Book Brief: Playing to Win

“How Strategy Really Works”

Brief Summary

Title: Playing to Win: How Strategy Really Works
Authors: A.G. Lafley and Roger L. Martin
Published: 2013 by Harvard Business Review Press
What It Teaches: Playing to Win teaches the 5 question Strategy Choice Cascade developed by business school dean Roger Martin and used by Proctor & Gamble (where A.G. Lafley was Chairman and CEO). It also introduces a 7 question Strategy Logic Flow used as a starting point for developing strategy and a 7 step Strategic Choice Structuring Process (built upon the question “what would have to be true?”) for conflict-free strategy development.
When To Use It: Anyone responsible for strategy development or making strategic decisions would benefit from the frameworks introduced by this book.

Brief Review

I bought Playing to Win several years ago. At the time I set the book aside thinking that the book was heavily focused on Proctor & Gamble’s approach to strategy, that none of my consulting clients look like P&G (few companies do), and therefore that my time was better spent reading other books.

In the four years since, Roger Martin has become one of my favorite writers on the topic of strategy. He writes a column at Medium that deals with strategy development that has become a “must read” for me each week. So, it was with great anticipation that I finally picked up Playing to Win with the time to give it the attention it deserved. I was not disappointed.

At the time the book was published, Martin was Dean of the University of Toronto’s Rotman School of Management and Lafley was the former Chairman and CEO of Proctor & Gamble. (Within four months, Lafley had been called back to lead a turnaround at P&G and Martin had stepped down at Rotman, but such is the nature of professional life.) Martin had previously been a partner with Monitor Company, the strategic consulting firm started by Harvard’s Michael Porter. In the late 1980s he led an engagement to establish the Applied Strategy Management program at P&G where he first encountered Lafley. Even after leaving Monitor to become Dean at Rotman, Martin continued to support P&G and Lafley brought him back in when he became CEO in 2000 to help make Martin’s Strategy Choice Cascade and Strategic Choice Structuring Process essential cornerstones of P&G’s strategy at all levels of the company. (You can read the whole story here.)

Playing to Win is mostly structured around the Strategy Choice Cascade. Proctor & Gamble examples are used throughout the book to demonstrate how the framework works in real life. While the examples are specific to P&G’s markets, there are enough different examples given at different levels in the company that I think most companies (especially large ones) will see parallels to the kinds of strategic decisions they are facing.

The Strategy Choice Cascade is a series of five questions that define a company’s strategy:

1. What is our winning aspiration?
2. Where will we play?
3. How will we win?
4. What capabilities must be in place?
5. What management systems are required?

Chapter one is titled “Strategy is Choice” and the authors define strategy as “a set of choices about winning.” The core of strategy is the first three questions in this cascade. In my opinion, the last two questions in the cascade are important questions to answer, but merely support questions 2 and 3 in achieving the winning aspiration.

The book’s title stems from the authors’ contention that companies must “play to win” or else they are wasting everyone’s time and investors’ money. Too many companies “play to play” which can appear to work for a time, but in the long run simply destroys value. This is not a case of “we win and everyone else loses” but rather being very selective about where and how we will win, which leaves opportunity for others to win elsewhere and in different ways. There is no single right answer to questions 1–3 for any given industry, but there likely is a best answer for a specific company at a specific moment in time, and this book is intended to help leaders develop the answers that are right for their business right now.

The questions in the cascade are roughly in the order in which they should be answered, however, each question is dependent on the answers to the other questions. Generally a company must understand their winning aspiration before they can figure out where to play and how to win, but in developing those other answers, they may find a need to modify their winning aspiration, and so on. The answers to these questions may also change over time, requiring a constant monitoring and fine tuning of the entire cascade.

Chapters 2 through 6 each deal with one of the questions in the cascade. The chapters often include tutorials in basic concepts of competitive strategy such as market segmentation, customer needs research, generic strategies, differentiation, etc. Each chapter includes detailed step-by-step case studies from P&G, a list of “dos and don’ts”, and often a story from either Martin or Lafley (or both) to share their personal experiences (sometimes painful) that helped them learn the key concepts covered in the chapter. There’s a lot of detail in these chapters beyond what the simple questions in the cascade might imply. Anyone involved in the kinds of hard strategic questions any business (especially a large one) faces will be able to relate to and learn from the many stories told and lessons taught.

Chapter 7 is titled “Think Through Strategy.” At the beginning of the chapter the authors point out that the cascade is helpful, but in the real world leaders will ask: “But how and where do you start? And how do you generate and choose between possibilities at each stage?” They offer another framework as a starting point. The framework involves four stages of analysis leading up to comparing a set of strategic choices (combinations of where to play and how to win). For each stage they propose a couple of questions to answer — I think these specific questions (listed below) work well for P&G, but slightly different questions may make more sense for your business:

1. Industry Analysis: What are the strategically distinct segments? How structurally attractive are the segments?
2. Customer Value Analysis: What attributes constitute channel value? What attributes constitute end-customer value?
3. Analysis of Relative Position: How do our capabilities stack up against competitors? How do our costs stack up against competitors?
4. Competitor Analysis: How will competitors react to our actions?

The chapter walks through each of these stages, introducing more approaches and tools that can help (e.g. Porters Five Forces) answer the questions at each stage.

The final full chapter in the book introduces yet another framework to help with strategy development. The authors make the point that strategy processes are typically contentious and defensive with leaders staking out a position and defending it while attacking competing options. That is unproductive and makes it hard to align the leadership behind what ultimately emerges as the chosen strategy.

One of the great statements in the book doesn’t appear until page 186: “Asking a single question can change everything: what would have to be true?” The authors then lay out a seven step process for making a critical strategic decision using this simple question:

1. Frame the choice: identify at least two mutually independent options
2. Generate strategic possibilities: broaden the list to be as inclusive as possible
3. Specify conditions: For each possibility, specify which conditions would have to be true for it to be a strategically sound option
4. Identify barriers to choice: Identify which conditions are most likely to not be true
5. Design valid tests: Design valid tests to determine whether or not each option is worth considering
6. Conduct the tests: Starting with the lowest-confidence conditions, test the hypotheses
7. Choose: Compare test results and make informed choices

The book closes with a short Conclusion titled “The Endless Pursuit of Winning” which ties the three main frameworks from the book into what the authors call a “playbook” for strategic management in a dynamic competitive world. They close the book with two short lists: “Six Strategy Traps” and “Six Telltale Signs of a Winning Strategy”.

Bottom Line: Playing to Win is likely the best book on strategy that I have yet read. It teaches concepts in an easy to understand way, provides frameworks that are easy to use in real world situations, and provides lots of examples to show how the frameworks work in a real company. I strongly recommend Playing to Win to anyone involved in strategy development and strategic decision making.