Playing to win: How strategy really works

by A.G. Lafley

strategy is about making specific choices to win in the marketplace.

strategy is an integrated set of choices that uniquely positions the firm in its industry so as to create sustainable advantage and superior value relative to the competition.

a strategy is a coordinated and integrated set of five choices: a winning aspiration, where to play, how to win, core capabilities, and management systems

Olay had a strategic problem that many companies struggle with—a stagnant brand, aging consumers, uncompetitive products, strong competition, and momentum in the wrong direction.

five interrelated questions:

A company must seek to win in a particular place and in a particular way.

where to play and how to win define the specific activities of the organization—what the firm will do, and where and how it will do this, to achieve its aspirations.

The questions to be asked focus on where the company will compete—in which markets, with which customers and consumers, in which channels, in which product categories, and at which vertical stage or stages of the industry in question.

Core was the first and most fundamental where-to-play choice—to focus on core brands, geographies, channels, technologies, and consumers as a platform for growth.

The key to making the right choices for your business is that they must be doable and decisive for you.

Capabilities are the map of activities and competencies that critically underpin specific where-to-play and how-to-win choices.

the way all of them work together and reinforce each other is what generates enduring advantage.

To be truly effective, they must be purposefully designed to support the choices and capabilities.

what is our winning aspiration?—defines the purpose of your enterprise, its guiding mission and aspiration, in strategic terms.

Saturn died, not because it made bad cars, but because its aspirations were simply too modest to keep it alive.

“[In IT] you need to be distinctive to avoid commoditization.

whatever is commodity, because there is not competitive advantage in doing it inside, we outsource.”

It is therefore important to be thoughtful about the business you’re in, your customers, and your competitors.

marketing myopia,

Companies in the grips of marketing myopia are blinded by the products they make and are unable to see the larger purpose or true market dynamics.

Winning aspirations should be crafted with the consumer explicitly in mind. The most powerful aspirations will always have the consumer, rather than the product, at the heart of them.

But then expand your thinking to focus on the best competitor in your space, looking far and wide to determine just who that competitor might be.

The push was to ask, “Who really is your best competitor? More importantly, what are they doing strategically and operationally that is better than you? Where and how do they outperform you? What could you learn from them and do differently?”

Unless winning is the ultimate aspiration, a firm is unlikely to invest the right resources in sufficient amounts to create sustainable advantage.

I wanted my team to understand that strategy is disciplined thinking that requires tough choices and is all about winning.

To be effective, strategy must be rooted in a desire to meet user needs in a way that creates value for both the company and the consumer.

Where-to-play choices occur across a number of domains, notably these:

Pregutas clave del where to win

Choosing where to play is also about choosing where not to play.

We immerse ourselves in people’s day-to-day lives. We work hard to find the tensions that we can help resolve. From those tensions come insights that lead to big ideas.”2 Those big ideas can be the basis of a powerful where-to-play choice.

Sometimes the key to finding a new place to play is to simply believe that one is possible.

It is about selecting regions, customers, products, channels, and stages of production that fit well together—that are mutually reinforcing and that marry well with real consumer needs.

play. Explicitly choose and prioritize choices across all relevant where dimensions (i.e., geographies, industry segments, consumers, customers, products, etc.).

the company offers products or services that are perceived to be distinctively more valuable to customers than are competitive offerings, and is able to do so with approximately the same cost structure that competitors use.

Loyalty emerges where there is a match between what the brand distinctively offers and the consumer personally values.

But every line of business and function should have a strategy—one that aligns with the strategy of the company overall and decides where to play and how to win specifically for its context.

At a high level, the choice is whether to

create new how-to-win choices where none currently exist.

Do consider how to win in concert with where to play. The choices should be mutually reinforcing, creating a strong strategic core for the company.

An organization’s core capabilities are those activities that, when performed at the highest level, enable the organization to bring its where-to-play and how-to-win choices to life.

For Porter, a company’s “strategic position is contained in a set of tailored activities designed to deliver it.”9 He calls the visual depiction of this set of activities an activity system.

It enables a firm to continue to invest in its current capabilities, to build up others, and to reduce the investment in capabilities that are not essential to the strategy.

A company needs to invest disproportionately in building the core capabilities that together produce competitive advantage.

Activities that don’t add value to activity systems below should be minimized, because they destroy value.

So, rather than dwell on crafting the perfect definition of winning, sketch a prototype, with the understanding that you will return to it later with the rest of the cascade in mind.

You must ask, what might be the distinct segments of the industry in question (geographically, by consumer preference, by distribution channel, etc.)?

This means understanding underlying needs,

In customer value analysis, the company assesses what its channel customers and end consumers really want and need, and what value they derive from the firm’s products and services relative to the costs they incur from buying and using the products or services.

business. An understanding of the channel customer value equation can help inform both the businesses you should be in and how you can win there.

multifunctional customer teams. Their job was to understand their customer so well that they could work collaboratively to develop mutual business goals, joint value creation strategies, and shared action plans to win.

could you configure your capabilities to enable your company to meet the needs of customers in a distinctively valuable way, underpinning a potential differentiation strategy?