2021 Chief Strategic Officer Research Report From Deloitte Consulting

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What is our current strategy—— This is a question that many enterprise managers have pondered since the outbreak of the epidemic.

The enterprise strategy department is usually responsible for the formulation and planning of long-term strategy, but when the epidemic is coming, the chief strategy officer (hereinafter referred to as CSO) has to solve a series of urgent problems, from maintaining the operation of the factory and supply chain to maintaining the enterprise cash flow, so as to ensure business continuity.

For CSO, taking into account short-term fire fighting and long-term planning has become one of the most significant changes in work responsibilities since the epidemic.

At the same time, there are more and more signs that the economic, social and geopolitical problems caused by the epidemic are leading to structural changes in the business environment of enterprises. In order to better understand the role changes of CSO and strategic departments in the face of new business challenges, Deloitte morit, a strategic consulting business of Deloitte management consulting, joined hands with Kellogg School of management, More than 250 CSOs and strategic executives from more than 30 countries were investigated. The subjects covered a wide range of industries in North America, Asia Pacific, Europe, the Middle East, Africa and Latin America, including listed and unlisted large and medium-sized enterprises.  

Deloitte molitor’s 2021 CSO survey results show that in order to control the sudden changes in the external business environment, CSOs are expanding their scope of activities within the enterprise and begin to think about how to improve their capabilities in non-traditional strategic fields such as scientific and technological proficiency, digital transformation and enterprise social value, so as to lead the enterprise to the future.

Current situation of global strategic management

Having a formal strategic management function is one of the symbols of organizational development maturity, which shows that enterprises are willing to look to the future, think about problems with a long-term perspective, and make active choices (and investments), so as to achieve higher aspirations.

Looking at enterprises around the world, strategic teams are experiencing a new round of rise, and 37% of respondents said that their strategic department group was built in the last five years. The strategic department is no longer just the patent of large multinational enterprises; Many small and medium-sized enterprises, including non-profit organizations, are also beginning to realize the benefits of establishing strategic teams.

Although new strategic teams and departments are constantly established, their scale is still quite streamlined, with an average of 1 to 5 people per strategic team (48%).

From the perspective of operation mode, the strategic department is usually centralized, and most of the surveyed enterprises (61%) adopt a centralized strategic management mode to provide services for all businesses. However, more and more mature strategic departments, especially in large and diversified enterprises, are turning to the mixed mode of centralization and decentralization, so as to improve flexibility and deepen the relationship between strategic departments and business lines.

Globally, CSO’s status continues to improve, and 75% of respondents report directly to the CEO. This strengthens the importance and voice of CSO in the company’s senior management team, and can directly advise the senior management team on key issues, strategic decisions and forward-looking investments.

Changes in CSO responsibilities and capabilities

The epidemic situation forced enterprises to re-examine and adjust their strategies. CSO, as a strategy maker, bears the brunt of the new requirements of the new situation on its responsibilities and capabilities. Deloitte comprehensively analyzed the research results and summarized the following four changes.

Change 1: evolution of CSO to “generalist”

Traditionally, CSO is good at long-term strategic planning, market insight, mergers and acquisitions, but affected by the epidemic, enterprises’ expectations for CSO have expanded to many aspects.

The survey shows that CSO played a key role in solving a series of problems during the epidemic: exploring new business models and strategic cooperation (62%), accelerating digital transformation (58%), upgrading market perception mechanism (50%), reconstructing the company’s operation model (49%), reshaping M & a strategy (48%), promoting corporate social value (48%), and adjusting product portfolio and marketing methods (46%), Further improve labor productivity (38%), restructure cost structure and ensure liquidity (36%).

These high priority and high attention business priorities have promoted CSO to become a generalist, taking into account cost and growth. But are these changes only temporary, or will they become a new “face” of CSO forever? The answer is uncertain.

Deloitte morit management consulting believes that in strategic organizations, responsibility changes related to digital transformation and corporate culture are more likely to last for a long time. Therefore, whether in or after the crisis, CSOs that can actively adapt to these challenges will certainly reflect higher value in the enterprise.

Change 2: develop mission driven enterprise strategy

In the CSO survey in 2021, one data is particularly striking: 67% of CSOs said that “embracing corporate social values and responsibilities” is the top priority of the enterprise, and nearly half (48%) of the respondents said that the participation of the strategic department in this aspect was very high or very high in the past year.

Why does corporate social value become a part of CSO work? Because corporate social value represents the greater ambition of the enterprise, it requires the enterprise to integrate the practice of social responsibility into all aspects of daily business activities. If properly implemented, the practice of social responsibility can bring great value to shareholders, employees and even the whole society. Therefore, executives need to consciously make a series of strategic decisions and embed social responsibility into the enterprise’s strategy.

Deloitte morit believes that the corporate mission is the responsibility of CSO. CSO and CEO have unique advantages and excellent opportunities to find a balance between corporate social responsibility and business profits and obtain excess returns in both aspects.

However, for most CSOs, promoting the issue of enterprise mission is still a new thing. This report gives some suggestions for CSOs’ reference.

Change 3: deep integration of strategy and science and technology

As a decisive strategic element of our times, science and technology can not only improve enterprise productivity, but also constantly create new business models and even new industries.

CSOs pay great attention to and recognize technology. Nearly 90% of the respondents agree that advanced technology is a very important strategic enabling means, and more than 60% of the respondents believe that advanced technology will fundamentally redefine their roles and required capabilities in the next few years.

Deloitte morit believes that the five areas in which CSO most wants to exert influence are: formulating the overall advanced technology strategy of the enterprise, guiding and managing relevant investment, tracking value realization, designing key application scenarios, mining and sharing best practices.

On the other hand, although 47% of CSOs think they have high or very high participation in the formulation and implementation of enterprise science and technology strategy, 80% of CSOs are eager to play a more central role, and they often feel incompetent to initiate or promote the discussion of such issues.

Change 4: deal with uncertainty with higher agility

The survey shows that since the outbreak of the epidemic, CSO has made the whole strategic planning process more dynamic (60%), started using scenario planning to prepare for unknown events (50%), improved the frequency of performance evaluation (48%), and used new data sources to predict and track market trends (38%). In general, the CSOs of large enterprises can better adjust their working methods and coping strategies according to the epidemic situation, which may reflect that the strategic management functions of large enterprises are more mature and have more available resources.

At the most critical moment, CSOs show amazing agility and adaptability to help the company cope with turbulence and uncertainty. They explored new and alternative data sources, adopted a more dynamic strategic planning process, and applied scenario planning methods to drive extraordinary performance.

However, how long CSO will continue to undertake the work related to the epidemic, and with the promotion of vaccines, the world is gradually returning to normal order. We still need to wait and see what long-term impact the post epidemic era will have on CSO’s work.  

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