Chief strategy officers are becoming stylish icons at technology services firms. Are they really necessary, or just the latest management fad?
Once upon a solutions providers business model, it was customary for the CEO to shoulder the companys burden. From running the business, to evangelizing the vision, to shutting off the lights at night, the CEO was doing it all, and enjoying the responsibility.
Over the past couple of years, however, the top job has undergone some profound changes. Increased competition, an IT spending slowdown among large customers, the advent of new technologies, and, of course, the meteoric rise and fall of the dot-coms have made the CEOs office a much more dangerous place to work.
In response, CEOs at solutions providers and software and hardware companies are calling upon a new breed of executive to lighten their load. This seasoned executive is, above all, a strategic, visionary thinker who provides the wisdom that underscores the daily actions of the CEO and the executive management team.
At many companies, the new executive has taken on the fancy title of "chief strategy officer" (CSO). To be sure, CSOs are not mirror images of one another. They come from different backgrounds and their roles tend to be customized to the nature of their organizations. Companies as diverse as Cisco Systems, Corio, Ingram Micro, Microsoft, Sapient and Sun Microsystems have appointed executives with the CSO title.
On one level, the advent of the CSO can be dismissed as simply the latest in a long line of new corporate officers. Within the past few years alone, weve witnessed the dawning of the chief motivation officer, chief innovation officer, chief inspiration officer and chief people officer. A number of those funky titles have already gone to dot-com heaven. And some industry watchers lump the CSO into this fly-by-night category.
Others, however, believe that the emergence of the CSO represents something much more important and much longer lasting. Indeed, they argue, the addition of the CSO to the upper-management ranks fundamentally changes the way that top management functions.
The way the job is shaking out, the CSO generally has both external responsibilities to clients and internal managerial duties. He or she is charged with telling the management team what the company must do to be successful and advising the CEO on making the right strategic bets.
"I think its a pretty important role, and it will become more important as there are new advances in technology and changes within a company and its business processes," says Prakash Parphasarathy, a senior research analyst at Banc of America Securities and a proponent of the CSO title.
"The business metrics of many companies are in a great churn right now, and the CSO could provide the insight for what a customer requires," adds Parphasarathy.
Representing the other view is Andrew Steinerman, a managing partner at Bear Stearns, who sees nothing particularly new and exciting about the CSO and doesnt see the need for another highfalutin title.
"I think this role has been around for a while, and I have certainly met a chief strategy officer along the way
in some companies, it was the business development person," he says.
Nevertheless, given todays stormy economic climate, even Steinerman concedes that a good CSO can help provide the strategic "focus" that a technology services company must have in order to survive. But he warns against expecting any miracles from this executive. "I still think that since times are tough, the most important role is the COO, who does the blocking and tackling," Steinerman concludes. "The CSO is not the silver bullet."
They Came From Another World
It is hardly surprising that many of the CSOs at software and services companies are veterans of high-level strategy consulting firms, such as Bain & Co., Boston Consulting Group, Index (now the management consulting arm of Computer Sciences) and McKinsey & Co.
Typical of this career path is Steven Hoffman, a former Bain and CSC Index consultant who took the newly created CSO post at Sapient last January. His major task: to help co-CEO Jerry Greenberg manage more effectively in a skittish market.
Hoffman sees his role as twofold: help Sapient think through its own internal strategy, and make sure that every piece of work the company does for its clients reflects that "strategic competency."
Put another way, Hoffman wants Sapient to avoid the dreaded "cobblers children" syndrome that has doomed many a technology consultancy. Why should any customer, particularly in this grim economic environment, take advice from a consulting firm that cant articulate its own business strategy? "Im responsible for making sure that we are as data-driven in how we think through our own strategic issues as we advise our clients to be," Hoffman explains.
Jim Champy, VP of strategy at Perot Systems and one of the architects of the corporate "reengineering" movement of the early 1990s, says another factor driving the surge of interest in the CSO is rapid technological innovation. "I think companies and senior executives are having a difficult time figuring out where technology is going, and there is a revived interest in strategy from a futures perspective," says Champy, who unofficially wears the CSO title at Perot Systems. "The job of the CEO is getting more intense, and the CEOs cant spend as much time as they would like to looking ahead."
