What a Corporate Strategy Team Actually Does

Two strategy departments

Canon USA had a strategic planning department. By Robert Kaplan and David Norton’s account, it had been “an ivory tower within the company, spending much money on memberships but not having much influence” ¹.

Chrysler had one too. Facing a forecast deficit of more than $5 billion for 2001, Chrysler Group got a new CEO, Dieter Zetsche, who worked with Bill Russo, his vice president of business strategy, on a new strategy ¹. Russo’s group started with the usual staff work: building a scorecard and running its reporting. Then it took on communicating the strategy to employees. Then something changed. Zetsche began asking Russo, before each management meeting, to brief him on the issues that needed attention and action. After the meeting, Russo followed up to make sure the actions were communicated and carried out ¹.

Same function on paper. One produced documents. The other decided what the top team talked about.

A corporate strategy team is a small group, usually reporting to the CEO or CFO, that helps the top team make company-level choices: which businesses to be in, how to allocate capital and talent across them, which acquisitions and exits to pursue, and whether agreed choices are being carried out. It runs the planning cycle, supports portfolio and M&A decisions, takes on CEO projects and shapes strategy reviews.

The argument of this page fits in a sentence. A corporate strategy team’s real product is the executive agenda, meaning which decisions the top team takes this year and whether they hold. Plans, decks and models are byproducts. A team that confuses the byproducts for the product ends up where Canon’s did.

The plan is the byproduct. The agenda is the product.

The five kinds of work

Most teams spend their year on some mix of five kinds of work. The mix depends on the company and, more than anyone admits, on the CEO. A team of four that tries all five at full depth will do none of them well.

Kaplan and Norton, studying companies that ran strategy through the Balanced Scorecard, saw units like Russo’s accumulate this work piece by piece. They called the result an Office of Strategy Management and listed nine processes it should run or coordinate, from strategic planning and strategy reviews to initiative management and the link to budgeting ¹. Some of those processes belong to it outright; others, like budgeting and workforce planning, stay with finance and HR, with the strategy unit making sure they connect to the strategy ¹.

The concept of corporate strategy itself is covered in the Lexicon entry on corporate strategy. This page is about the people who do it for a living.

The planning cycle: from collecting plans to curating decisions

The planning cycle is the most visible work and often the least valued. Kaplan and Norton sketch the usual calendar. A strategy offsite in mid-year. Business-unit and functional plans drawn up separately. A budget built by finance in the third and fourth quarters that is typically uninformed by the strategic plan. Monthly reviews that drift to short-term operations and firefighting ¹. Each step is run by a different unit, so nothing connects them.

Michael Mankins and Richard Steele go further. Annual, unit-by-unit planning fails, they argue, because real strategic decisions follow neither the calendar nor unit boundaries ². Companies that moved to continuous, issue-focused decision making shifted executive discussion from “review and approve” to “debate and decide,” and the authors report they make more than twice as many important strategic decisions a year as companies on the traditional model ².

That is the mechanism behind the thesis. When the team’s job is to collect plans, its output is a binder, and the binder has no owner once it is printed. When the team’s job is to curate the short list of issues the executive team must decide, its output is a set of decisions with names and dates on them, and every one of them can be checked.

• Good looks like: a short list of named strategic issues, each with an executive owner and a decision date; business-unit reviews that end in a choice; a budget whose big allocations trace back to the priorities.
• Bad looks like: a template sent to every unit, a binder of plans nobody reopens, and a budget negotiated separately from the strategy.

The mechanics of the cycle, from offsite to operating plan, are on the annual planning cycle.

Portfolio and M&A: the thesis comes before the price

In a multibusiness company the defining corporate question is how the parent adds value to the businesses it owns. Andrew Campbell, Michael Goold and Marcus Alexander framed it as two questions most chief executives fail to address: which businesses should the company own and why, and what structure, management processes and philosophy will get the best performance from them ³. Their book develops the idea of parenting advantage: a parent can create or destroy value in its businesses, and should own a business only where it is a better parent than the alternatives ⁴.

