Understanding the Role of the

Chief Strategy Officer

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Understanding the Role of
the Chief Strategy Officer

Nicolas Kachaner and Sam Stewart

December 2013
AT A GLANCE

BCG interviewed 48 chief strategy officers (CSOs) of companies from around the
world to address four questions.

What Are the Typical CSO Responsibilities?

CSO responsibilities fall into three categories—strategy development, resource
allocation, and strategy execution—but activities within the categories vary widely.

Why Are Some CSOs More Effective Than Others?

Three factors determine a CSO‘s success: having a clearly defined role; getting the
basics right on planning, growth, and innovation; and building credibility and trust.

How Should Csos Work with Line Executives?

There is no single “right” model, but our analysis revealed four CSO archetypes:
portfolio manager, strategy orchestrator, internal consultant, and CEO delegate.

What Role Should the Strategy Department Play in Developing Future

Leaders Within the Business?
The strategy department is seen as both the entry point for external talent and an
environment for accelerating the careers of the most talented young managers.

2 Understanding the Role of the Chief Strategy Officer

I n our work with chief strategy officers (CSOs), four questions invariably arise:
What are the typical CSO responsibilities? Why are some CSOs more effective
than others? How should CSOs work with line executives? And, finally, what role
should the strategy department play in developing future leaders within the
business? We’ve observed that roles and responsibilities vary among companies
and industries, but to better quantify the differences—and to definitively answer
these questions—we embarked on a series of in-depth interviews with 48 CSOs of
companies from around the world, in a wide range of industries: consumer prod-
ucts, industrial goods, financial services, energy, technology, media, and telecommu-
nications. Just over half of the CSOs we interviewed report to the CEO, although
this is less likely to be the case at larger companies and in the financial sector.

Our interviews explored CSO responsibilities, team composition and size, how CSOs The CSO has the
work with other parts of the business, and other key success factors. least-defined role
among C-suite-level
executives.
What Are the Typical CSO Responsibilities?
Our findings revealed that the CSO has the least-defined role among C-suite-level
executives. The role is characterized by a high level of ambiguity, constantly evolv-
ing relationships with key stakeholders, and regular changes to the scope of work.
As one executive we interviewed noted, “The strategy department is in charge of
every new project that falls outside the boxes of the traditional organization.”

Broadly speaking, CSO responsibilities fall into three categories—strategy develop-

ment, resource allocation, and strategy execution—but activities within these three
categories vary widely. (See Exhibit 1.) Most CSOs are responsible for identification of
growth opportunities (84 percent of the executives we interviewed), strategic plan-
ning (82 percent), and M&A and divestments (82 percent). Other common responsi-
bilities include monitoring long-term trends and outlook, gathering competitive intel-
ligence, driving cross-business-unit initiatives, and sustaining business model
innovation. Far fewer CSOs are involved with identifying cost improvement opportu-
nities and managing postmerger integration (23 and 20 percent, respectively).

CSO responsibilities vary by industry. For instance, consumer goods companies’

CSOs focus primarily on strategic planning and cross-business-unit strategy,
whereas CSOs at industrial goods companies focus more on increasing shareholder
value through portfolio management, M&A, and identification of growth
opportunities. CSOs in the energy and financial services industries tend to have
more-diverse responsibilities.

The Boston Consulting Group 3

Exhibit 1 | Typical CSO Responsibilities Include Strategy Development, Resource Allocation, and
Strategy Execution
Current responsibilities of CSOs and their teams

Identification of growth opportunities 84

Strategic-planning process 82
Strategy Strategic-planning content development 77
development
Long-term trends and outlook 64

Competitive intelligence 64

M&As and divestments 82

Portfolio management and group-level 57
resource allocation
Project approval, prioritization, or both 36
Resource
allocation Shareholder value management 32
Allocating or managing capital expenditures, or both 30
Vendor management, consulting 30
procurement, or both

Cross-business-unit initiatives 68
Innovation including business model innovation and 59
Strategy new-business incubation
execution
Identification of cost improvement opportunities 23

Postmerger integration 20

0 20 40 60 80 100
% of CSO respondents
Source: BCG interviews.
Note: The panel was composed of 48 companies worldwide.

