Playing to Win

1. Strategy is about making choices to win

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.

Definitive choices. Strategy requires making explicit choices about what to do and what not to do. It's not about having a vision or a plan, following best practices, or simply optimizing current operations. Strategy involves choosing a specific set of activities that will deliver unique value to customers and create a sustainable competitive advantage.

Winning focus. The ultimate goal of strategy is to win in the marketplace. This means providing better value to customers than competitors do, on a sustainable basis. Winning should be at the heart of any strategy, driving tough choices and substantial investments. Companies that merely aim to participate, rather than win, often fail to make the necessary choices and investments to succeed.

Integrated approach. A successful strategy consists of five interconnected choices:

• Winning aspiration
• Where to play
• How to win
• Core capabilities
• Management systems
  These choices must be coordinated and mutually reinforcing to create a coherent strategy that drives competitive advantage.

2. Define your winning aspiration clearly

What matters is winning. Great organizations—whether companies, not-for-profits, political organizations, agencies, what have you—choose to win rather than simply play.

Ambitious goals. A winning aspiration goes beyond simply participating in a market. It defines what winning looks like for the organization in clear, ambitious terms. This could mean being the industry leader, transforming an industry, or creating significant value for customers in a unique way.

Customer-centric focus. Winning aspirations should be framed around customers and their needs, rather than internal metrics or financial goals. For example, P&G defined winning as improving consumers' lives with their products, which drove innovation and customer focus throughout the organization.

Guiding principle. A clear winning aspiration serves as a north star for all other strategic choices. It helps align the organization and provides a benchmark against which to evaluate options and make tough decisions. Without a well-defined aspiration to win, companies risk settling for mediocrity or making inconsistent strategic choices.

3. Choose where to play and how to win

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

Where to play. This choice defines the specific playing field for the company. It includes decisions about:

• Which geographic markets to serve
• Which customer segments to target
• Which categories or product lines to offer
• Which channels to use
• Which stages of the value chain to participate in

How to win. This choice outlines the unique approach the company will use to succeed in its chosen playing field. There are two fundamental ways to win:

1. Cost leadership: Delivering similar value at a lower cost than competitors
2. Differentiation: Providing unique value that customers are willing to pay a premium for

Reinforcing choices. Where-to-play and how-to-win choices must be mutually reinforcing. A company's approach to winning should be tailored to its specific playing field, leveraging its strengths and addressing customer needs in a way that's difficult for competitors to match.

4. Develop and leverage core capabilities

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.

Identify key activities. Core capabilities are the essential activities that allow a company to deliver on its where-to-play and how-to-win choices. These are not generic strengths, but rather the specific abilities that create competitive advantage in the chosen market.

Build systems of activities. The most powerful core capabilities operate as a system of mutually reinforcing activities. This creates an advantage that is difficult for competitors to replicate, as the strength comes from the interplay of multiple capabilities rather than any single factor.

Invest strategically. Once core capabilities are identified, the organization should invest disproportionately in developing and maintaining them. This may involve:

• Training and development programs
• Dedicated resources and teams
• Specialized technologies or processes
• Partnerships or acquisitions to fill capability gaps

5. Implement supporting management systems

Without supporting structures, systems, and measures, strategy remains a wish list, a set of goals that may or may not ever be achieved.

Align processes. Management systems should be designed to support and reinforce the strategic choices. This includes processes for:

• Strategy creation and review
• Resource allocation
• Performance measurement
• Incentive structures
• Communication and decision-making

Foster strategic thinking. Implement systems that encourage ongoing strategic dialogue throughout the organization. This could involve regular strategy reviews, cross-functional collaboration, or training programs to build strategic capabilities at all levels.

Measure what matters. Develop specific, measurable outcomes that align with the strategy. These metrics should span financial, customer, and operational dimensions to provide a holistic view of strategic progress. Regularly review and adjust these measures to ensure they continue to drive the right behaviors and outcomes.

6. Use the strategy logic flow for analysis

To make good choices, you need to make sense of the complexity of your environment. The strategy logic flow can point you to the key areas of analysis necessary to generate sustainable competitive advantage.

Structured approach. The strategy logic flow provides a framework for analyzing the key factors that inform strategic choices. It consists of four main areas:

1. Industry analysis
2. Customer analysis
3. Relative position analysis
4. Competitive analysis

Iterative process. While the flow generally moves from left to right, strategy development is not a linear process. Insights gained in one area may require revisiting earlier assumptions or analyses.

Focus on key issues. The logic flow helps prioritize the most critical questions and analyses, rather than trying to analyze everything at once. This targeted approach saves time and resources while ensuring the most important factors are considered.

7. Reverse-engineer possibilities to make strategic choices

Rather than asking individuals to find that answer for themselves and then fight it out, this approach enables the team to uncover the strongest option together.

Collaborative process. The reverse-engineering approach shifts strategy discussions from advocacy of preconceived ideas to a collaborative exploration of possibilities. This reduces conflict and leads to more robust strategies with stronger buy-in.

Key steps:

1. Frame the choice
2. Generate strategic possibilities
3. Specify conditions for success
4. Identify barriers to choice
5. Design and conduct tests
6. Make the choice

Focus on "what would have to be true." Instead of arguing about what is true, teams explore what would need to be true for each possibility to be successful. This reframes the discussion and surfaces key assumptions and concerns in a constructive way.

8. Avoid common strategy traps and recognize signs of winning

There is no perfect strategy—no algorithm that can guarantee sustainable competitive advantage in a given industry or business. But there are signals that a company has a particularly worrisome strategy.

Strategy traps to avoid:

• The do-it-all strategy: Failing to make choices
• The Don Quixote strategy: Attacking the strongest competitor head-on
• The Waterloo strategy: Fighting on too many fronts simultaneously
• The something-for-everyone strategy: Trying to serve all segments at once
• The dreams-that-never-come-true strategy: Aspirations without concrete choices
• The program-of-the-month strategy: Pursuing generic industry strategies

Signs of a winning strategy:

• A distinctive activity system
• Passionate customers and clear non-customers
• Profitable competitors
• Superior resources for reinvestment
• Competitors attacking each other, not you
• Customers looking to you for innovation

9. Strategy is an ongoing process of adaptation

All companies need to evolve their strategies—to improve, sharpen, and change to stay competitive and, ultimately, to win year after year.

Continuous improvement. Strategy is not a one-time exercise but an ongoing process of refinement and adaptation. Regularly revisit and challenge strategic assumptions to ensure they remain valid in changing market conditions.

Proactive approach. The best companies evolve their strategies before financial results start to decline. They use leading indicators and market insights to identify shifts early and adjust course accordingly.

Balance stability and flexibility. While consistency in strategic direction is important, be prepared to make bold changes when necessary. Create a culture that values both strategic discipline and the ability to innovate and pivot when the competitive landscape shifts.

Last updated: August 8, 2024