Jo Whitehead and colleagues report in Harvard Business Review:
Success comes from a good fit between the capabilities of the head of strategy and the ongoing stream of corporate strategy work to be done, the capabilities of the rest of the senior team, and the broader context. CEOs should avoid creating an all-encompassing wish list and focus on the most-important capabilities they need to ensure that candidates complement the team and fit in with the organization. They should customize the job to capitalize on the strengths and minimize the weaknesses of the best candidate.
Why is it that some companies have great heads of strategy who make an outstanding contribution to their companies, while others don’t? To answer this question, we evaluated 55 heads of strategy, and looked more closely at 11 who were particularly successful and 10 who were at the other end of the spectrum. The full findings are contained in this white paper. But here’s a synopsis of what we learned.
The person’s capabilities should fit the challenges facing the organization. Consider Staples, the office supplies retailer, which tumbled from being the market leader to being one-third of the new leader’s size. The existing management team had not addressed a range of issues, including required changes to store sizes, the product range, and which geographies the company focused on.
So founder and CEO Tom Stemberg hired John Wilson as head of strategy and chief financial officer. Wilson was an industry outsider (he had previously worked as a management consultant and the head of corporate planning at an airline), described by Stemberg as a “provocateur” and an “in-your-face kind of guy.” Wilson was exactly what the business needed. He rammed through required changes in strategy such as building bigger and brighter stores, which helped the company nearly quadruple its revenues over the next four years. Wilson went on to be COO of The Gap Inc. and is currently president of Staples Europe.
As corporate priorities change, so should the head of strategy. Staples continued to grow, but profitability fell. There was a need to refocus the management team on reducing costs, targeting opportunities based on their profit rather than their growth potential and systematically reviewing all parts of the business for any other opportunities to improve profitability. Stemberg turned to Basil Anderson, who had tackled similar challenges as CFO of Campbell Soup and Scott Paper. Like Wilson, Anderson was able to lead the senior team. But Anderson, who had served as an independent director on the company’s board for several years, did this through having “tremendous relationships and credibility with the operating executives.” With Anderson’s help, Staples’ net profits grew more than tenfold over the next five years.
In some cases, it pays to tailor the job to the candidate’s unique capabilities. If the candidate has a particular set of capabilities of great value to the company, it can be worth the company’s while to fit the role to the candidate. Walgreens Boots Alliance’s Rick Mills has been the group strategy officer for 20 years. He has accumulated a unique mix of deep knowledge of the organization, the industry, and how to work with Stefano Pessina, the company’s executive chair. These attributes have allowed Mills to evolve from a strategy staff role into a critical member of the senior team. He has worked closely with Pessina to identify and execute deals that have propelled Walgreens Boots Alliance forward on both sides of the Atlantic.
Make sure the critical skills don’t already exist in-house. This means considering whether you can use other members of the senior team to do all or part of the strategy role. Doing so not only reduces costs but also avoids the potential frictions that come from adding a new member to a team (for example, the danger that the newcomer will clashw ith members of the leadership team for political or personality reasons).
For example, the CEO of a communications company we interviewed had hired a capable person to head strategy, but he didn’t contribute many insights beyond those that the CEO was already getting from the chief information officer. The latter was a capable strategist with relevant insight into digital technologies — the most pressing strategic issue for the company at that time. The CEO ended up getting rid of the head of strategy, continuing to use the CIO to provide him with strategic advice, and hiring a strong but relatively junior analyst to provide support to the senior team.
Don’t underestimate the importance of cultural fit. When the head of strategy at a large European chemicals company was retiring, the capabilities that his successor needed to have seemed pretty clear: the ability to structure a strategic process that helped and challenged the company’s business units to review their current competitive positions, project how the future might evolve, and develop plans that strengthened their short-term position and developed options for future changes.
The best fit seemed to be an experienced individual from a major consulting company, who had also served in an executive position at another multinational firm. Within a few months the CEO decided that the decision had been a mistake, because the personal style of the individual in question did not fit in with the company’s culture, which generated several conflicts over a short period of time. A senior executive described to us what he termed the “rules of engagement.” This included building a strong social network and working as a team with a shared stewardship of the organization. He said that while his successor had considerable talents, he failed to conform to these social rules.
In summary, success comes from a good fit between the capabilities of the head of strategy and the ongoing stream of corporate strategy work to be done, the capabilities of the rest of the senior team, and the broader context. Thinking this through should occur when a new hire is being considered and periodically thereafter.
Since this observation isn’t exactly rocket science, why do so many companies seem to break this rule? A central reason is it is hard to identify and recruit good candidates who fit on all dimensions.
To increase the chance of hitting the head-of-strategy jackpot, CEOs should avoid creating an all-encompassing wish list and focus on the most-important capabilities they need from a head of strategy. They should take the time to ensure that shortlisted candidates will complement the senior team and fit in with the organization. They should be willing to customize the job to capitalize on the strengths and minimize the weaknesses of the best candidate.
Yes, this takes a lot of the CEO’s time. But the prize is a head of strategy who will be highly effective.
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