The size of the CSO’s centralized strategy team varies depending primarily on the
size of the company itself, but the centralized team tends to be smaller than strate-
gy teams in the business units. (See Exhibit 2.) Of the CSOs we interviewed, 68 per-
cent reported teams of ten or fewer, with a median size of seven. Responsibilities
drive team size, too. CSOs who are accountable for M&A or innovation tend to have
larger teams than CSOs without those responsibilities.

Why Are Some CSOs More Effective Than Others?

From our experience and observation, three factors determine the success of a CSO:
having a clearly defined role; getting the basics right on planning, growth, and inno-
vation; and building credibility and trust—particularly in the first 100 days. Let’s
look at each of these more closely.

Having a Clearly Defined Role

The most effective CSOs have a clear role and well-defined objectives. This clarity
allows them to stay focused on what matters and to build a supporting team that
has the right people and skills. As noted earlier, CSO roles and responsibilities vary
greatly. Our analysis of the range of responsibilities revealed four distinct roles:

4 Understanding the Role of the Chief Strategy Officer

 Exhibit 2 | Company Size Affects the Size of CSOs’ Teams
Depending on the number of
FTEs in the company Depending on company sales

Strategy function FTEs per 1,000 FTEs Strategy function FTEs per $1 billion in sales
25,000 100,000
10.00 100.00
$5 $50
billion billion
Typical size Typical size Typical size
2–7 FTEs 7–12 FTEs 12–14 FTEs

10.00
R = 0.61
² R² = 0.66
1.00

1.00

TMT

0.10 TMT
0.10 IG, EN

IG, EN, FI Typical CP, FI

size
CP Typical size 7–11 Typical size
3–7 FTEs FTEs 11–14 FTEs
0.01
1,000 10,000 100,000 0.1 1.0 10.0 100.0
Total FTEs in company Company sales ($ billions)

IG CP FI TMT EN

Sources: BCG interviews; company websites.

Note: CP = consumer products. EN = energy. FI = financial services. FTE = full-time equivalent. IG = industrial goods. TMT = technology, media, and
telecommunications. The panel was composed of 35 companies. The equation for the FTE ratio analysis regression line is Y = 2.17–0.62 X, and the
equation for the sales analysis regression line is Y = 0.72–0.80 X.

portfolio managers, strategy orchestrators, internal consultants, and CEO delegates.

(See the section “How Should CSOs Work with Line Executives?” for more informa-
tion on these archetypes.)

Getting the Basics Right on Planning, Growth, and Innovation

Strategic planning, growth, and business model innovation are the fundamental re-
sponsibilities of almost every CSO. Through the planning process, effective CSOs
provide top-down guidance to the business units and align the units’ plans with
those of the corporate center, a task that all our respondents said they find chal-
lenging. Driving growth is also a key aspect of CSO performance. Deciding which
markets to target and how to win is especially difficult when it involves going be-
yond traditional, core businesses. The CSOs we spoke to said that their greatest
challenge is executing growth ideas, not generating them. The ability to drive busi-
ness model innovation—that is, to rethink the value proposition and operating
model to capture new opportunities—is also a highly valued aspect of the CSO role.

Even though growth and business model innovation are among the top priorities of
the CSOs we spoke with, few CSOs have formal processes for executing on those
priorities. As a result, CSOs often find themselves responding reactively rather than

The Boston Consulting Group 5

 proactively to opportunities. This can be frustrating for CSOs as well as for their
C-suite colleagues.

Building Credibility and Trust—Particularly in the First 100 Days

CSO success hinges on the ability to build relationships with the business units and
deliver value, rather than being seen simply as “overhead.” Good listening skills are
critical. Each business unit is different, and each will have substantive issues. As
one CSO noted, “One of the hardest things to relearn is that I don’t have to speak. I
have to listen to senior executives so that they open up.” Without strong relation-
ships with the business units, strategic planning can become a bureaucratic, tem-
plate-driven exercise. Another trap that new CSOs typically fall into is playing the
CEO card too early. The CSO’s relationship with the CEO can be an important lever,
but it must be used sparingly.

