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Synopsis

Are you playing the game or are you playing to win? Chances are your competitors are doing the latter. Develop a winning strategy for your company, business unit, or new product launch with former Procter & Gamble CEO A.G. Lafley and co-author, Roger L. Martin's recipe for success.

Lafley and Martin lay out the simple steps of strategy in the form of five questions, the most important of which are "Where to play?" and "How to win?" Once those decisions are made, develop the core capabilities and management systems to support them. Use this book summary as a guide to set a competitive business strategy and distinguish your organization from others.

Questions and answers

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The five strategic questions laid out by Lafley and Martin in their book "Playing to Win: How Strategy Really Works" are as follows:

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

You asked about the other three questions. They are "What is our winning aspiration?", "What capabilities must we have in place to win?", and "What management systems are required to support our choices?". These questions help to define the organization's purpose, identify the necessary skills and resources, and establish the systems needed to implement the strategy effectively.

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Top 20 insights

  1. Make five choices to create a business strategy: 1) Articulate a winning aspiration; 2) Determine where to play; 3) Know how to win in your chosen location; 4) Develop the core capabilities required to win; and 5) Implement the management systems that support success.
  2. Consider the attractiveness of a given market for other parts of your business. P&G committed to skin care because the skin care market creates brand loyalty, is highly profitable, makes up 25% of the entire beauty market, and generates consumer insights that can be transferred to P&G's other products in categories like hair care and fragrance.
  3. Avoid complacency during triumphant times. While P&G's Bounty had 40% of the paper towels market, an analysis revealed there were two types of customers where Bounty fell short: people who wanted a soft, cloth-like feel and people who were price sensitive. This led to two new hit products: Bounty Extra Soft and Bounty Basic.
  4. When you try something new, consider your geographic areas of strength or top customers first. P&G uncovered that they derive 85% of profits from 10 countries. They therefore considered how to launch and stabilize in these 10 core countries and prioritized it over blind global growth.
  5. Pricing is a key component of a winning strategy. Before P&G launched "Total Effects," a high-end product that they intended to sell from drugstore shelves, they determined how to attract both prestige shoppers who typically bought skin care at department stores and "mass shoppers" who don't like to spend too much.
  6. Pick your partners wisely. P&G purposely went with HP as its IT partner. Since HP was a distant fourth player, rather than the very top, in the industry, this decision meant that P&G became HP's priority as its largest client.
  7. P&G's complete re-branding of Olay proves that smart answers to the five strategy questions pay off. As a result, "Olay had double-digit sales and profit growth every year for the next decade: and turned into a $2.5 billion brand.
  8. To beat competitors, consider all opportunities along the value chain. Hershey's makes a more "expensive" chocolate bar using high-quality ingredients. Mars makes a "cheaper" candy bar with less expensive ingredients. But they can charge about the same for their candy bars because Mars buys premium shelves in stores to even out the playing field.
  9. Consider existing capabilities when Go-to-Market (GTM) strategy is in-development. P&G launched Olay as a prestige product on mass retailer shelves, and created a new "masstige" (mass + prestige) segment. This channel choice leveraged their strong relationships with mass retailers and other big box stores.
  10. In 2000, only 20% of P&G's revenues came from emerging markets, whereas 40% of revenues at competitors, Unilever and Colgate, came from those geographies. Strategic choices about which geographies and products to focus on led to 35% of revenue from emerging markets 11 years later.
  11. Develop capabilities with outsourcing. P&G partnered with "product ingredient innovators (Cellderma), designers…and key influencers (like beauty magazine editors and dermatologists)" to increase capabilities to win in skin care.
  12. Don't overlook the potential for management systems to support your strategy. When P&G doubled down on investment in Olay, they created a corollary human resources initiative nick-named "Love the Job You're in" to attract top talent to that division. Special benefits included enhanced professional development opportunities.
  13. A key sales decision for Olay was to create a new type of marketer – a "technical marketer" who bridged the worlds of marketing and skin care experts. This person could more easily gain the trust and sponsorship of beauty editors and dermatologists.
  14. You can apply a winning mindset to a variety of business activities. Although P&G's Global Business Services (GBS) unit is an internal entity created to provide services like facilities and IT, it competes with outside companies. The head of GBS reasons that "if the business units like them, they will buy them." This policy ensures offerings are competitive and cutting-edge.
  15. Don't take an overly simplified approach to define what winning looks like. While in many broad categories P&G had the far majority of market share, a closer look at specific products and geographies revealed that "the best competitors were often found to be local companies, private-label competitors, and smaller consumer goods companies."
  16. Think carefully about your path to win. In 1984, P&G wanted to win in laundry without a competitive response from Wisk, so when Liquid Tide launched, the company didn't go after Wisk's market share. Instead, they focused on the overall market growth.
  17. Consider the unexpected benefits that a "non-core" or otherwise unattractive business might have for your broader company. P&G sells fine fragrances not because they fit neatly within other product categories but because the consumer insights generated through fine fragrances' offers extend to their core categories like hair care and skin care.
  18. Consider alternative ways of winning. P&G developed "ForceFlex" technology for trash bags that allowed them to stretch more and tear less. But the market was already very competitive between the Glad and Hefty brands. So, P&G started a joint venture and licensed the technology to the Glad makers and enjoyed a share of the profits.
  19. Remember that a winning strategy is time-dependent. Its keys for success become less potent as time passes due to shifting dynamics and evolving competitive landscapes. The important thing for an organizational leader, according to Lafley, is to "build up strategic thinking capability within your organization."
  20. P&G culture was not initially conducive to strategy discussions. Unit leaders independently created plans and pitched them to higher-ups in long, one-sided presentations without meaningful dialogue. This practice changed when executives encouraged an "assertive inquiry" style of communication, and emphasized a mindset of, "I have a view worth hearing, but I may be missing something."

