Strategy Best Practices Series, #3
In the third installment of our series, we are summarizing a survey Monitor Deloitte, the Strategy practice of Deloitte Consulting LLP, and the Kellogg School of Management did with chief strategy officers in 2020. This covers a lot of interesting ground we thought our strategy practitioners would be more than curious about. Read the original report here.
TL;DR – Report Conclusion
The State of Strategy as a Function
Strategy is still comparatively young as a corporate function. 39 percent of CSOs surveyed report that Strategy has existed as a formal function for less than five years at their organization.
The Strategy function plays a critical role within the modern corporation, directly advising CEOs on critical issues and shaping the strategic agenda. That is evidenced by the direct line CSOs often have to their CEOs – 69 percent of CSOs surveyed report directly to their company’s CEO. However, only 29 percent of top Strategy executives are awarded a C-level title of either chief strategy officer (27 percent) or, much fewer, chief growth officer (2 percent).
From an operating model perspective, more than half of Strategy teams are centralized (55 percent), serving all parts of the business, while only 9 percent are decentralized. Interestingly, however, roughly a third (35 percent) are a hybrid with both centralized and decentralized elements.
Key findings
- Unlocking disruptive growth is a strategic capability gap – CSOs recognize that the ability to generate disruptive growth in a fast-changing market environment is their organization’s most critical strategic capability gap. The 2020 CSO Survey revealed that while 70 percent of CSO respondents rate disruptive growth as critical for their companies’ success, only 13 percent of CSOs believe their company is capable of delivering on this strategic priority.
- Winning (today, and tomorrow) requires fluency in technology as a strategic enabler – There is still insufficient understanding among CSOs of the role technology plays in enabling new strategic possibilities. The 2020 CSO Survey shows that only a small percentage of CSOs believe that their organizations are capable of fully leveraging the potential of digital transformation/e-commerce (26 percent), analytics transformation (24 percent), and automation/robotics/AI (17 percent).
- Strategic planning must become more dynamic – The traditional strategic planning process does not match the speed with which the market is moving and likely needs to be reinvented. Most Strategy executives (45 percent) report that their companies refresh their strategy on an annual basis, while others only go through that exercise every two years (23 percent) or three years (22 percent). In addition, the annual strategic planning process typically takes 3 – 4 months to complete (according to 40 percent of respondents).
- Global economic prospects are a major concern – Even prior to the COVID-19 pandemic, the looming threat of a global economic downturn was a real concern for Strategy executives. At the time the survey was conducted (November to December 2019), forty-three percent of CSOs were pessimistic (or very pessimistic) about the direction of the global economy, while only 10 percent were optimistic.
- Aspiration to become a CEO – When reflecting on their own career ambitions, a meaningful portion of experienced CSOs (44 percent) aspire to become a CEO within the next five years. While they are confident about their ability to ascend to the top, they also recognize that they face some significant challenges in preparing themselves to achieve this professional goal, including their general lack of direct operational experience.
Action plan
Strengthen your ability to identify, unlock, and capture disruptive growth
Most of the high-growth opportunity spaces are forming on the outskirts of mature markets where disruptive growth is the norm. These opportunity spaces tend to be more fragmented, faster-moving, more fluid, and harder to grasp.
This is where the Strategy function can help these organizations. How? By architecting a fit-for-purpose model that creates the necessary conditions for identifying, pursuing, capturing, and managing new opportunities.
Shape and drive the disruptive technology agenda
Technology is exponentially changing human potential, progressively pushing the boundaries of what is possible, and unlocking new amazing opportunities. Winning organizations of tomorrow will be faster, able to target opportunities more granularly, and more connected.
The Strategy function must play a central role in bringing this vision to life as an orchestrator of strategic actions across the enterprise. CSOs should look to educate themselves on the basics of the underlying technologies, illustrate their applications through case examples and demos, and help open the aperture to new possibilities through “art-of-the-possible” ideation sessions.
Adopt more agile and dynamic strategic planning practices
Current strategic planning cycles do not match the speed with which the market is moving and may need to be reinvented. In fact, the vast majority of CSOs (71 percent) report spending more than three months on their strategic planning process, and nearly a third (31 percent) spend more than four months. In addition, the survey results reveal that most companies (45 percent) refresh their strategy on an annual basis, while others only go through that exercise every two (23 percent) or three years (22 percent).
In today’s fast-moving world, the current strategic planning cadence is not nearly fast enough to avoid incoherence between a company’s strategy and the evolving realities of the marketplace. Strategy should become a continuous discipline, not a periodic exercise. The Strategy function should lead the way in reimagining the strategic planning process in its own organization.
First, scenario planning has proven to be an invaluable tool to help companies “future-proof” their strategies. Secondly, technology offers many enhancement opportunities to create next-generation strategic planning capabilities. Digitizing the process is a critical first (and necessary) step to unlock new possibilities. Finally, companies should seize the opportunity to utilize better and quicker access to data to monitor how their strategy is faring in the marketplace.
Most of the high-growth opportunity spaces are forming on the outskirts of mature markets where disruptive growth is the norm. These opportunity spaces tend to be more fragmented, faster-moving, more fluid, and harder to grasp.
Omnistrat adherence
Much of this report deals with issues outside of a strategy process, but some are directly supportive of what Omnistrat represents.
Omnistrat was conceived to bring a practical strategy management capability to companies of any size. It was also designed to make a company’s strategy visible to everyone in the organization.
Omnistrat allows for both open strategy and agile strategy. Open means more people participate in the process, so a broader perspective is taken in when formulating strategy. Agile refers to the ability to respond quickly and pivot when necessary. This can only happen if execution is part of the same system, which it is in Omnistrat.
Read the next in our Strategy Best Practices Series here.
