How chief strategy officers think about their role: A roundtable

Last Updated Oct 24, 2008 2:27 PM EDT

McKinsey Chief strategy officers from several high-profile companies discuss the complexities and challenges of the role.


As companies struggle to meet the challenges of today's complex business environment by developing short- and long-term strategic visions, the role of chief strategy officer (CSO) has become increasingly prominent. Although CEOs remain ultimately responsible for strategic decisions, they regularly look to the CSO to craft and implement successful strategies. But the role's relative novelty raises critical questions about its function and the degree of ownership it carries.


McKinsey recently brought together CSOs from several high-profile companies to discuss the challenges of the job—starting with its definition and what it entails. The panel included Edward C. Arditte, senior vice president of strategy and investor relations at the multi-industry company Tyco International; Stuart Grief, vice president of strategy and business development at the aircraft, industrial, and finance group Textron; Marius A. Haas, senior vice president of strategy and corporate development at the technology company HP; Dan Simpson, vice president, office of the chairman, at the cleaning-products group Clorox; Annabel Spring, managing director in charge of strategy and execution at the investment bank Morgan Stanley; and J. F. Van Kerckhove, vice president of corporate strategy at the e-commerce company eBay.


Some of the panelists say that they have one foot in the corporate suite and the other deep in the business units. Others believe that while communication with the business units is very important, a CSO's primary concern is the development of high-level strategy. In that capacity, CSOs grapple with the challenge of balancing short- and long-term goals: handling the multifaceted demands of an increasingly global business environment, they strive to focus on growth without losing sight of productivity. All panel members agree that a close relationship with the CEO is vital for instigating change, but they voice different views on other issues, such as how to interact with the finance function. Renée Dye, a consultant based in McKinsey's Atlanta office, moderated the panel discussion.


The Quarterly: How well defined is the role of the CSO?


Dan Simpson: The role of the CSO is poorly defined, much like the discipline of strategy itself. Most other C-level executives have high levels of control over their disciplines, fairly clear ownership, and a large staff. But that isn't true for the CSO. Many things affect the role, from the nature of the industry or company to the CSO's reporting relationship. But the biggest factor is the style of the CEO, the true chief strategy officer.


Stuart Grief: The CEO makes the ultimate decisions, but it's our job to explore the facts and alternatives around an issue. We make sure CEOs have a clear understanding of the implications of various choices so that they can make informed decisions.


J. F. Van Kerckhove: The CEO is the ultimate owner of corporate strategy. A good strategy process finds the right balance between top-down and bottom-up engagement in developing strategy, building on the collective wisdom, and exposing its main assumptions. While the formulation of strategy often goes through specific planning milestones, its development is ongoing—at times explicit and at times not. The CSO plays an important role in helping to coordinate and inject knowledge in the more formal strategy process, as well as fostering an environment for more spontaneous strategy creation. The latter often finds its roots in a close collaboration with the business units or field operations at the forefront of experimentation and learning. In a fast-paced industry like ours, the ability to rapidly learn from the field is a true competitive advantage.


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