Summary

In Playing to Win: How Strategy Really Works, former P&G CEO A.G. Lafley details how to develop and implement a successful strategy for your business, with a cornerstone principle which stresses the importance of playing to win, not just playing the game. A winning aspiration focused on customer needs' satisfaction is the beginning, but the most essential questions follow: Where will you play, and how will you win there? According to Lafley, all these choices should be well-researched, data-driven, and considered in light of competitor behavior. Lastly, to implement the strategy, a business needs to identify and develop core capabilities and take a management approach that supports a culture of strategy overall.

Questions and answers

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Yes, there are several short stories that highlight the "play to win" mindset about deliberate choices. One such story is "The Tortoise and the Hare" where the Tortoise, despite being slow, makes a deliberate choice to keep going and eventually wins the race. Another story is "The Boy Who Cried Wolf". The boy makes a deliberate choice to lie for his amusement, but when a real threat appears, no one believes him, teaching him a hard lesson about the consequences of his choices. These stories, while simple, highlight the importance of deliberate choices and the mindset of playing to win.

The book "Playing to Win: How Strategy Really Works" does not provide specific case studies or examples. Instead, it outlines a strategic framework developed by former P&G CEO A.G. Lafley. This framework includes five key questions: What is our winning aspiration? Where will we play? How will we win? What capabilities must we have in place to win? What management systems are required to support our choices? The broader implications of this framework are that businesses need to have a clear vision (winning aspiration), understand their competitive landscape (where to play and how to win), and have the necessary resources and systems in place to execute their strategy.

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A winning aspiration

Some companies articulate their winning aspiration and call that the strategy. Defining the winning aspiration is a necessary part of the strategy, but it is only the first step. These statements may include metrics such as revenue, profitability, and market share, but those numbers will be second to words and phrases that describe your customer and how you aim to serve them. Without the customer at the center, the other aims are futile. For example, rather than saying they have a market-leading, profitable skin care line, P&G 's winning aspiration could be "helping women have healthier, younger-looking skin" or "helping women feel beautiful."

Questions and answers

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The question seems to be asking about the strategy used by the person mentioned in the book "Playing to Win: How Strategy Really Works". The book, authored by former Procter & Gamble CEO A.G. Lafley, outlines a five-step strategy for success.

Firstly, the strategy begins with defining a winning aspiration, which is a clear articulation of what the company aims to achieve. This is not just about financial metrics like revenue or market share, but also about the company's purpose and how it aims to serve its customers.

Secondly, the strategy must be customer-centric. Without the customer at the center, other aims are futile. For instance, P&G's winning aspiration is not just about having a market-leading, profitable skin care line, but about helping women have healthier, younger-looking skin or helping women feel beautiful.

