individuals, companies, and governments on a global scale. Today, AWS is said to contribute over 50% of Amazon’s operating income. Amazon has never swayed from its entrepreneurial, pioneering spirit. Founder and past CEO Jeff Bezos was driven by a belief in continual renewal. Although satisfied with Amazon’s successful launch (Day 1) he regarded “Day 2 as stasis. Followed by irrelevance...” There was never going to be a loss of pioneering spirit at Amazon, not if he has anything to do with it.
Crusader: With a predominant focus on renewal, and a strong influence of prosponsive invention in both resources (Inside Out) and markets (Outside In) the CSO as crusader is responsible for the identification, articulation, and justification for the launch of high level, strategic disruptions; and organisation wide transformation. In contrast to pioneers, crusaders are able to leverage an entire corporate resource set and thereby create an enviable and inimitable presence in new market spaces. This could involve the evolution of new, dynamic market systems altogether. In this capacity an alignment of the office of the CSO and the internal organisational learning function will pay huge dividends, if not physically, then at least spiritually. An organisational learning function that engages in systems thinking, a capacity to see the whole picture, is a recognised key to success.
As discussed in the book Corporate Universities (6), Mars Corporation is reported to have relied on its organisational learning function to lead a corporate transformation through restructuring, in the mid 2000’s. Similarly, in the book Chocolate Fortunes (7) Allen explains how Mars organisational learning function played a key role in the successful launch of the Mars Confectionary division into the Chinese market, also in the mid 2000's. The results were impressive, the restructuring positioned the company for substantive growth. Sales in China doubled between 2003 and 2005. In the future, forces of change from sources such as the rise of digital technology, changes in geopolitical influences and new societal attitudes (to name a few) will force the majority of corporations to engage in highly aggressive and disruptive transformations. Expect the enormity of these to require many more resources than the efforts of a learning function alone.
Filling the gap: A Comparison of Theory and Practice
In order to identify, or at least illustrate the gap between theory and practice, the SMI reviewed the recruitment advertisements for the role of the CSO in the jobs section of the LinkedIn social media platform. The task required the SMI to identity common responsibilities that were listed as a feature of the role of the Chief Strategy Officer – as described in the job description included in each of the advertisements. The review focused on the mature markets of Australia, the regions of Greater London UK, San Francisco USA, and New York USA. In all, 18 advertisements were analysed and tested by measuring the frequency of use of key terms such as transformation, plan, grow, drive, manage, partner, support, project and 45 more (refer Appendix 1). As illustrated in Figure 3, the analysis of the most frequently used words resulted in the identification of three of the four primary roles used to describe the role of the CSO. Those categories were illustrated in Figure 1. The detailed list of words used, and their frequency in use, appear as Appendix 1 to this paper.
Figure 3: Recruitment preferences for role of Chief Strategy Officer
Although three of the four elements of the role of the CSO were readily evident, and pioneers were in highest demand, there was little requirement exhibited for the appointment of a crusader. To some extent that is understandable, in contemporary business environments risk is closely monitored and managed, and strict corporate reporting controls adopted. There is little room for overt risk taking in that environment. The work of a crusader may be troublesome for a global bank, for example, of which one was included in the research. In an environment of increasing extremes of volatility, uncertainty, change, and ambiguity, disruption is ever present; it has become a growing threat to the stability of every corporation. It's highly surprising therefore, that there is little apparent demand for CSO's with a capacity to engage in deliberate disruption. Surely, that is exactly what is needed in so many corporations today.
Realistically of course, it would be foolish for any corporation to entice an individual to seek to disrupt the organisation from day 1. The role of Crusader therefore must be one that is filled by a CSO that has earned the trust of their colleagues and in this area especially, comes with no predetermined job description. That individual most have the capacity to engage in such activities, but in cohort with the existing CEO and probably, chairman of the board. It is at this juncture that strategy does become an art, more so than a function that is expected from an accountant or lawyer. At the end of the day, it is all about trajectories. Mars provides an example again. Ever since its restructuring back in the 2000’s Mars has made sure it remains relevant, by stealth. Now involved in nutritional based health care, food brands, pet care, and snacks, Mars strategists can be considered to be corporate crusaders. Mars is prepared to and does continually evolve and grow its resource base while at the same time, experiment in existing markets whilst also contemplating or trialling a presence in new markets.
