Western Digital has come a long way since its days of manufacturing calculator chips. The company has evolved into a global manufacturer of computer hard drives, and a large contributor to the storage technology company’s growth is due to its innovative business strategy. Western Digital’s chief strategy officer discusses what this role entails to the company’s transition from Hitachi to Western Digital.
How would you define the position of a chief strategy officer?
The chief strategy officer (CSO) is a senior executive responsible for leading and enabling the development of a company’s overall corporate strategy; undertaking the necessary analysis, planning, and monitoring to identify the top strategic priorities; and building the necessary processes for the senior executives and leaders of the business units to understand, communicate, and evolve the strategy and manage the execution of strategic initiatives.
The CSO’s primary role is to ensure the senior executive team and the company’s business units are addressing the highest-priority challenges and opportunities and that the resulting strategy is well-understood by all company stakeholders and effectively implemented. This requires both regular and ad-hoc analyses designed to assess the internal strategic context and the changing external context. For example, the outside world is changing in terms of new technologies, competitive solutions, and customer needs.
How do you implement the strategy within the company?
Communication. The best strategy is useless unless it is properly communicated throughout the organization. The more people understand the “why” behind corporate priorities and objectives, the better able they will be to address the “what” and “how” questions they will face on a day-to-day basis. Done correctly, this type of communication results in empowered executives and employees who can respond quickly and creatively to the changing business environment, while still achieving the overall corporate objectives.
How do they do that?
It’s our job to facilitate alignment between the various activities of a company and its long-term strategy and create the optimal amount of leverage between all the strategic initiatives. The CSO must build a team and processes to regularly interact with all groups in the company to improve awareness of both the strategy and various initiatives underway throughout the organization.
Lastly, strategy is useless without the ability to translate it into business actions and value creation. We have spent substantial time on this at Western Digital and have developed a management system that takes the output of strategic planning and creates specific strategic initiatives with individual plans that allow us to gauge the financial impact and track progress on attaining the objectives.
What is the most challenging part of being involved in a company’s strategy?
The main objectives for the strategy process are effective prioritization of strategic initiatives; communicating the strategy and priorities regularly to all the involved stakeholders; and translating strategic plans into reality through successful execution. To achieve these objectives, the strategy must remain consistent enough so it can be communicated throughout an organization, but have the flexibility to evolve (and sometimes change dramatically) in response to changing circumstances. Developing an effective process to allow senior executives and business units to regularly engage in strategic planning and review without causing unnecessary churn is a major challenge. It is critical to embed key elements of the strategic planning and analysis process into the overall management system and the other planning activities of the business units.
Is there a certain personality type that fits well with this role?
It can take a variety of capabilities to be an effective CSO, depending on the types of strategic challenges that a company is facing. If a company is in its early stages and operating in a fast-changing environment, it will take someone with the ability to rapidly analyze information and develop new, creative solutions. If a company is more mature and the environment is changing more slowly, it will take someone with a deeper understanding of the operational elements of the business and the ways to continue improving the core business. What can be particularly interesting is when a mature company is operating in a rapidly changing environment and facing significant value creation risks and opportunities. This combination requires a balance between the analytical skills of dealing with the uncertainty of new businesses and the operational insights to address the challenges of mature organizations.
What are your biggest priorities at Western Digital?
We are a large, mature storage technology business that is operating in the exciting and rapidly evolving IT infrastructure space. As a result, our priorities are to optimize our $15 billion core storage device business, primarily focused on hard disk drives, while building significant new businesses that leverage our storage competencies and IP, including enterprise solid-state drives (SSD), cloud infrastructure solutions, and new storage solutions for home and small business users.
How large is your team? Is it divided by M&A, strategic investments, and integrations?
Our strategy team operates on an integrated basis where people from different groups work together on various projects and everyone can be involved in our largest initiatives. There are four primary areas of domain expertise within the team: the strategy and analytics group currently has seven members and has been growing to help us develop our strategic planning processes and support the business unit and corporate strategy efforts with data collection and analysis. The corporate development group has seven members, but draws from members of other groups (as well as functional teams from other parts of the Western Digital organization) to staff projects. The team primarily focuses on mergers and acquisitions and significant partnerships and joint ventures. The Western Digital capital group has three members and draws from other teams to engage with start-ups, entrepreneurs, and venture capitalists as we look for strategic investments to accelerate the development of our new businesses.
We are currently expanding the integration and project management team of four significantly. That team focuses on coordinating and facilitating the integration of acquisitions and the management of our strategic initiatives. They are responsible for leading the broader integration teams that consist of functional leads from the business, drawing heavily from the HR, finance, IT, and business unit organizations.
How has your previous work experience at Hitachi helped you at Western Digital?
I joined Western Digital following the acquisition of HGST, which was a division of Hitachi. I began working with the company in late 2008 to turn around the financial performance and create a long-term strategic plan. We were very successful in the turnaround effort, taking HGST from significant losses to significant profitability by executing our strategic transformation plan. By 2011, we had made such progress that Western Digital agreed to buy HGST for $4.7 billion.
What are you currently working on?
Building the team. We’re refining the strategic processes, deepening our relationships with key players in the ecosystem, and creating alignment with the board of directors, management team, and business units.
What are Western Digital’s goals?
Near-term: increasing the profitability of our core business, which we plan to accelerate once we can begin the integration of HGST and Western Digital, our two operating subsidiaries that are currently held separate based on a ruling by the Chinese antitrust authorities. Secondly, grow our new businesses, specifically our enterprise SSD business, our cloud infrastructure business, and our consumer and SMB storage business. Long-term goals are identifying significant value-creation opportunities that we can capitalize on through internal investment, acquisitions, and strategic investments and partnerships.
How has your background in tech helped you in this role?
I came to Silicon Valley in 1995 and was an investment banker focused on Internet and software companies during the height of the tech bubble. Over the last twenty years, I have worked with smaller, rapidly growing venture-capital-backed companies and mature technology leaders in a variety of senior roles. My diversity of experiences and extensive network of relationships enable me to understand new challenges and opportunities quickly. I have also developed an extensive set of tools to design potential solutions to the key challenges or opportunities. Finally, given I have been an executive, investor, adviser, and board member of technology companies, I have learned how to build alignment around potential strategic paths and to ensure effective execution.
Why is it important to have support from your senior team?
Without that, not only will the organization fail to engage in the planning process, but also the outputs of the process will not be executed. This leads to the common complaint that a strategic plan is “worthless” because after all the planning work, the business goes back to the tactical priorities and the plan remains “on the shelf.” The senior team’s support will help in the following ways: making the planning process a priority; embedding the strategic process into the management process; providing transparency and visibility to the broader organization and board of directors; and enabling execution of strategic initiatives.