Playing to Win

Lafley was CEO of Procter & Gamble in two stints and Martin, dean of Rotman, was his strategy advisor for years; the book is the distillation of how they doubled P&G's value between 2000 and 2009. Their starting point is an uncomfortable definition: most of what companies call strategy isn't. A vision is not strategy. A plan is not strategy. A list of initiatives is not strategy. Strategy is an integrated set of choices that positions you to win, and winning means being the best at something concrete for someone concrete, not simply participating.

The problem it solves is that of the founder who does everything for everyone: three segments, five channels, ten features, and no position where they are clearly the best. Lafley and Martin argue that this dispersion isn't a lack of resources but a lack of choice.

The method is the cascade of five choices, and the order matters because each one constrains the next. First, the winning aspiration: not "grow" but what winning means for you and against whom. Second, where to play: which markets, which segments, which channels, which geographies, and by implication where not to play. Third, how to win in those places: the specific advantage, which is almost always either lower cost or real differentiation, never both halfway. Fourth, the core capabilities that way of winning demands, that is, the few things your company has to do better than anyone. Fifth, the management systems that build and measure those capabilities.

The central example is Olay. It was an aging 800-million-dollar brand that sold for $3.99 on the shelf and competed against cheap supermarket creams. P&G decided not to go into the luxury world nor stay where it was, but to create a new space, "masstige": prestige-brand quality at $18.99, sold in drugstores and supermarkets, aimed at women starting to worry about their skin. The five choices were made explicitly and in sequence —the price demanded a formula that really worked, and the formula demanded research capabilities P&G did have—, and the brand reached 2.5 billion dollars in sales.

Done well, the method shows in what you give up: a strategy that doesn't say where you won't play isn't strategy. Done badly, it becomes a document of aspirations with the five boxes full of generalities. The test the authors propose to avoid that is to ask, for each strategic option, "what would have to be true for this to work?", and then go verify those conditions instead of arguing opinions. That shift, from debating what is true to agreeing on what would have to be, is what turns a strategy meeting into a list of testable hypotheses.

The recipe for this week: write your company's five choices on one page, one sentence each, and underline in the second one where you won't play. If you can't write that part, you don't have a strategy yet. Then take your most important bet and list the three things that would have to be true for it to win; assign someone to verify each one within two weeks.

The authors' line: "Winning should be at the heart of any strategy." And it works beyond your role as a founder: the cascade works for a product line, for your career and for deciding which investment thesis to concentrate a fund on.