The CSOs we spoke to all agreed that the first 100 days on the job are critical when
it comes to building relationships and gaining credibility. Said one, “I have seen that
Most CSOs reported the CEO forms his impressions in the first 100 days and rarely changes them later
that, in hindsight, on.” Most reported that, in hindsight, they should have focused their first months
they should have more on building relationships with the business leaders and CEOs.
focused their first
months more on To stay connected to the strategy resources in the business units, CSOs use a range
building relationships. of levers. These include adding nonbureaucratic team members with strong com-
munication skills; developing a community of business unit strategists through reg-
ular meetings, monthly calls, or newsletters; and staying closely involved with daily
performance management at the business unit level.

How Should CSOs Work with Line Executives?

Operating within a clearly defined role that is well understood by the broader man-
agement team is critical to a CSO’s success. Although there is no single “right” mod-
el, the CSO’s role should be shaped by how diversified the business units are, the
CEO’s leadership style, and the company’s organization model. Our analysis re-
vealed four CSO archetypes, each requiring different capabilities.

Portfolio Manager (26 Percent of Respondents)

This role focuses on the long-term horizon and has limited operational involvement
in the business units. Key responsibilities include strategic planning, monitoring of
the external environment, portfolio management, and M&A. CSOs in this role typi-
cally report to the CFO. Portfolio managers tend to have small teams of five to sev-
en people, strong links to finance functions, and access to consistent, value-based
metrics that are used across the company. Corporations best suited to this type of
CSO role are those that have a diverse portfolio of end-to-end businesses with limit-
ed operational synergies, those that favor growth by M&A, and those whose busi-
ness-unit executives have a high degree of autonomy with respect to strategy.

Strategy Orchestrator (42 Percent of Respondents)

This is the most common CSO role. It involves a broad range of activities that must
be clearly defined to avoid bureaucracy and duplication of efforts. Key responsibili-
ties include strategic planning, growth initiatives, portfolio management, competi-

6 Understanding the Role of the Chief Strategy Officer

tive intelligence, and cross-business-unit projects. Because of the wide range of ac-
tivities, the CSO in this role needs a mix of skills—everything from financial
analysis to operational expertise, along with strong communication and relation-
ship-building skills. Strategy orchestrators typically have large teams with ten or
more people and may create a pool of junior team members who can be shared
across the various functions within the team. To succeed in this role, the CSO must
be seen by the CEO and business unit heads to be adding value by translating long-
term plans into near-term projects for business unit consideration. An ongoing chal-
lenge is to remain effective and relevant to the business across a broad range of re-
sponsibilities. This model is typically seen in diversified companies with potential
synergies among business units—such as diversified financial services companies.

Internal Consultant (16 Percent of Respondents)

In this model, the CSO focuses on supporting the business units and their leaders
on a wide variety of assignments and projects, managing a pool of strategy Because of the wide
resources as a shared service. Cross-business-unit projects, strategy content, and range of activities, the
identification of growth opportunities are key responsibilities. CSOs operating in CSO in the strategy
this mode are more likely to report to the CFO than to the CEO. Given the nature of orchestrator role
the internal-consultant role, CSOs and their teams need the typical “consulting tool needs a mix of skills.
kit” skills: quantitative analysis, the ability to deal with ambiguity and multiple
issues, and customer service. This type of CSO usually has a large team of ten or
more people organized as a pool of resources, and a larger proportion of junior
staff than is included in most other CSO models. Because of these large teams and
the variety of assignments, CSOs need to be strong line managers. To succeed with
this model, the CSO must be able to work closely with all levels in the business unit
organizations, provide high-quality advice and support, and develop a talent pool
for future line-management roles. Strong listening skills are critical. The internal-
consultant model is best suited to companies with relatively autonomous business
units, where the CEO tends not to get involved in business-unit-level strategy
development.

