The Chief Strategy Officer: Is it a must-have for CEOs?

As more businesses develop and draft strategic plans, the role of chief strategy officer (CSO) has been adopted by executives who are eager to put their plans into action.

Although strategic plans are increasingly common, many CEOs have watched their plans fall flat. According to research from Bridges Consultancy, 48 percent of businesses fail at implementing their strategic plan, with only 7 percent reporting that their organization has an “excellent” ability to implement its strategy.

“People got a little weary of strategic planning, yet there are still a lot of companies that just go through the motions,” says Michael Canic, president of Making Strategy Happen in Denver, Colorado, and author of “Ruthless Consistency.” “But there’s a hunger for execution, for making it systematic.”

Enter the CSO, tasked with leading strategy and ensuring that a company’s strategic plan is executed each day.

Strategy has long been the purview of the executive leader, but Sherrin Ingram, CEO of the International Center for Strategic Planning based in Hinsdale, Illinois, has seen more CEOs delegating the responsibility of strategy. Ingram first started seeing demand for CSOs about seven years ago.

“I noticed that a lot of the companies had capable CEOs and leaders, but they often didn’t have the capacity to oversee the execution of strategy,” Ingram says. “Their bandwidth wasn’t in alignment with being able to put the attention they needed to ensure its success.”

In recent years, more companies have hired CSOs to lead their strategy function. Deloitte’s 2023 Chief Strategy Officer Survey found that 74 percent of organizations manage strategy with a dedicated leader and personnel in 2023, up from 62 percent in 2021.

CSOs have been especially prevalent in large companies. While Canic says that small- and midsize businesses (SMB) don’t typically hire CSOs, they would be wise to consider how CSOs work to turn a company’s strategic plan into a day-to-day reality.

What is a CSO?

While the simple definition of a CSO is an executive that leads strategy, those tasks can change depending on a company’s needs.

Some companies need a CSO who will build the company’s strategic plan from scratch; others need someone who will hold executives and employees accountable to the plan while finding new markets. Some companies may need a CSO who will serve as a full-time executive; others may simply need a strategy consultant with whom executives meet with a quarterly basis.

Ingram described CSOs on two different levels:

1. On the first level, the CSO helps form and guard the integrity of the strategic plan. They ensure that the company is building a solid strategic plan, but they also coordinate across the business to ensure the plan is executed well. This is where most SMBs should start, Ingram says, likely by first hiring a strategy consultant.
2. On the second level, CSOs look at trends, new markets and innovations, finding ways for the company to become more expansive in its offerings. They test new strategies, finding what works and discarding what does not work. This may still be a consultant but could also be a full-time CSO.

It’s this analysis that makes the CSO different from other roles in the C-suite, according to Dr. Andi Simon, CEO and founder of Simon Associates based in Yorktown Heights, New York, as well as author of “On the Brink: A Fresh Lens to Take Your Business to New Heights.”

CSOs are always analyzing the company’s strategy, what Simon calls its “story about how to grow.” CSOs are also analyzing both the market and the organization they’re serving, as well as those it could be serving.

And CSOs are also analyzing corners the company may have been previously ignoring. When Simon serves in the role of a consulting CSO for companies, she has executives look at emails and phone calls from potential customers. Often, customers are asking questions about what they need rather than what the company already offers.

“And when you listen to what they need, if you get three calls or emails on the same topic, you’ll find that there’s a new market,” Simon says. “Strategists help you see that.”

Why CEOs may need a CSO

When Canic consults on strategy with companies, he works with them for two years to institute the structure and discipline of his Strategic Management System, much more than just developing or implementing a strategy. It’s a process that requires time and commitment, he says, but one that helps transform companies and produce results.

“We’ve seen significant improvements in a wide range of strategic metrics such as revenue growth, gross margin, customer retention, and employee engagement,” Canic says. “It’s not rocket science. It’s structure, discipline, and rigor. When you take a systematic approach, it’s not surprising that you get far more accomplished.”

But many CEOs don’t have the capacity to consistently lead this strategic charge on their own, Ingram has found, which is often why the average strategic plan falls short. Bridges Consultancy found that many CEOs simply don’t devote much time on strategy, with 48 percent spending less than one day per month on the company’s strategy.

When CEOs are honest about their own lack of capacity to work on strategy, Ingram says that’s when they come to her to consult as their external CSO, or else find an internal CSO whom they can hire.

Beyond the strategic plan, Ingram says that CSOs can also help CEOs improve the company’s position to achieve its larger vision. The vision is the big idea behind both the company itself and the strategic plan, the driving ethos behind a company. CEOs must be honest with themselves, Ingram says: “Who is ensuring that the business is being driven forward in a way that’s aligned with the business’s plan and vision?”

If CEOs can’t ensure that they’re the ones driving the plan forward, then they can look at hiring a CSO an investment for both their company and their quality of life as the company’s leader, Ingram says.

The CSO’s responsibilities

Once a company’s strategic plan is drafted, Canic says that the next critical step is to operationalize it in the form of strategic initiatives and execution plans. These initiatives are tangible — they could be as simple as adopting a new CRM program or as complex as establishing a foothold in a new market, but Canic says that they always are built around goals, metrics, time-linked milestones and clear accountabilities.