Mars roots can be traced to the year 1911, but as evidence of further low profile disruption, it just recently launched a new division referred to as Mars Edge. This is a scientifically grounded, nutritional based health food business which is described on the Mars Inc. web site (8) as a division being “built to help improve human health, by bringing together the food we want with the nutrition we need.” Mars Edge products, the web site proclaims, are easy and enjoyable, and are “not only based on the latest science and embedded in state-of-the-art technologies, but also powered by real data that delivers real results”. An example of a Mars Edge product is COCOAVIA™. It is a cocoa extract dietary supplement that supports healthy blood flow for heart and brain health. COCOAVIA™ however isn’t a recent invention, it is the result of 20 years of evidence-based research.
Making the role of the Chief Strategy Officer Your Own
The role of the CSO need not be limited to any one category of consultant or business leader. It is a role that is well suited to all-rounders who are capable of making all of the characteristics presented in the matrix their own. To summarise, they are: I) a steady hand in problem solving, ii) constantly on the look out for, and always aware of contemporary ‘difficult’ issues that may become threats in the future, iii) cognisant of, and respectful to the pioneers of the business, and the legacy that should be imbued within the corporate culture, and thereby, an understanding of what the company should become, and iv) the strategic imperatives that must be met to ensure the company will excel and grow into the future – through passive or aggressive disruption if necessary. It is the latter requirement that calls for the crusader and in view of the uniqueness of every corporation, is a role that the CSO will likely grow into. It is true that the role will benefit from fresh insight and fresh points of view, but no one can introduce and create change unless they are a part of the company’s culture and respectful of its DNA.
While problem solving is key to the role of the CSO, the task of responding (adapting) and prosponding (inventing) will be a natural component of that attribute. Individuals who rise to the challenge of pioneering of course will be highly regarded. The act of crusading however will require careful management and that is a skill that must be treated with caution. Yet that role is becoming a necessity as opposed to a feature. The role requires therefore, an individual who carries a high degree of courage and a strength of self-confidence. Its enactment will demand a lot of trust from supporters and the board, especially the CEO. Its conduct requires careful and thoughtful steps, a belief in, and commitment to expected outcomes, and a conscious management of strategic risk. At the end of the day, strategy is about the future, but the future is unknown so there are no guarantees. Journeys into the future must therefore include built in parachutes, for use when the assumptions, guesstimates and estimates that went into the justification of prior strategic decisions don’t turn out as expected. The CSO must craft their own role and their own future, that is though, one of the greatest attractions of the job, isn't it?
References
1. Hunter, P., Corporate Strategy (Remastered) II: A Fieldbook, Implementing High Performance Strategy and Leadership, Routledge, Oxford, UK, 2020
2. Hunter, P., Corporate Strategy (Remastered) I: High Performance Strategy and Leadership in a Volatile, Disrupted World, Routledge, Oxford, UK, 2020
3. Ansoff, H.I. (1965), Corporate Strategy, New York: McGraw-Hill
4. Pfeifer, S., The Financial Times, London, UK 21 May, 2023. Accessed 25 may, 2023 https://www.ft.com/content/3436ab7e-728f-4ca0-9cde-d51ab2c4b90e
5. BHP, Our Strategy https://www.bhp.com/about/strategy, Accessed 15 May, 2023
6. Rademakers, M., Corporate Universities as Drivers of Organizational Learning, Routledge, Oxford, UK, 2014.
7. Allen, L., “Chocolate Fortunes; the Battle for the Hearts and Minds, and Wallets of China’s Consumers”, AMACOM, 2010
8. Mars Edge, https://www.mars.com/our-brands/edge, Accessed 25 May, 2023
Appendix 1: Summary of Word Use in Advertisements for the Role of Chief Strategy Officer
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