Playing to win: How strategy really works

by A.G. Lafley

Really, 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.

Sameness isn’t strategy. It is a recipe for mediocrity.

But it is only through making and acting on choices that you can win. Yes, clear, tough choices force your hand and confine you to a path. But they also free you to focus on what matters.

choose to win rather than simply play.

The Mayo Clinic, though, sets out to transform the world of medicine, to be at the vanguard of medical research, and to win. And it does.

terms, 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.

What is your winning aspiration? The purpose of your enterprise, its motivating aspiration.

Where will you play? A playing field where you can achieve that aspiration.

How will you win? The way you will win on the chos...

What capabilities must be...

What management systems are required?

But in larger companies, there are multiple levels of choices and interconnected cascades.

Each strategy influences and is influenced by the choices above and below it; company-level where-to-play choices, for instance, guide choices at the sector level, which in turn affect the category-level and brand-level choices.

Both the salesperson and her CEO are making strategic choices and acting upon them—the only difference is the scope of the choices and the precise nature of the constraints.

Aspirations are statements about the ideal future. At a later stage in the process, a company ties to those aspirations some specific benchmarks that measure progress toward them.

aspirations shouldn’t change day to day; they exist to consistently align activities within the firm, so should be designed to last for some time.

Where to play represents the set of choices that narrow the competitive field.

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.

In great strategies, the where-to-play and how-to-win choices fit together to make the company stronger.

To determine how to win, an organization must decide what will enable it to create unique value and sustainably deliver that value to customers in a way that is distinct from the firm’s competitors. Michael Porter called it competitive advantage—the specific way a firm utilizes its advantages to create superior value for a consumer or a customer and in turn, superior returns for the firm.

If you are a small entrepreneurial firm facing much larger competitors, making a how-to-win choice on the basis of scale would not make much sense.

Two questions flow from and support the heart of strategy: (1) what capabilities must be in place to win, and (2) what management systems are required to support the strategic choices?

There is no checklist, whereby you create and articulate aspirations, then move on to where-to-play and how-to-win choices, then consider capabilities. Rather, strategy is an iterative process in which all of the moving parts influence one another and must be taken into account together.

Peter Drucker argued that the purpose of an organization is to create a customer, and it’s still true today.

To play merely to participate is self-defeating. It is a recipe for mediocrity. Winning is what matters—and it is the ultimate criterion of a successful strategy. Once the aspiration to win is set, the rest of the strategic questions relate directly to finding ways to deliver the win.

A too-modest aspiration is far more dangerous than a too-lofty one. Too many companies eventually die a death of modest aspirations.

The biggest danger of having a product lens is that it focuses you on the wrong things—on materials, engineering, and chemistry. It takes you away from the consumer. Winning aspirations should be crafted with the consumer explicitly in mind.

When setting winning aspirations, you must look at all competitors and not just at those you know best.

“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?”

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.

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

Focus is a crucial winning attribute. Attempting to be all things to all customers tends to result in underserving everyone.

It is tempting to think that you have no choice in where to play, because it makes for a great excuse for mediocre performance.

Where to play is about understanding the possible playing fields and choosing between them.

The heart of strategy is the answer to two fundamental questions: where will you play, and how will you win there?

The low-cost player doesn’t necessarily charge the lowest prices. Low-cost players have the option of underpricing competitors, but can also reinvest the margin differential in ways that create competitive advantage.

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

All successful strategies take one of these two approaches, cost leadership or differentiation.

life inside a cost leader looks very different from life inside a differentiator. In a cost leader, managers are forever looking to better understand the drivers of costs and are modifying their operations accordingly. In a differentiator, managers are forever attempting to deepen their holistic understanding of customers to learn how to serve them more distinctively. In a cost leader, cost reduction is relentlessly pursued, while in a differentiator, the brand is relentlessly built.

Competitive advantage provides the only protection a company can have. A company with a competitive advantage earns a greater margin between revenue and cost than other companies do for engaging in the same activity.

assertive inquiry

clearly articulating your own ideas and sharing the data and reasoning behind them, while genuinely inquiring into the thoughts and reasoning of your peers.

“I have a view worth hearing, but I may be missing something.” It sounds simple, but this stance has a dramatic effect on group behavior if everyone in the room holds it.

While it may feel more forceful to advocate, advocacy is actually a weaker move than balancing advocacy and inquiry. Inquiry leads the other person to genuinely reflect and hear your advocacy rather than ignoring it and making their own advocacy in response.

The processes that you put in place to do that, they have to be very deliberate. It doesn’t happen by itself. What happens [naturally] is entropy.

It’s an old saying that what gets measured gets done.

Without such defined measures, you can fall prey to the human tendency to rationalize any outcome as more or less what you expected.

clearer, simpler strategies have the best chance of winning, because they can be best understood and internalized by the organization.

In the end, building a strategy isn’t about achieving perfection; it’s about shortening your odds.