Insight into the unique challenges and opportunities often faced by CSOs in the AEC industry.
Zweig Group’s inaugural 2023 Chief Strategy Officer Roundtable event was a great success. Curated for a gathering of great minds, this invitation-only session provided an unparalleled experience and infused much energy and confidence into the cohort of strategy leaders who genuinely supported and challenged each other through empathy and vulnerability – with the common goal of continuing to blaze a trail in the space of the CSO’s journey where change is constant, success is not always quantifiable, performance metrics are often qualitative, and entrenched long-held views must be changed through unlearning, influence, and inspiration. However, this seemingly insurmountable obstacle also represents a huge opportunity for AEC firms and their CSOs who greet the challenge head on.
The role of CSO in relation to CEO. There has never been a time when strategy has become more important to the AEC industry than it is today. Bombarded with countless opportunities and challenges simultaneously, senior leaders of an AEC firm must have a holistic understanding of their companies’ strategies over multiple time horizons. Mobilizing such a leadership team at the front and center is the CEO, whose job can’t get any lonelier.
As I write this, the CEOs of high-performing AEC firms are coping with AI disruption/digital transformation, climate change, corporate responsibility and social advocacy, vision setting and resource allocation, work-life integration for employees, client experience and acquisition, organic and M&A growth strategies, board engagement and stakeholder management, ownership transition, and leadership succession – the list goes on. Unquestionably, this is a hefty agenda for any executive. At a more individual level, these CEOs must also assess and do the things that only they can do through ruthless prioritization to maximize personal effectiveness, while proactively mobilizing leaders to ensure that these team members are complementary and connected to one another, not merely working side by side.
Operating in such an ever-changing and complex environment with increased demand from all stakeholders, AEC firms will be well-served if they have a C-suite leader who is laser-focused on strategic direction: the CSO. This role is crucial for continued growth and success of the firm, and business leaders must be selective and intentional about who they choose for the position. The CSO must understand both external and internal opportunities that could enable the firm’s success, assess what is signal versus noise, and steer the company in the right direction in the short- and long-term.
For smaller firms that don’t have a CSO, these responsibilities often fall under the CEO’s ambit. However, some of the more forward-looking, visionary CEOs of smaller firms choose not to be constrained by the current size of the firm; instead, they view it as an opportunity to explore an alternative strategic approach to effectively grow and scale their firm by hiring a fractional CSO, an external experienced C-level executive to bridge leadership gaps in a part-time capacity, until the firm is “ready” for a full-time CSO.
Regardless of the size of the firm, understanding precisely what the CEO expects is a top priority for the CSO. The CEO’s strategic priorities can vary from reframing vision, cultural transformation to stress-testing the existing strategy or future-proofing a new one. To build a great rapport with the CEO, the CSO should feel comfortable enough to challenge the CEO’s thinking while serving as a “partner-in-crime” to the CEO when it comes to strategy development and execution. If there is a misalignment between the CEO and the CSO, it is highly unlikely that the firm’s strategy would be approved by the board for full adoption and rollout.
Key challenges and opportunities facing CSOs. Given that a CSO has such a significant and lasting influence on the firm’s success and the CEO’s longer-term impact, how can CSOs chart a successful path forward to set themselves up for success in their firms? In contrast to other C-suite executives, the CSO often faces these unique challenges that can be turned into opportunities:
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Challenge: Being responsible for “nothing” but accountable for everything. Unlike other C-suite executives who have strategic responsibility for running their respective businesses or functions, the CSO wears an “intangible” hat with a global span of accountability that drives the company’s overall strategy by being an exceptional futurist and a good thought partner with the leadership team.
Opportunity: Deliberately defining the role and the breath of duties for the CSO from the onset lays a strong foundation for leadership alignment and helps establish a clearly defined working relationship with the rest of the executive team. For example, is the CSO playing a more independent or integrated role within the firm? Is he/she responsible for strategy development or implementation or both? These considerations must be seriously evaluated by the executive team under the firm’s unique context. Depending on the firm’s capabilities and characteristics, the CSO can bolster his/her value in a few ways, including working as an internal strategy advisor to the CEO, acting as a change leader linking the high-level strategic plan with simple processes and tools that empower business units and functions to execute on the strategy, and/or serving as a consensus builder by integrating many moving parts amongst different C-suite leaders to drive alignment around priorities while challenging the firm to stretch. The better these responsibilities are defined, the greater the likelihood the CSO will succeed. In case of a misalignment or conflict amongst the executive team, it is ultimately the CEO’s responsibility to solve for the team’s psychology by relentlessly unlocking the magic of how the team works together (versus what the team does together). -
Challenge: Possessing core competencies and skills in both qualitative and quantitative thinking. Being the person accountable for strategy in a firm, the CSO must take a holistic and future-oriented approach in looking at strategy while demonstrating a tactical understanding of what needs to be done now to deliver value, coupled with strong financial acumen and fluency in technological innovations.
Opportunity: Optimizing this allocation of effort is no easy feat. To maximize value and impact, the CSO must possess a (relatively) balanced mix of hard and soft skills such as forward-thinking, understanding marketplace trends, challenging the status quo, infusing new ideas and insights into the organization, explaining the importance of the strategy and connecting the dots to explain the “why” in strategic decision, interpreting data and conducting top quality analysis, aligning the diverse parts of the company around the common goal, championing the companywide strategy and influencing others to follow. -
Challenge: Managing expectations of various stakeholders. The CSO must be able to satisfy and integrate different agendas of a menagerie of stakeholders including the CEO, board, CFO, business unit leads, and potential investors.
Opportunity: To influence people and processes, the CSO must be able to demystify the firm’s strategic complexity to stay relevant and timely. Understanding the priorities of the firm’s key stakeholders, their pain points and aspirations through one-on-one interviews and discussions with every individual is critical in building consensus with executive leadership and the broader organization to frame critical strategic choices for the company.
With this article, my greatest hope is that all the readers – whether they are incumbent, emerging, or aspiring CSOs – will be informed and inspired in ways that enable them to build a strategic leadership legacy they are proud of and for which our great AEC industry will be grateful. If you need a sounding board or a quick chat on this topic, feel free to contact me at yliu@zweiggroup.com.
Ying Liu, MBA, LEED AP BD+C, is a strategy advisor with Zweig Group. Contact her at yliu@zweiggroup.com.
