Don’t Need a Strategy Leader? Think Again
Not many roles in an organization are as misunderstood as the role of the head of strategy or the chief strategy officer (CSO).
The CEO is the leader and the visionary. The COO, CFO, CMO, CIO, and CHRO respectively lead the operations, finance, marketing, technology and human resource functions of the firm. But what does the head of strategy/CSO do? And what advantages does an insurance agency have by recruiting a CSO into its leadership ranks?
In recent years, the role of the CSO and the idea of having a firmwide formal strategic plan have gained traction across organizations of different sizes and in different industries. So let’s explore how this little-understood function can be an asset to any organization.
One of the most important goals of the CSO is to lead the development and execution of the strategic plan for the business. The strategic plan acts as a guidepost for the business. It announces to the entire organization where the business should be focusing its efforts. The CSO gets away from the quarterly pressures of managing the business and takes a medium- to long-term view to answer the question of what we want our organization to look like in one, three, five or 10 years. The strategic plan converts this vision for the organization into actionable items. Strategy brings together all functions—operations, IT, sales, service, finance, marketing, HR—into one cohesive unit aligned with the vision and the strategic priorities of the firm.
Consider all the issues affecting the insurance industry today: aging demographics, information revolution, cyber security, technological advances, changing business landscape due to mergers and acquisitions, competitive pressure for new business, creating and marketing a differentiated value proposition to customers, talent acquisition and retention, learning and development, diversity and inclusion, and more. Each of these issues has the potential to make or break your business and must be on the list of strategic priorities of every agency. The importance of any of these issues cannot be overstated. Hire the wrong candidates, and productivity suffers. Hire the right candidates without providing them learning and development opportunities, and you will lose them. Ignore the new and upcoming technologies, and your client experience, along with revenues, will suffer.
One of the many analytical frameworks the CSO may use during the strategic planning process is SWOT (strengths, weaknesses, opportunities and threats) analysis. Combining SWOT analysis with other analytical frameworks, like the balanced scorecard, value chain analysis, etc., help define strategic priorities and the actions the organization needs to take to achieve them. As the leadership team discusses what they do well, where they are lacking, what opportunities they can cultivate, and what threats they need to be cognizant of, they develop a completely new understanding of the business as different viewpoints are brought to the surface. The leadership team can then use this knowledge to frame the issues their business is facing and develop creative solutions to work through them.
Let’s take a look at talent acquisition and retention. Given the aging employee population in the insurance business, it is imperative to bring the new generation into the industry. But how do you attract talent to an industry that is not the top choice for job candidates? How do you create brand awareness for your firm? How do you mold your operating model, culture and values to become an employer of choice? As your leadership team works through the SWOT analysis, insight into weaknesses could point to reasons for high attrition rates, and a discussion of external threats could point to the strategies competitors are using to attract talent. Combine this with the knowledge of why employees like to work for your firm (your strengths and opportunities) to help you develop a plan for cultivating a strong talent pipeline.
Consider another example: mergers and acquisitions. Given the fragmented nature of the agency business, M&A is rampant. Growth via acquisitions is a strategic priority for many agencies. But how do you assess which is the right strategic partner for your business? Again, during the strategic planning process for your agency, you will identify where gaps exist in your business. These gaps should guide your decision on what to look for in an acquisition partner.
The strategic planning process is not a one-time activity. The CSO gathers the competitive intelligence for the business, assesses existing market conditions, works to continuously add to the strategic plan, and can pivot and redirect the plan as emerging trends and technologies develop and disruptors surface.
Once the strategic plan is formalized, the CSO utilizes it to create alignment and focus in the organization. It is the CSO’s job to make sure all employees in the organization understand how their daily activities move the organization forward to fulfill its strategic priorities. Gathering feedback on the plan, communicating it to all colleagues to get alignment and buy-in, and leading the execution of that plan are the most crucial and the most challenging aspects of the CSO’s job…and the most fun!
Shikha Khetrapal is SVP and head of strategy at Marsh & McLennan Agency, Northeast Region.