Enterprises face a host of challenges today, including digital disruption and changing global trade patterns. In such an environment the need for a flexible strategy and a flexible strategy function is high. In this article, the authors present a clear step-by-step approach to getting the best value from the strategy function based on their research in over 50 companies with Heads of Strategy, CEOs, CFOs and advisors.
In recent years, companies have been creating high-powered strategy functions to help develop, communicate, and execute their strategies, and to track progress. Part of the value of the Head of Strategy – as we refer to the role in this article – is that there is no standard job description. Heads of Strategy typically have fewer routine responsibilities than do other functional heads. Although they manage the annual planning process, that isn’t a full-time job usually; companies don’t entirely overhaul their strategic plans every year. In the Head of Strategy, a CEO therefore has a skilled and seasoned resource on tap, which can be invaluable in an unpredictable and fast-changing world.
All the data show that there are wide variations in the work that Heads of Strategy perform. For instance, a 2008 Accenture survey found that the average Head of Strategy was responsible for as many as 10 different activities while 25% were responsible for 17, or more activities.1 But precisely, because the Strategy role is so flexible, companies and their CEOs find it difficult to hire the right Head of Strategy and get full value from their strategy function. The Head of Strategy needs to be able to play so many roles that even talented executives find it difficult to do well across the board. The Head of Strategy must possess a difficult-to-find mix of strategy-related skills, industry knowhow and the ability to develop close relationships with senior executives. Defining the type of individual required up front is made more difficult because it evolves over time. CEOs load up Heads of Strategy with pressing tasks whenever necessary, so much of the Head of Strategy’s work is opportunistic. Several of the CEOs and strategists we interviewed described how previously successful Heads of Strategy lost their job when the challenges facing the organisation shifted – for example from growth to margin improvement – something that Heads of Strategy have in common with CEOs and which distinguishes them from other senior executives.
Heads of Strategy studies, such as the annual survey conducted by the University of St. Gallen and Roland Berger since 2011, find that one in seven Heads of Strategy is, sooner or later, asked to quit – comparable to the one-in-six rate at which CEOs were forced out in 2016.2 Only a third of them remain in office for over three years, and just one in ten stick around for over five years, so most Heads of Strategy don’t stay long enough to see the results of their efforts. In our research, about one in five Heads of Strategy failed to have an impact on their companies or were rejected by top management teams.
About the Authors
Jo Whitehead is a Director of Ashridge Strategic Management Centre. His research is in strategic decision-making, business unit strategy, corporate strategy and the role of Chief Strategy officers and their departments. Jo’s other professional interests include running and providing management programmes and consulting to client companies.
Felix Barber is a Director of the Ashridge Strategic Management Centre. His work includes directing research projects and running the ASMC Corporate Member Program. The long-term focus of his research is on the ownership, governance and organisation of large corporations. His current work targets how to harness and profit from Artificial Intelligence.
Rebecca Homkes is a Director at the Ashridge Strategic Management Centre as well as a Fellow at the London Business School’s (LBS) Department of Strategy and Entrepreneurship and its Centre for Management Development, where she is co-directing a global initiative on executing strategy in turbulent markets.
1. R.T.S. Breene, P.F. Nunes PF and W.E. Shill. “Rise of the chief strategy officer”. Outlook, no. 1 (2008): 1-8
2. The Strategist’s Change. How successful CSOs transform their companies – Key findings of the Chief Strategy Officer Survey 2014. Report from Roland Berger and the University of St Gallen. November 2014; PWC annual report on CEO turnover, accessed via https://www.strategyand.pwc.com/ceosuccess#VisualTabs2
3. See, for example, N. Kachaner and S. Stewart. “Understanding the Role of the Chief Strategy Officer”. Report by The Boston Consulting Group, (December 2013) and M. Birshan, E. Gibbs, and K. Strovink. “Rethinking the role of the strategist”. McKinsey Quarterly. (November 2014)
4. While the work of a strategist can be very broadly spread, as described earlier, our research suggested that the most value is generated when working on corporate priorities. When asked to describe their role interviewees typically provided a long list. However, when asked to identify which of these were, in their opinion, most value creating, they universally identified roles that involved supporting or leading an initiative to address a significant and current corporate priority.
5. D. Thomas. “Vodafone’s Finegold to retire” The Financial Times, March 30, 2016 viewed at https://www.ft.com/content/df928b8c-f66f-11e5-803c-d27c7117d132?mhq5j=e7
7. The CFO often plays an active role in developing and executing strategy and may sometimes have the Head of Strategy report into them. One survey found that 83% of CFOs are engaged or heavily engaged in strategy formulation and even more in strategy implementation (J. Karaian, The Chief Financial Officer: What CFOs do, the influence they have, and why it matters, (Economist Books, London, 2014)). Recent trends may have swung things in favor of the Head of Strategy (E. Qualtrough. CIO 100 shows CFO losing power to strategy directors. CIO UK. April 23 (2015), viewed at https://www.cio.co.uk/it-leadership/cio-100-shows-cfo-losing-power-strategy-directors-3607589/
8. Hewlett-Packard to split into two public companies, lay off 5,000. Reuters. 6th October, 2014