“In the end, building a strategy isn’t about achieving perfection, it’s about shortening your odds”
Playing to Win: How Strategy Really Works is by A.G Lafley and Roger L. Martin. Roger has spent decades as a strategy consultant, including time at Monitor with Michael Porter. During that time he worked at Procter & Gamble, as A.G.’s trusted strategic advisor. After three decades at P&G, A.G. became CEO, and was pivotal in redefining the organisation’s approach to strategy. This book is about their experiences with strategy at P&G, and the models they developed there.
The book, basically, is split in two halves. The first, where they define strategy as a series of choices they call the Strategy Choice Cascade. The second half centres around how to design a winning strategy, using components that form the Strategy Logic Flow.
The first half is really great. They guys lay out the model for defining strategy as 5 simple, distinctive, yet related, questions.
What is your winning aspiration?
“A too modest aspiration is far more dangerous than a too lofty one. Too many companies eventually die a death of modest aspirations.”
If you’re in business, winning should be your goal.
Where will we play?
“Focus is a crucial winning attribute”
Your strategy should provide focus, and detail in which markets you’re going to compete.
How will we win?
“If winning means providing a better consumer value equation … there are just two generic ways of doing so: cost leadership, and differentiation”
Beyond those two options, however, there are choices about how and where you’ll enter the market. For me the line between WTP and HTW was a little grey, but they call it a ‘one-two punch” so I’m not sure it really matters, as long as choices are made.
What capabilities must be in place?
“With capabilities, again, winning is an essential criterion. Companies can be good at a lot of things. But there are a small number of activities that together create distinctiveness”
Imagine you’ve turned your winning aspiration, and choices about how to achieve it into a reality. What are the core capabilities in your organisation that help you to do that sustainably? It’s important this collection of core capabilities and supporting activities (your Activity System) is;
- Feasible: Something your organisation could do, even if that means investing to develop it
- Distinctive: Having superior WTP and HTW choices isn’t enough if the activity system is the same. Your competitor could just shift over.
- Defensible: Even if your competitor doesn’t have the same core capabilities, could they develop them quickly.
For those familiar with the Business Model Canvas, these are the ‘Key Activities” that will set you apart from the competition. i.e. Understanding consumers, Partnering with suppliers.
What management systems are required?
By first working out how to measure the strength of your core capabilities, you can then invest (time, money, people etc.) to improve them.
N.B. Although maybe not stated as part of your Activity System, you may also want to consider what management systems (meetings, reviews, processes) are needed for defining and refining your strategy.
The second half, for me, was equally interesting, even if a harder to get to grips with. The guys describe a different process for coming up with winning strategies, again, based on their experiences together at P&G. They start by laying out the usual strategic concerns into what they call the Strategy Logic Flow.
Traditional logic tells us to work (roughly) through this flow, left to right, performing data analysis as we go, then making a strategic decision. Lafley and Martin, however, suggest asking “What strategic choices could we make?”, throwing scepticism aside for a second, to gather ideas.
Once they have a set of ideas, they then use their reverse engineering method by asking “In each of these components, what would need to be true for this choice to be fantastic?”. The responses to that question then form Barriers to Choice. They suggest your next step should then be to identify the barriers to choice that are least likely to be true, design tests to validate them (focus groups, prototyping, pilots, etc.) and repeat until all participants (including the biggest sceptic) are satisfied with the level of proof from each test. Picking your strategy is then as easy as seeing which choice survived testing, or performed best in reality.
As a fan of guessing things up front, then validating, I really liked this approach. A more creative and imaginative approach to strategy, without fear of criticism, is bound to be more successful than one blinkered by the current state of things. Also, by opening the door to more ideas, and testing them, you’re sure to discover more information. Even if you find a barrier to choice is valid, what you discover may be relevant to a different strategic choice, or help inform/improve it.
Overall, I thoroughly enjoyed the book, found it highly informative, and easily digestible. There’s a lot of new ideas in the book, built upon decades of research and experience. Collectively, they provide a framework for strategic decision making that could be easily adopted, or adapted for all kinds of organisations.
Personally, I learnt a lot about both the whole spectrum of strategy (all five questions), beyond a winning aspiration, and about the different factors to consider when designing a strategy.
I really liked the simplicity with which their two models (Strategy Choice Cascade and Strategy Logic Flow) explained strategy. And think that simplicity is useful in facilitating strategic discussions. Finally, I can see the more experimental approach to strategy design, the reverse engineering process, being a very effective method for more innovative and sustainable strategy.
For anyone with an interest in strategy, whether casual of professionally crucial, I’d strongly recommend you give it a read. I’d love to hear your thoughts.