Playing to Win

The problem it starts from

Most companies say they have a strategy. Ask to see it and you are usually shown something else: a mission statement, a list of initiatives, a budget, or a set of aspirations such as being the leader in the market. A. G. Lafley, who ran Procter & Gamble from 2000 to 2009 and returned to the role for two more years from 2013, and Roger Martin, then dean of the University of Toronto’s Rotman School of Management, had worked together for years on P&G’s strategy. Playing to Win, published in 2013, sets out the method they used and argues that it can be applied by any business or business unit.

Their definition is plain. A strategy is a coherent group of choices that gives an organisation a distinctive position in its industry, one from which it can create more value than its rivals and keep doing so. Everything turns on the word “choices”. A strategy that does not exclude anything is not a strategy.

The practices

The heart of the book is a cascade of five questions, each constraining the next.

What is our winning aspiration? The purpose of the enterprise, stated in terms of winning with customers and against competitors. Lafley and Martin insist on the word “winning”, because aiming merely to participate produces mediocre choices.

Where will we play? The choice of markets, customer segments, channels, geographies and stages of production in which to compete, and by implication which to leave to others.

How will we win? The value proposition and competitive advantage that will let the business win in those places. Following Porter, the authors see two basic routes: lower cost than competitors, or differentiation that lets the business charge more.

What capabilities must be in place? The activities, at which the company must be excellent, that make the chosen “where” and “how” possible, and that reinforce one another.

What management systems are required? The structures, measures and processes that build and maintain those capabilities.

The authors stress that these choices must fit together, and that a company should move up and down the cascade, revisiting earlier answers when later ones prove hard. Where to play and how to win are the core pair. A choice of where to play without a way to win there is a hope, and a way of winning that applies everywhere usually means no real advantage anywhere.

The book’s other main practice concerns how to choose. Rather than asking which option is right, which invites people to defend their favourite, Lafley and Martin ask teams to state what would have to be true for each option to be the best one. The team then identifies which of those conditions it is least confident about and designs tests for them. The question moves debate away from opinion and toward evidence, and it lets people who favour different options work together, since everyone is now asking the same question about each.

The book illustrates the method with cases from P&G’s history, among them the revival of Olay, which was turned from an ageing brand into a premium skin-care line competing with department-store products at a mass-market price point, and the decisions about which categories and countries P&G should invest in and which it should leave.

The idea underneath

The deepest idea in the book is that strategy is about choice under uncertainty, and that this makes it uncomfortable. Planning, budgets and benchmarking are popular precisely because they feel safe: they are within the organisation’s control and can be done well. Strategy requires betting on things that are not in the company’s control, such as what customers will want and what competitors will do, and it can turn out to be wrong. Martin later argued, in a 2014 Harvard Business Review article, that much strategic planning is a way of avoiding that discomfort while appearing to address it.

A second idea is that a strategy is a system of choices that reinforce each other, rather than a list. This echoes Porter’s argument that durable advantage comes from fit among many activities, which is hard for competitors to copy because they would need to copy the whole system. It also explains why the authors’ first two questions are so important. Once where to play and how to win are clear, many later decisions follow without debate.

There is a psychological point too. “What would have to be true” works because it lets people separate their identity from their preferred option. Rather than arguing for a position, they are asked to describe the conditions under which it would succeed. That reduces the defensive reasoning that most strategic debates produce and makes disagreement useful.

Since it was published

The cascade has become one of the most widely taught strategy frameworks in business schools and companies. Martin has continued to write on strategy as choice, including in A New Way to Think (2022), and has warned against treating the cascade as a template to fill in rather than a set of genuinely hard choices. P&G itself went through difficult years after Lafley’s first tenure, and he returned as chief executive in 2013, and in 2014 announced that the company would shed as many as a hundred smaller brands to concentrate on its strongest, a “where to play” choice applied to the company’s own portfolio.

A first step

Take a decision your team is currently arguing about. Write down each option, and for each one list what would have to be true about customers, competitors, costs and your own capabilities for it to be the best choice. Circle the condition you are least sure of for each option. Spend the next week finding out whether it holds.