David Collis and Cynthia Montgomery add that the answer depends on the company’s resources, which run along a continuum from highly specialized to very general, and that great corporate strategies exist all along it ⁵. In practice the team turns these ideas into recurring work: the economics and outlook of each business, where the parent helps or gets in the way, and which businesses should get more capital, be fixed or be sold. The Lexicon entries on portfolio strategy and corporate advantage cover the tools.

On deals, the common split is that strategy defines where the company wants to grow and why, and corporate development finds, values and executes the deals. The handoff that matters most is the investment thesis. If the strategic case for a deal is written after the price is agreed, nobody is testing it; they are decorating it.

The table is a common division of labor, offered as practitioner judgment, not a standard. Kaplan and Norton’s guidance points the same way: existing staff departments keep prime responsibility for processes like budgeting, and the strategy unit coordinates with finance so budget targets match the strategic plan ¹. Whatever split you choose, write it down. A RACI matrix will do.

Strategy reviews: the briefing before the meeting

The single most valuable habit in the Chrysler story is unglamorous. The strategy unit briefs the CEO before the monthly management meeting on the strategic issues that need attention, so the agenda centers on strategy and learning rather than short-term numbers and firefighting; then it tracks the actions agreed and follows up afterward ¹.

Why does this work when a beautiful plan does not? Because the management meeting is where the company’s attention is actually spent. Whoever shapes its agenda shapes what gets decided. A strategy team that writes the plan but not the agenda has handed the steering wheel to whoever does.

Initiatives are the other half. Kaplan and Norton recommend the unit monitor all strategic initiatives, report on them at management meetings, and consolidate or eliminate those not delivering strategic benefits ¹. The last clause is the test. A team that reports on initiatives is a scorekeeper. A team that gets some of them stopped is doing strategy. Strategy execution covers where that handoff usually breaks.

There is a quieter reason CEOs want this. Graham Sher, CEO of Canadian Blood Services, wrote in the same paper that “information, particularly bad news, tends to be filtered before it gets to me” ¹. A strategy unit with a direct line and no operating territory to defend is one of the few places unfiltered news can come from.

Where the team sits decides what it can do

Kaplan and Norton drew four reporting configurations. Reporting directly to the CEO, or to the CFO or COO with a dotted line and direct access to the CEO, were the two found in successful implementations. Two levels below the CEO with no direct access was less desirable; three levels below was “even less desirable and unsustainable” ¹. The director of strategic alignment at St. Mary’s Duluth Clinics reported that she overcame managers’ resistance because they knew she had a direct reporting line to the chief operating and chief executive officers ¹.

Size matters less than seat. In Kaplan and Norton’s sample, an office running all nine processes typically had six to eight full-time staff, and most had ten or fewer ¹. Canadian Blood Services launched its office with three people, led by a vice president who sat on the executive team ¹.

The second design choice is central versus embedded. We know of no rigorous study showing one model outperforms the others, so what follows is practitioner judgment about the trade-offs.

The embedded model’s weakness deserves a second look. A strategy lead who reports to a unit president will, sooner or later, be asked to make the case for that unit’s capital request. That is advocacy, and it is useful, but someone at the center must then be able to say no. If nobody can, the portfolio is allocated by the best presenters.

The case against a strategy team

The strongest objection comes from Henry Mintzberg. When strategic planning arrived in the mid-1960s, he wrote, it separated thinking from doing and created a function of specialist planners, on the theory that planning systems would produce the best strategies and step-by-step instructions the managers could not get wrong. “As we now know, planning has not exactly worked out that way” ⁶. His conclusion: planners should not create strategies, but they can supply data, help managers think strategically and program the vision ⁶.

He is right, and the agenda thesis is the answer to him rather than a rebuttal. A team that writes the strategy for the line is the ivory tower Mintzberg described and Canon lived in. A team that frames the choices, brings the evidence, schedules the decision and follows up is doing exactly the jobs he left for planners. The strategy belongs to the executives who will be held to it. The team’s job is to make sure they actually choose.

