There is no debating that a well-defined strategy helps a company design and activate a path to growth and profitability. Yet amidst heightened competition and increased advances in innovation, the retail industry has some of the highest degrees of variability in how a company defines,organizes and activates the “strategy” function. We are privileged to observe and work with consumer-facing organizations navigating in unchartered waters and, despite significant variability,we have found that there are five key observations as the role of strategy is evolving for consumer-facing companies:
1. RECOGNIZING THE HIGH DEGREE OF VARIABILITY
In the retail industry, “strategy” is a broad term and could include anything from corporate strategy, financial strategy, merchandising strategy, business development strategy, M&A, insights, analytics and more. Naturally, with these options, there is significant variability in how strategy is activated by each company. Each company defines their‘strategy’ role based on their distinct needs, and no company utilizes the role the same, nor should there be one definition of strategy.
In omni-channel retail specifically, organizations are leveraging data to make critical decisions more than ever before. Because of that, some forward-thinking organizations are now including data, insights, analytics and even AI into the role of the ‘Head of’Strategy. Forward-thinking companies are using titles such as “Head of Strategy & Artificial Intelligence”,“Chief Strategy & Digital Officer” or “Chief Strategy & Analytics Officer” to denote a broadened scope of responsibility. As companies accept the high degree of variability for the strategy role, defining the role for their specific needs, and aligning on priorities for the role,will lead to recruiting the right executive.
2. CEO SPONSORSHIP IS CRITICAL
Despite the variability of the functional responsibilities, we have observed that CEO sponsorship is the key to success for atop strategy executive. We believe that the most successful top strategy roles report to the CEO – this both provides an ability for the strategy executive to have a direct line of communication to the top decision maker, and it also signals the importance of the role to the rest of the senior leadership team, and the company at large. Today’s best-in-class strategists are charged with thinking about how to disrupt organizations for the future, not just build a roadmap based on the past. Because of the importance of their role in creating a strategic path to success, having a seat at the executive table is more critical than ever before.
3. CANDIDATES WANT TO KNOW “WHAT’S NEXT?”
Similar to other functions, top strategic talent will be interested in understanding their ability for upward mobility within the organization. The path to general management is the most alluring option for most strategic executives. While strategy is not a common ‘route-up’ to the CEO role, other C-Suite roles in general management and operations are common paths for strategy executives. Executives with early best-in-class consulting experience often make strong general management executives as they have developed critical thinking, project management and problem-solving skills. Best-in-class consultants also have observed a broad range of companies, functions and situations and therefore often have a well-developed point of view, again making them strong candidates for general management consideration.
4. ADDRESS THE COMPENSATION CONUNDRUM
Aligning on compensation parameters early in the discussion is important for both the hiring company and the candidate. For companies looking to hire an executive straight out of consulting, it is important to understand that within top tier consulting organizations, there are well-defined compensations parameters for each level (Principal or Partner, for example). Knowing the compensation parameters, and then understanding how realistic it will be to recruit an executive from one of these levels, is critical for search success.
Concurrently,candidates within consulting organizations need to have an understanding of the compensation parameters ‘in house’ and, specifically, what the components of a“compensation” include (base, bonus, stock, for example). Additionally, an understanding of the trade-offs of consulting verses in-house roles is important. While a move into industry may not yield the lucrative cash salary of consulting, the benefits include a lifestyle change (less travel, more stability), an opportunity for additional career path/career options and the potential for long-term wealth creation through future operating roles.
5. TOP TIER CONSULTING PLUS PRACTICAL APPLICATION
The typical approach for hiring talent in strategy is either to look for those straight out of consulting, or those with “in-industry” experience – with pros and cons to each model. When hiring someone out of consulting, a retailer has the benefit of ‘shaping’ the executive to their own model. Yet we often find that an ideal combination for a ‘Head of’ Strategy is early consulting experience plus in-house roles. This executive understands how to both architect AND activate a strategic plan and they have already made the transition out of consulting, overcoming any potential ‘learning curves’associated with make a shift in industry.
As consumer and retail companies continue to face an unprecedented amount of change and disruption, forward-thinking companies are relying more heavily on the strategic function to envision, architect and activate a competitive strategic plan. The most innovative companies recognize data, analytics and artificial intelligence are competitive strategic levers and we are seeing strategic leaders are now having more responsibility,if not full ownership, over those functions. Despite the variance of in scope for a strategy role, the most successful consumer-facing companies are crystallizing their priorities for the strategy position, aligning on compensation and creating well-defined career paths to recruit and retain top strategy talent.