Monitor Deloitte, the strategy consulting arm of professional services firm Deloitte, has released the 2020 edition of its annual Chief Strategy Officer report. Report authors Bernardo Silva, Tom Schoenwaelder and Wayne Nelson outlined five key themes that emerged from the survey findings.
Unlocking disruptive growth is a strategic capability gap
Chief Strategy Officers 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 Chief Strategy Officer Survey revealed that while 70% of respondents rate disruptive growth as critical for their companies’ success, only 13% believe their company is capable of delivering on this strategic priority.
Strategy Officers are ideally positioned to help their organizations meet the disruptive growth challenge by architecting a systemic competence, based on a fit-for-purpose model, that promotes a more entrepreneurial mindset, novel ways of sensing emerging trends and opportunities, higher rate of experimentation, greater risk tolerance, better calibrated expectations, well-aligned funding and incentives, and creation of an expanded ecosystem of partners.
Fluency in technology as a strategic enabler
There is still insufficient understanding among Chief Strategy Officers of the role technology plays in enabling new strategic possibilities; for example, step-changing productivity across the enterprise, creating new sources of competitive advantage, enabling new business models, and unlocking new growth opportunities.
The 2020 Chief Strategy Officer Survey shows that only a small percentage of leaders believe that their organizations are capable of fully leveraging the potential of digital transformation/e-commerce (26%), analytics transformation (24%), and automation, robotics or artificial intelligence (17%).
Chief Strategy Officers should not only seek to advance their understanding of new technologies, but also (and most importantly) develop a personal point-of-view on how these technologies can help them solve their most pressing strategic challenges. Partnering with their C-suite technology peers, the Chief Information Officer (CIO) and/or the Chief Technology Officer (CTO), is a great starting point to help ensure alignment and help build momentum. External advisers can also be an invaluable resource to guide Chief Strategy Officers in this journey.
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. The process is too infrequent, and it takes too long to complete. Most strategy executives (45%) report that their companies refresh their strategy on an annual basis, while others only go through that exercise every two years (23%) or three years (22%).
In addition, the annual strategic planning process typically takes 3–4 months to complete (according to 40% of respondents). Scenario planning is a great technique to create optionality into an organization’s strategy, arming it with a playbook to quickly react to changes in market conditions or in competitive dynamics – however, only about half of the time (52%) do companies use scenario planning to help “future proof” their strategy.
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, 43% of Chief Strategy Officers were pessimistic (or very pessimistic) about the direction of the global economy, while only 10% were optimistic.
A recent analysis shows that previous recessions have favored the prepared – only 14% of companies were able to grow both revenue and earnings before interest and taxes (EBIT) during the economic slowdown, creating a 700 bps EBIT spread between “winners” and “losers.” Chief Strategy Officers play a critical role in leading downturn planning efforts to help ensure that their organizations will be able to not only weather the storm but also thrive in volatile times.
Aspiration to become a CEO
When reflecting on their own career ambitions, a meaningful portion of experienced Chief Strategy Officers (44%) 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.
Leading a meaningful unit of business (e.g., a business unit, a regional operation, a global brand), with direct profit & loss ownership, or an executive rotation through operating roles in finance or commercial, can be effective ways of closing the CEO readiness gap.