A second objection is cost: why not let finance run the cycle and borrow consultants for the big questions? Some companies do, and it can work while the portfolio is simple. The price shows up later, in a budget negotiated without reference to any strategy and in big questions that arrive only when someone thinks to commission them. Consultants answer the question they are given. Somebody inside has to decide which questions get asked.

How to judge a corporate strategy team

Strategy teams are hard to measure because their output is other people’s decisions. There is no standard metric, and any benchmark claiming a typical team size or return deserves suspicion unless its source is clear. The tests below are judgment, not research findings.

• Decisions, not documents. Count the material choices the executive team made this year where the team framed the options, and how long each took from question to decision.
• The budget follows the strategy. The largest capital and headcount allocations trace to stated priorities.
• Initiatives get stopped. Some strategic initiatives were killed or reshaped on evidence, not just reported on.
• Decisions get reviewed. Major decisions are revisited against what was expected, using something like a post-decision review.
• The businesses ask for help. Unit leaders bring problems to the team instead of only receiving templates from it.

Corporate strategy jobs: who gets hired and what they do

Teams commonly hire from management consulting, investment banking and corporate development, and from inside the company’s own businesses. Titles run from analyst and associate through strategy manager and director to head of strategy or chief strategy officer, though titles vary widely. Junior members build models and draft documents; managers own workstreams and stakeholder relationships; the head of strategy owns the agenda with the CEO. The middle of that ladder is described in detail on the strategy manager role.

The skills that matter are structured problem solving, financial fluency good enough to argue with finance, clear writing, and the ability to work through people who do not report to you. The last is the hardest to hire for and the most common reason strong analysts struggle. If you have just joined a team, the 30-60-90 day plan for a new strategy role is a place to start.

Own the agenda

If you run a strategy team, try this before your next planning cycle. List the decisions your executive team must make in the next twelve months. Then list what your team is working on. Draw lines between the two lists.

Work with no line to a decision is a candidate to stop. Decisions with no line to your team are the ones you are not shaping. Canon’s planners had plenty of work. What they lacked was a line from any of it to a decision. Russo had a standing briefing before each management meeting. That briefing was the line.

Questions

What does a corporate strategy team do?

It helps the CEO and executive team make company-level choices: which businesses to be in, how to allocate capital and talent, which acquisitions and exits to pursue, and whether agreed choices are carried out. In practice that means running the planning cycle, supporting portfolio and M&A decisions, CEO projects, strategy reviews and board strategy content.

What is the difference between corporate strategy and corporate development?

In a common split, corporate strategy decides where the company should grow and why, writes the investment thesis, and tests whether deals fit it. Corporate development sources, values, negotiates and executes the deals and usually leads integration planning. The boundary varies between companies, so the decision rights should be written down.

Who should a corporate strategy team report to?

Kaplan and Norton found successful strategy offices reported either directly to the CEO or to the CFO or COO with a dotted line to the CEO. They called an office two levels below the CEO with no direct access less desirable, and three levels below unsustainable. Access to the CEO is what lets the team shape the agenda.

Should a strategy team be central or embedded in the business units?

There is no proven best model. A central team gives an enterprise view and access to the CEO but can lose touch with the businesses. Embedded teams know their businesses but lose the enterprise view. Many diversified companies use a hybrid: a small central team that sets the agenda plus unit strategy leads with a dotted line to the center.

How do you measure a corporate strategy team?

There is no standard metric. Practical tests include how many material decisions the team framed and how quickly they were made, whether the largest allocations trace to stated priorities, whether some initiatives were stopped on evidence, and whether major decisions are later reviewed against what was expected. Output volume is a poor measure.

Where to go next

• The Annual Planning Cycle: Strategy, Plan and Operating Plan
• The Strategy Manager Role: The Work, the Skills, the Path
• Corporate Strategy: Definition and Examples
• Portfolio Strategy
• Balanced Scorecard: Framework and How to Apply It
• Post-Decision Review Template