The remaining steps of the strategy are not mentioned in the content, but they would typically involve identifying where to play (which markets and segments to target), how to win (what unique value to offer), and what capabilities and systems are needed to support the strategy.

Understanding and defining a winning aspiration is important because it sets the direction for your business strategy. It's not just about setting financial goals like revenue or profitability, but it's about defining who your customer is and how you aim to serve them. This customer-centric approach ensures that your strategy is focused on creating value for your customers, which in turn drives business success. For instance, Procter & Gamble's aspiration isn't just to have a profitable skin care line, but to help women have healthier, younger-looking skin or to help women feel beautiful. This aspiration guides their strategy in product development, marketing, and customer service.

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Companies or executives who've become too focused on product features and performance have "marketing myopia," which means they are "blinded by the products they make and are unable to see the larger purpose or true market dynamics." The people your products serve should always remain top of mind, or the winning aspiration will become stale. Because a winning aspiration is only the start of a comprehensive strategy, it can and should remain generalized. Answering the four other strategy questions will provide the necessary detail. Some examples include:

Questions and answers

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Potential obstacles a company might face when trying to implement the winning aspiration strategy could include resistance to change, lack of clear communication, and lack of resources. Overcoming these obstacles requires a clear and compelling vision, effective communication, and adequate resources. It's also important to address any resistance to change by involving employees in the process and providing necessary training and support.

The lessons from "Playing to Win: How Strategy Really Works" can be applied in a traditional sector like manufacturing in several ways. Firstly, avoid "marketing myopia" by focusing not just on the products you manufacture, but also on the larger purpose and market dynamics. Secondly, keep the people your products serve at the forefront of your strategy. Lastly, develop a comprehensive strategy that includes a winning aspiration and answers to the four other strategy questions. This approach will help you stay competitive and successful in the manufacturing sector.

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  • Starbucks – "To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time."
  • Nike – "To bring inspiration and innovation to every athlete* in the world. *If you have a body, you're an athlete."
  • McDonald's – "Be our customers' favorite place and way to eat."

Empowering individual business units to set their own winning aspirations can transform all aspects of an organization, even units that don't sell externally. For example, P&G created an internal entity called "Global Business Services" that provided services like information technology support, facilities management, and employee services to P&G business units worldwide. The business model was financially healthy, but P&G leaders focused on winning had a higher standard for GBS.

Questions and answers

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A startup can use the strategy of setting their own winning aspirations to grow by empowering individual business units to set their own goals and aspirations. This can transform all aspects of an organization, even units that don't sell externally. For example, an internal entity could be created that provides services like information technology support, facilities management, and employee services to the business units. This business model can be financially healthy, but leaders focused on winning should have a higher standard.

The idea of creating internal entities like Global Business Services can be implemented in real-world business scenarios by identifying the services that are common across different business units and centralizing them. This could include services like IT support, facilities management, and employee services. The entity should operate with a clear business model and aim to provide high-quality services to the other business units. It should also have its own winning aspirations and strategy, just like any other business unit. This approach can lead to cost savings, increased efficiency, and improved service quality.

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Filippo Passerini was in charge of GBS and determined that in its field, GBS wasn't really winning. He wasn't confident that as currently structured, GBS was creating the most value for P&G. What if they spun GBS off and functioned as a separate entity providing services to other companies? What if they dissolved GBS and contracted with a company that would handle the different services independently?

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If a company like GBS were to function as a separate entity providing services to other companies, several innovative approaches could be applied. Firstly, they could leverage their expertise and reputation to offer specialized services tailored to the needs of each client. This could include consulting, IT services, or other business solutions. Secondly, they could adopt a partnership model, working closely with their clients to understand their unique challenges and develop customized solutions. Lastly, they could invest in cutting-edge technology and innovation to stay ahead of the competition and provide superior services.

The case of Filippo Passerini and GBS can be analyzed for broader business implications in several ways. Firstly, it highlights the importance of strategic thinking in business operations. Passerini's consideration of restructuring GBS or spinning it off as a separate entity shows the need for businesses to constantly evaluate their strategies to maximize value. Secondly, it underscores the need for businesses to be flexible and adaptable. The potential dissolution of GBS and contracting with an independent company signifies the need for businesses to be open to drastic changes for the sake of efficiency and value creation. Lastly, it emphasizes the role of leadership in making tough decisions that can potentially transform the business.

