PoS Apr 2015 | Corporate Strategy Office: Why an organization cannot do without one
Last year, the CEO of a medium sized company approached me to advise him on whether to enter a new market segment. I enquired why he did not ask one of his senior managers to find the answer. He said that he would have to seek the opinion of the Business Head or Chief of Marketing. They, he feared, would say YES.
His observation was astute. He recognized their interest in a bigger job might predispose them in favour of entering the prospective segment.
Role of the CSO
CEOs often seek out consultants for independent, insightful and expert advice. While that need may not go away, it is possible for companies to resolve many questions of strategy on their own, reliably.
The principal role of the Corporate Strategy Office (CSO) is to provide rigorously evaluated strategic advice the Board, CEO, business units (BUs), and functions. They should report directly to the CEO.
One of their most important responsibilities is to periodically determine how well the firm’s strategy is working. Is the firm is serving the customers (segments) they are best equipped for? Are they delivering superior value? Is the business capturing sufficient value in the process? These and similar questions constitute strategy audit.
The role of CSO extends further. They should monitor changes in the environment, markets, and behaviour of customers. Acute observations can alert the firm to opportunities and threats. Early signs of change are usually visible at the periphery of the organization, in interactions with suppliers, service providers, and customers.
The CSO can help senior operating managers institute formal and informal ways of sensing. Inability to adapt has destroyed many a company.
|How Palm, Blackberry & Nokia missed the busPalm, the smartphone pioneer, failed to adopt new operating system and design in spite of being a part of HP, a technology powerhouse. Blackberry today is a pale shadow of the past. Nokia was blinded by its own success and did not see customers’ growing preference for smartphones.
Gillette and Apple, on the other hand, have repeatedly and consistently built new generation products that cannibalized their own successful brands.
Aequs, an Indian manufacturer of aerospace components and assemblies, has asked itself again and again if they are in the right business. Their answers have seeded new ventures and created new streams of revenue. From complex machining, they have entered metal forming, forging, assembly, and surface treatment – all part of the extended manufacturing value chain of Tier 1 and Tier 2 suppliers to the aerospace industry.
The CSO’s true value lies in influencing, and enabling business and function leaders to succeed. Their job is complex and difficult. It requires an inquisitive orientation and considerable expertise.
That may explain why so few companies have the Corporate Strategy Office. But it does not diminish their critical contribution to charting the firm’s destiny.
Read the previous issue of PoS – The Critical Need for A Corporate Strategy Office.