Let’s begin with the question: who shouldn’t be responsible for strategy? This question is vital, as it highlights the complexities of strategic roles within organizations. While the Chief Strategy Officer (CSO) role has been touched upon, a deeper discussion is necessary.

Over the past 50 years, strategy has evolved from an obscure concept to a fundamental function within most large companies. Typically, organizational functions are clearly defined: finance manages the finances, sales handles sales, HR oversees human resources, manufacturing produces goods, and legal manages legal affairs. So, shouldn’t the strategy function manage strategy? Initially, it seemed so. General Electric, a trailblazer in corporate strategy during the 1960s and 1970s, created an extensive strategy division. However, Jack Welch later reduced its size and scope, recognizing the limitations of this approach.

The strategy differs from other functions because it is inherently integrative and horizontal. Like general management, its core task is to integrate across various functions to make sound decisions. While other functions, such as finance, also take an integrative view, they do not determine what all other functions should do.

Business schools need to teach general management or strategy as integrative disciplines adequately. They focus on functional skills and strategy analytical tools, contributing to the decline of strategic art.

Effective strategy involves making integrative choices across the entire enterprise. Therefore, the leader of a company, business unit, or product/service line must take charge of strategy. If general managers delegate this responsibility to the strategy function, they fail. The strategy should support and enable executives to create a strategy, not take over their responsibilities.

This is the importance of the strategy function. Its critical role is to assist executives in formulating strategy, offering expertise, and ensuring high standards in strategic output. Many strategies fail because they do not aim for a significant advantage. The strategy function should not encroach on the business leader’s responsibilities but support and enhance the strategic process.

A company’s strategy team should comprise the entire executive leadership team (ELT), regardless of its names (EC, GMT, GLT, SMT, etc.). If the CEO does not consider a team member essential for strategy, that member should not be on the leadership team. This principle applies to business unit presidents and product/service line heads concerning their teams.

The strategy team should include experts whose core knowledge is strategy. The CSO or the head of the strategy, if not on the ELT, can provide crucial skills and expertise. These experts should facilitate the ELT’s strategy creation process and support analytical work, setting high standards and focusing on winning strategies.

Line executives who delegate strategy creation to external consultants must fulfil their responsibilities. Historically, firms like Boston Consulting Group (BCG), Bain, and McKinsey performed strategy outsourcing.

Today, many businesses in the UK follow this approach. For instance, Tesco revamped its strategy internally with minimal external input, focusing on customer-centricity and operational efficiency. Similarly, Unilever’s sustainable living plan was developed with internal leadership, aiming to integrate sustainability into the core strategy.

As a leader of a company, business unit, or product/service line, you are responsible for strategy. Please don’t forget to delegate this responsibility. Your strategy team should include your direct reports, ensuring everyone is involved.

You can use strategy experts wisely, both internal and external. Their role is to assist and improve your strategic capabilities, not to create a strategy for you. Evaluate them based on how well they help you develop and execute strategy and ensure they enhance your strategic skills.

For strategy providers, avoid taking over strategic responsibilities from general managers. While it may be tempting, it ultimately harms your client and limits your ability to develop your most valuable skill: facilitating effective strategy creation.

Conclusion

Effective strategy is integrative and requires active leadership involvement. While the strategy function and external consultants play crucial roles, they should support, not replace, the strategic responsibilities of general managers. Organizations can develop robust strategies that drive success by fostering a collaborative and integrative approach.

This is based on the article by Roger Martin

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By Andrew Constable MBA, BSP

Keywords: Business Strategy, Innovation, Leadership

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