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These were the sole options on the table for a time until Passerini pitched another approach. To have a winning strategy for providing services to P&G business units might mean a combination approach. The ability to get the best services, at the lowest costs, with the greatest additional benefits, meant contracting with more than one service provider in a "best of breed" approach rather than a single conglomerate, which was the prevailing model at the time.

Questions and answers

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The concept of 'best of breed' in the book 'Playing to Win: How Strategy Really Works' refers to the strategy of choosing the best product or service from different providers or sources, rather than relying on a single provider. This approach allows an organization to benefit from the strengths of each provider, ensuring the highest quality and most cost-effective solution. It's about selecting the best in each category to create a superior composite offering.

Small businesses can apply the 'best of breed' approach by selecting and integrating the best available products or services in each category of their operations, rather than relying on a single provider. This approach allows businesses to optimize their services and costs by choosing the most efficient and cost-effective solutions in the market. It involves careful evaluation of various providers, considering factors such as cost, quality, compatibility, and customer support. However, it's important to note that while this approach can lead to optimized services and costs, it may also require more management and integration efforts.

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"Passerini saw that specialization could increase the quality and lower the cost of BPO solutions…Plus, there was risk mitigation in having multiple partners, and they could be benchmarked against one another…Finally, outsourcing would free up remaining GBS resources to invest in P&G core capabilities," the book explains.

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The concept of specialization in BPO solutions can be applied to traditional sectors like manufacturing or retail to improve quality and reduce costs in several ways. First, by focusing on their core competencies and outsourcing non-core tasks, these sectors can achieve higher efficiency and quality in their primary operations. Second, outsourcing can lead to cost savings as specialized BPO providers can often perform non-core tasks more cost-effectively due to economies of scale and expertise. Third, risk mitigation can be achieved by having multiple partners, allowing for benchmarking and competition. Lastly, outsourcing frees up resources that can be invested back into the company's core capabilities.

Outsourcing contributes to the development of P&G's core capabilities by allowing the company to focus its resources on areas where it excels. By outsourcing non-core functions, P&G can invest more in its core capabilities. Additionally, outsourcing can lead to increased quality and lower costs of business process outsourcing (BPO) solutions due to specialization. It also provides risk mitigation by having multiple partners who can be benchmarked against one another.

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Aspiring to win requires much more than obtaining a majority market share. It means truly understanding customers and not losing sight of their needs. It means not just "playing to play" or get the job done but instead, always looking for ways to generate more value for both customers and your firm.

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The book 'Playing to Win: How Strategy Really Works' presents several innovative ideas. One of the most surprising is the concept of not just playing the game, but playing to win. This involves a deep understanding of customers and their needs, and always looking for ways to generate more value for both customers and the firm. Another innovative idea is the five-step strategy, which provides a clear and simple roadmap for developing a winning strategy. These ideas challenge conventional thinking and provide fresh perspectives on business strategy.

The theories presented in "Playing to Win: How Strategy Really Works" challenge existing paradigms in the field of business strategy by emphasizing the importance of not just playing the game, but playing to win. This means not just focusing on obtaining a majority market share, but truly understanding customers and their needs. It also means always looking for ways to generate more value for both customers and the firm, rather than just getting the job done. This approach challenges the traditional focus on market share and competition, and instead places the customer and value creation at the center of the strategy.

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Where to play

Though "where" connotes geography, the question of where to play to deliver on a winning aspiration includes five categories: 1) geography; 2) product type; 3) consumer segment; 4) distribution channel; and 5) vertical stage of production. To employ a sound strategy means to gather extensive information in each of these areas and to make a conscious choice along each parameter.

Questions and answers

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NCS should play in the industrial and commercial sector where it can leverage its strengths and create a competitive advantage. This could be in areas where it has technological expertise, strong customer relationships, or unique product offerings.

It should also consider the geographical location, focusing on regions with high demand for its services or products.

The consumer segment is another important factor. NCS should target segments that value its offerings and are willing to pay for them.

The choice of distribution channel can also impact its success. It should choose channels that can effectively reach its target customers.

Finally, NCS should consider the vertical stage of production where it can add the most value. This could be in manufacturing, distribution, or after-sales service.

Remember, the key is to make conscious choices based on extensive information and strategic considerations.

