Book Review: Playing to Win: How Strategy Really Works
By: A.G. Lafley and Roger L. Martin. Harvard Business Review, 2013.
Review by Teresa Jurgens-Kowal, Ph.D., NPDP
Not surprisingly, A.G. Lafley’s latest offering, “Playing to Win” with co-author Roger Martin, is a superb book for anyone working in new product development (NPD) or innovation. Following a set of choices that business leaders must make, the authors provide a “do-it-yourself” guide to selecting an effective and profitable strategy.
In Chapter 1, “Strategy is Choice,” the authors stress a key point regarding strategy that should be well known to all NPD practitioners – strategy decision area s much about what the firm will not do as what it will do. Many business leaders make the mistake of defining strategy as vision or a plan (pg. 3) when a successful strategy actually addresses five key questions (pg. 15):
What is your winning aspiration?
Where to play?
How to win?
What are your core capabilities? and
What are the supporting management systems?
Each of these questions is the focus of a subsequent chapter in “Playing to Win”.
In discussing the winning aspiration, Lafley and Martin describe much more than a vision or mission statement. As aspiration for a corporation, a brand or a product is a specific, yet passionate statement about the ideal future. An aspiration is clear and concise to drive action and is specific enough to measure success. Too many firms will simply participate in a market without the ultimate goal of winning a customer segment. Thus, the aspirational statement should be couched in terms of people (customers and consumers) instead of money (share price). “A too-modest aspiration is far more dangerous than a too-lofty one” (pg. 36).
Once a firm identifies the essence of a clear but challenging aspiration, the twin decisions of where to play and how to win are addressed (Chapters 3 and 4). Where to play encompasses more than a geography, including product type (luxury or value), consumer segments, distribution channels, and vertical integration. A losing choice is to try to serve everyone, everywhere (pg. 57).
Lafley and Martin build extensively from Michael Porter’s work and show that only two strategies can be winning: cost leadership and differentiation. Of course, cost leadership (lowest cost producer and distributor) leads to new competition as technology allows improved production models. Differentiation requires deciding what value will be delivered to which customer segments and how your organization delivers value above and beyond your competition. (Appendix B provide simple microeconomic arguments to support the differentiation strategy.)
Wrapping up the key strategic choices, Chapters 5 and 6 describe strengthening a firm’s core capabilities and building management systems and processes to grow these core capacities within the company. While many firms claim their people are their core capability, the true strategic linkage comes from being customer-centric and providing a meaningful, competitive advantage. For Procter and Gamble (P&G), Lafley’s stomping grounds, this core capability is housed in market research. Consumer studies have allowed P&G to develop insightful new products that offer unique customer advantage among competitors. Minimizing bureaucratic management systems and reinforcing streamlined processes close out the discussion on the five strategic choices in Chapter 6, “Manage What Matters”.
While not intuitive, Chapter 7, “Think Through Strategy,” presents a framework to overlay industry segments, customer value, and competitive analysis with the five key strategic questions. These dimensions are most closely associated with where to play and how to win decisions.
Finally, Chapter 8 introduces another human element into developing a business or innovation strategy. Perhaps this chapter embodies the primary takeaway from “Playing to Win” by encouraging leaders to ask strategic questions differently. Rather than laying out a hypothesis and collapsing it with negative potential outcomes, the authors recommend finding ways to make the strategy concept successful. In fact, P&G demonstrated positive results by allowing the biggest skeptic to design and conduct tests against the selected strategy.
As Lafley and Martin indicate, a lack of strategy “will kill you” (pg. 211). “Playing to Win” is a great book to help guide an NPD leader to thinking about customers first while building upon the organization’s strengths. As a very slight drawback to the text, due to Lafely’s tenure as CEO at P&G, most of the examples and case studies are based on consumer packaged goods. However, it should not be too much of a stretch to expand the winning aspirations strategy framework to a business-to-business model.
For anyone struggling with innovation or brand strategy, “Playing to Win” is a terrific guide to addressing key components of a successful business pursuit.