It’s then, Canic says, that leaders need to institute monthly progress-tracking meetings to ensure strategic initiatives are on track, obstacles are spotlighted and overcome, and no one loses sight of the goal: the “return on strategy” each initiative needs to generate.

When a strategy is thriving, a large part of a CSO’s job becomes listening to the markets, Simon says, searching for new and innovative initiatives. This may mean the markets the company serves, adjacent markets, or seemingly unrelated markets where opportunity for growth an expansion may lie.

And when CSOs find potential new opportunities, Simon says that they must feel comfortable creating new initiatives to test their hypotheses. They must also be comfortable with the fact that some of these initiatives will fail, perhaps even find satisfaction in their failure. At Proctor and Gamble, for example, Simon says that the company would give awards for strategies that didn’t work to incentivize employee creativity.

“Unless you are willing to risk a little bit, a strategy officer will find themselves forever hearing, ‘no, we don’t do that,’” Simon says. “They must have a testing mindset, using pilots with good metrics, so you know what works and what doesn’t.”

And Simon often urges companies she works with to look at other industries, perhaps even going to trade shows outside of their own field. “If you go outside of what you’re familiar with, you’re going to pick up ideas that could be applied that others won’t think about,” Simon says.

CEOs must buy in

Before Canic consults with any company on strategy, he meets with the CEO to determine whether they’re truly serious about implementing strategy.

“I test them, and I say, ‘This is what it’s going to take; don’t take this on unless you’re serious, because there is a significant commitment of time and effort,’” Canic says. “The buy-in from CEOs is essential.”

Likewise for CEOs who hire CSOs, they must buy into the process from the start. Ingram says that CEOs must also keep regular communication with the CSO, including weekly meetings and updates about the CSO’s work.

“The meetings shouldn’t just be about progress, but actual steps being taken, red flags that might be coming up, new information that’s being detected, what could be seen as obstacles or distractions from the strategy,” Ingram says. “Being willing to invest that type of communication pathway is critical for success.”

With CSOs typically being a role that suggests new ideas, tests initiatives and holds people accountable across the company, Ingram says that CEOs must stand behind them and their work. If the CSO is the guardian of the strategic plan, the CEO must be the guardian of the work done by the CSO.

Hiring a CSO

If a company has created a strategic plan and watched it go nowhere, it may be time to hire a CSO or strategy consultant.

But where does a company find a CSO? It may be a good idea to first look at someone who has been a good strategist in a different industry, Simon says, as they’ll come with fresh ideas and a different perspective. For this same reason, she says that it’s important to look for a CSO who is highly creative and independent-minded, someone who does more than simply implement the plan, but tries to find ways that the plan can be optimized and expanded.

“You may even have somebody inside the company who’s doing a great job at being a creative, can see where the industry going and just needs to be heard,” Simon says. “Don’t ignore them.”

When Ingram is doing an executive search for companies searching for a CSO, she looks for professionals able to see the bigger picture and not entrenched in a specific industry. She also looks for great coaches, people able to lead others toward their goals and ask questions that a company might not be thinking about.

“You’ve got to be willing to push on uncomfortable topics,” Ingram says. “Especially if a company is in the middle of a crisis, they don’t really want to be thinking about the future, because they’re trying to handle today. This chief strategy officer has to be sensitive to that, but can’t let it rule the day, or else they’ll perpetually be in fix-and-react mode. And that lessens their value.”

Embracing a culture of strategy

When a CEO truly buys in — whether to a CSO, a strategy consultant, or a process to implement strategy — it becomes easier to get other executives on the same page. This creates a culture where strategy factors into each decision.

“I find most executives are very receptive to it, simply because they’ve been through the strategic planning charade,” Canic says of implementing a strategic plan. “They’re very open to a better approach. A systematic approach that aligns the triad of strategy, culture and execution. And that reinforces all of it through regular communications and celebrations. But it really starts with the CEO: Are they truly driven to make this happen?”

When CEOs are driven to ensure a strategy works, the CSO and a strategy mindset will become part of the business. CSOs will be in meetings regularly, listening to other executives to understand their struggles, Simon says. While CSOs must be creative in finding opportunities outside of what the company is doing, they must first work to ensure they’re truly hearing what is on the plates of other executives.

“For a while, people were hiring chief innovation officers, and they didn’t go anywhere,” Simon says. “Businesses had created a little room for them, but nothing came out of it because they had nobody to work with. CSOs should be on the manufacturing floor, on sales calls and listening to what people are talking about. They’re curious, looking for what’s next, and that requires knowing what’s happening now.”

Whether an SMB chooses to hire a CSO or a strategy consultant, Simon says that now is the time to truly put strategy to work. Rollups, consolidations and new ventures are running rampant in the middle market, she says, and focusing on strategy is a key to growing in a tough market.

“The next 3 to 5 years, we’re going to see all kinds of things happening to the mid-market,” Simon says. “What is your strategy? It’s important to consider. I’m often hired after a company loses a major client and didn’t see it coming. But long before that, there are lots of opportunities to grow through strategy.”

For more information on strategic planning, download our report Strategic Planning: Identifying Gaps in Your Game.

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