CEO Delegate (16 Percent of Respondents)

CSOs in this role have a clear mandate from the CEO and often take on a variety of
high-level strategic projects, directed on behalf of the CEO but within the operating
business units. Typical responsibilities include business transformation, M&A, post-
merger integration, cross-business-unit projects, and identification of growth oppor-
tunities. CEO delegates tend to have teams of five to ten people, report directly to
the CEO, and interact mostly with the CEO, business unit heads, and functional
heads. To succeed with this model, CSOs must be able to build trust and transpar-
ency with the business unit heads. Also needed are analytical and operational
skills, project management skills, the ability to juggle a variety of projects, and fast
ramp-up capabilities. The CEO delegate must be able to set up and deliver on mea-
surable project outcomes, generate valuable ideas and projects for CEO review, and
manage all stakeholders to ensure strong CEO endorsement. Many people in this
role are former consultants who stay on the job for two to four years before moving
into another area of the company. This model is best suited to companies whose
CEO is intimately involved with the daily business, such as family-owned compa-
nies and consumer goods companies that must deliver a consistent customer expe-
rience across different markets and channels.

The Boston Consulting Group 7

What Role Should the Strategy Department Play in
Developing Future Leaders Within the Business?
In many organizations, the strategy department is seen as both the entry point for
external talent and an environment for broadening the horizons and accelerating
the careers of the most talented young managers. For example, nearly 60 percent of
CSOs are external hires, with many coming from a management consulting
company or investment bank. Traditional wisdom says that the skills required to
succeed in a strategy role form an important part of the skill base of a successful
senior executive.

This seems to be a plausible theory, but does it work in practice? The answer is yes,
mostly, but with a few significant caveats. Our interviews highlighted the important
role that strategy departments play in attracting talented people from outside the
organization. Most of the CSOs we spoke to recruit from a combination of invest-
ment banks, top-tier consultancies, and business schools. In general, this model
works well, providing both a strong strategy team and an effective platform to bring
those people into the organization. Strategy teams tend to have quite high turnover,
but in general this is evidence that the model is working.

Where CSOs report a more mixed experience is in developing and accelerating the
careers of talented managers who are already within the organization. Companies
that do this well are rigorous about selecting managers to “cycle through” the strat-
egy team and then providing targeted training and professional development to the
chosen few. Over time, this creates a track record of accelerating the careers of tal-
ented people—and attracting the next wave of talent into the department. Unfortu-
nately, however, the reverse is also true. Without a clear mandate to bring in the
best people, a structured development program, and a process for cycling them into
line roles, the strategy department can rapidly become a dead end for less-talented
managers. This negative cycle can be hard to break once it sets in.

It is no surprise that CEOs and CSOs alike commonly ask us what CSOs typically
do next. Although only 41 percent of CSOs sit on the executive committee or man-
agement board, they do tend to rise in the executive ranks, with 67 percent either
becoming the head of a business unit or taking on another role on the executive
committee.

D espite being the least-defined C-suite role, and notwithstanding some of the
common frustrations surrounding the corporate-planning process, the over-
whelming majority of CSOs add a great deal of value, usually by focusing on a
small number of critically important functions. From the CEO’s perspective, an
effective CSO provides tremendous leverage and insight. And from the CSO’s
perspective, the role typically provides a solid foundation for an executive-level
line-management position.

8 Understanding the Role of the Chief Strategy Officer

About the Authors
Nicolas Kachaner is a senior partner and managing director in the Paris office of The Boston
Consulting Group. You may contact him by e-mail at kachaner.nicolas@bcg.com.

Sam Stewart is a partner and managing director in the firm’s Sydney office. You may contact him
by e-mail at stewart.sam@bcg.com.

Acknowledgments
The authors wish to acknowledge Anne-Sophie Schissler for her support. They also thank Katherine
Andrews, Gary Callahan, Martha Craumer, Catherine Cuddihee, Kim Friedman, and Sara
Strassenreiter for their writing, editing, and production assistance.

For Further Contact

If you would like to discuss this report, please contact one of the authors.

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