However, cautions Champy, as valuable as the CSO may be to the well-being of a technology company, the role should not overshadow the CEO, who remains the principal corporate strategist. "The CSO role is to support the CEO and the board," concludes Champy.
Michael Treacy, a co-founder of consulting firm Gen3 Partners, believes the CSO is such a crucial job that he assumed that title himself. His reason: Markets are so much more volatile that it requires a separate individual to make sure strategy keeps pace with rapid change.
At Gen 3 Partners, which specializes in helping established companies create new spin-offs, Treacy, in his role as CSO, maintains a clear boundary between himself and fellow founder and CEO Jim Sims.
"Jim is the emotional leader, the kind of entrepreneur people want to work for. He is driving the thinking of what we might, or might not, do in the system integration field," says Treacy. While Sims rallies the troops, Treacy sees himself taking on a shifting set of responsibilities"master influencer" of client expectations, internal company seer, whatever is required at the time.
Within large, established tech companies, the CSO is viewed as a sort of corporate linebacker, tackling threats from emerging companies or disruptive technologies. That is the role Cisco Systems has in mind for Michaelangelo Volpi, its mergers and acquisitions practice leader who recently added the CSO title to his job responsibilities.
Similarly, distributor Ingram Micro recently added CSO responsibilities to the CIO job. Guy Abramo, the recipient of the joint title, says Ingram believed that with the proliferation of marketplaces, "it just got so complicated that we needed to put a new focus on understanding the industry structure
and take a more formal approach [by creating] the chief strategy officer job."
Abramo says he will guide Ingram in its adoption of a marketplace approach to doing business. "Most of what drove distribution in the past was based on how we brought the vendors products to market. We didnt look at the source of the demand for the technology products," Abramo explains. "We want to really understand the market for products and services as it relates to the IT supply chain and [the] customer set, and look at the competencies they need rather than just pushing this or that to market." Abramo, unlike other CSOs, will have not only a strategic planning organizationwhich analyzes customer behaviors and market demandreporting to him, but also the companys worldwide marketing group.
No Free Lunch
Although the word "strategy" does conjure up images of pipe-smoking consultants in three-piece suits who live in a world free of accountability, sources say the CSO will not have the same luxury. "They will have to be accountable for the choices they make," says Champy.
Richard Putz, CSO and CFO at C-bridge Internet Solutions, says as CSO he expects to be very much on the front lines, working with the companys account execs when pending deals need to be escalated to the next level. Putz, who took on the CSO job nearly two years ago, says he is typically brought in early in the process to help the sales team build its business case for the solution sale. Secondarily, the CSO may be called in toward the end of the process to answer the clients detailed questions about the efficacy of the solution.
Some tech services companies, however, have struggled to implement the CSO post. Glenn Yeffeth, CSO of integrator Lante Corp., says a company must get beyond "flirting" with the idea, and take corporate strategy to its heart.
For example, Yeffeth spends a relatively small amount of time advising CEO Rudy Puryear and the Lante board on how to shape the companys strategic direction. The bulk of Yeffeths time is taken up with building Lantes ability to offer strategic services to clients, and getting the entire Lante organization to think strategically.
"We are helping clients make up their minds. It [strategy] requires long-term thinking and makes you a valuable partner," says Yeffeth. "Clients know they will get a business result and not just a technology solution."
Yeffeth, who was formerly with DiamondCluster International, says he spends three days a week with clients, helping to generate sales leads and advising those clients.
While there is a slow adoption of CSOs in the tech-services space, Perots Champy sees more and more companies adding that role to their management roster. "IT services firms will be really challenged in the next six to 19 months," says Champy. "I think they will create strategy roles if they dont have them," he adds.
There is no question that the new breed of CSOs are an enthusiastic group with a clear and important task ahead of them. But like the CIOs before them, if they dont ultimately help make their companies top and bottom lines shine, theyll end up marginalized, if not out on the bread line. In such a worst-case scenario, the CSO acronym could come to stand for "couldnt see opportunity."