141. Strategy 💘

Notes and highlights from the book Playing to Win

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Hi there 👋

Have you read anything good lately?

I recently finished the book Playing to Win, which is all about business strategy. I’ll share my notes below. I’d love any recommendations for new stuff to read. (Here is a list of my favorites, plus everything I’ve read recently.)

~ Kevan

P.S. New jobs have been added to the remote marketing jobs Airtable, including a cool product marketing role at HelpScout.

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Playing to Win: Highlights

Notes on business strategy, strategic focus, and winning

I’ve been trying to read a new business book every month from a variety of categories and authors. (Here're my notes from Obsessed by Emily Heyward.) Playing to Win is probably the most business-y of the books — it’s written by the former chairman of Procter & Gamble and it is rife with examples from Gillette, Olay, Tide, etc. The examples are a bit far removed from everyday life at Buffer, but the core of Playing to Win felt quite relevant, especially in this season of strategizing for the new year.

Here are many of my notes, highlights, and takeaways from the book.

The 5 Questions of Strategy

Strategy can seem mystical and mysterious. 

It isn’t. 

It is easily defined. 

Strategy is a set of choices about winning. 

Again, it 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. 

Specifically, strategy is the answer to these five interrelated questions: 

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

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

3. How will you win? The way you will win on the chosen playing field. 

4. What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way. 

5. What management systems are required? The systems and measures that enable the capabilities and support the choices.      

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The five questions of strategy come in order, cascading from one to the next:

Also, these five questions can be answered at every level of the business from the highest level to the individual level.

Example:

Consider a company that designs, manufactures, and sells yoga apparel. Say, Lululemon for instance.

Aspiration: It aspires to create fierce brand advocates, to make a difference in the world, and to make money doing it.

Where-to-play: It chooses to play in its own retail stores, with athletic wear for women.

How-to-win: It decides to win on the basis of performance and style. It creates yoga gear that is both technically superior (in terms of fit, flex, wear, moisture wicking, etc.) and utterly cool. It turns over its stock frequently to create a feeling of exclusivity and scarcity. It draws customers into the store with staff members who have deep expertise.

Capabilities: It defines a number of capabilities essential to winning, like product and store design, customer service, and supply-chain expertise.

Management systems: It creates sourcing and design processes, training systems for staff, and logistics management systems.

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What is our winning aspiration?

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.                

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At Olay, the winning aspirations were defined as market share leadership in North America, $1 billion in sales, and a global share that put the brand among the market leaders.                

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Aspirations can be refined and revised over time. However, 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.                

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Nike’s aspirtion: 

“To bring inspiration and innovation to every athlete in the world.” 

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Where to play? & How to win?

These two choices, which are tightly bound up with one another, form the very heart of strategy and are the two most critical questions in strategy formulation.                

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

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Where to play selects the playing field; how to win defines the choices for winning on that field. It is the recipe for success in the chosen segments, categories, channels, geographies, and so on. The how-to-win choice is intimately tied to the where-to-play choice. Remember, it is not how to win generally, but how to win within the chosen where-to-play domains.                

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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.                 

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What capabilities must be in place to win?

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

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At P&G, a company with more than 125,000 employees worldwide, the range of capabilities is broad and diverse. But only a few capabilities are absolutely fundamental to winning in the places and manner that it has chosen: 

1. Deep consumer understanding.                 

2. Innovation.                 

3. Brand building.                 

4. Go-to-market ability.                 

5. Global scale.                 

These five core capabilities support and reinforce one another and, taken together, set P&G apart. In isolation, each capability is strong, but insufficient to generate true competitive advantage over the long term.                

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Use the core capabilities to build an activity system, where the core capabilities are shown as large nodes, and the links between the large nodes represent important reinforcing relationships.

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What management systems are required to support the strategic choices? 

Management systems foster, support, and measure the strategy. To be truly effective, they must be purposefully designed to support the choices and capabilities.                

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Beneath Olay’s choices and capabilities, the team built supporting systems and measures that included a “love the job you’re in” human resources strategy (to encourage personal development and deepen the talent pool in the beauty sector) and detailed tracking systems to measure consumer responses to brand, package, product lines, and every other element of the marketing mix.

Olay organized around innovation, creating a structure wherein one team was working on the strategy and rollout of current products while another was designing the next generation. It developed technical marketers, individuals with expertise in R&D as well as marketing, who could speak credibly to dermatologists and beauty editors.                

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One popular system used by P&G was the Objectives, Goals, Strategy, and Measures (OGSM). Here is a sample:

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Ultimately, there are four dimensions you need to think about to choose where to play and how to win:

1. The industry. What is the structure of your industry and the attractiveness of its segments?

2. Customers. What do your channel and end customers value?

3. Relative position. How does your company fare, and how could it fare, relative to the competition?

4. Competition. What will your competition do in reaction to your chosen course of action?

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Common strategy traps

The do-it-all strategy: failing to make choices, and making everything a priority. Remember, strategy is choice.

The Don Quixote strategy: attacking competitive “walled cities” or taking on the strongest competitor first, head-to-head. Remember, where to play is your choice. Pick somewhere you can have a chance to win.

The dreams-that-never-come-true strategy: developing high-level aspirations and mission statements that never get translated into concrete where-to-play and how-to-win choices, core capabilities, and management systems. Remember that aspirations are not strategy. Strategy is the answer to all five questions in the choice cascade.

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Thanks so much for reading. Have a great week!

— Kevan

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