The vertical stage of production refers to the different steps a product goes through from its inception to its final form. This can include everything from the sourcing of raw materials, to manufacturing, to distribution and retail. Each stage adds value to the product, and companies can choose to participate in one or more of these stages. For example, a company might choose to focus on manufacturing, leaving the sourcing of raw materials and distribution to other companies. This is a strategic decision that can impact a company's profitability and competitive positioning.

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Here are some other vital questions to consider when developing your strategy. Which geographies are the biggest and most profitable markets, or are there certain countries where your firm has experience and expertise? What product types are in demand, or what product or service choice will enable a distinct advantage and command high margins for the longest time? How are consumers segmented, and which segment is most attractive? Is there a natural channel choice or one in which customers are accustomed to buying? And, what might be the benefits of expanding operations into different levels of the value chain?

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Understanding consumer segmentation and product demand is crucial for a successful business strategy. Consumer segmentation allows businesses to categorize their potential customers into groups based on common characteristics like demographics, behaviors, and preferences. This helps in tailoring products, marketing efforts, and services to meet the specific needs of these segments. Understanding product demand, on the other hand, helps businesses to forecast sales, manage inventory, and plan future production. Together, these insights can lead to more effective strategies, improved customer satisfaction, and increased profitability.

When developing a strategy for expanding into new geographical markets, some key considerations include: understanding the market size and profitability, having knowledge of the product types in demand, identifying the most attractive consumer segments, choosing the right channel for distribution, and considering the benefits of expanding operations into different levels of the value chain.

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Some of these five "where to play" choices will hold different weights depending on the situation and company at hand. For example, startups spend lots of time developing and refining a specific product or service. A mature company seeing little growth might rejuvenate sales by re-analyzing their consumer segmentation to find pockets of growth. Across the five "where to play" questions, the most important consideration is analyzing both the quantitative and qualitative data in light of your current goals and capabilities, making conscious choices that reflect your winning aspiration.

Questions and answers

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The analysis of quantitative and qualitative data can significantly influence the 'where to play' strategy in achieving winning aspirations. Quantitative data provides hard numbers, statistics, and measurable facts that can help identify trends, measure progress, and make predictions. Qualitative data, on the other hand, provides insights into why certain trends are happening, the motivations behind customer behavior, and the underlying reasons for certain outcomes. By combining both types of data, a company can make informed decisions about where to focus their efforts, which markets to target, and how to position their products or services. This can help them align their strategy with their winning aspirations.

The 'where to play' choices have different implications in different business scenarios. For startups, these choices often involve focusing on developing and refining a specific product or service. They need to analyze both quantitative and qualitative data to make decisions that align with their goals and capabilities. On the other hand, mature companies that are seeing little growth might use 'where to play' choices to rejuvenate sales. They might re-analyze their consumer segmentation to find new growth opportunities. Thus, the 'where to play' choices can significantly impact a company's strategy and success.

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P&G began every effort to determine the "where to play" choices with an in-depth exercise to understand the consumer.

"Only through a concerted effort to understand the consumer, her needs, and the way in which P&G can best serve those needs is it possible to effectively determine where to play – which businesses to enter or leave, which products to sell, which markets to prioritize, and so on." P&G had a robust consumer research arm in-house to conduct qualitative studies like home visits, but they outsourced surveys and other quantitative research.

Questions and answers

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A retail company can apply the consumer research methods discussed in the book by first establishing a robust consumer research arm. This can involve conducting qualitative studies such as home visits to understand the consumer's needs and preferences. They can also outsource surveys and other quantitative research to gather data on consumer behavior and preferences. This information can then be used to determine which products to sell, which markets to prioritize, and which businesses to enter or leave. By understanding the consumer, the company can effectively improve its product offerings to better serve the needs of its customers.

The strategy presented in "Playing to Win: How Strategy Really Works" challenges traditional business practices by emphasizing the importance of understanding the consumer and their needs. It suggests that businesses should focus on where to play, which involves deciding which businesses to enter or leave, which products to sell, and which markets to prioritize. This is a departure from traditional practices that may not place as much emphasis on consumer needs and strategic decision-making.

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In considering "where to play," don't just go for the lowest hanging fruit. A market that may otherwise look competitive and daunting may be a good choice for your firm if the offering is truly distinctive, and the entry strategy is smart. In 1984, laundry detergent was primarily powdered. Unilever's Wisk brand was blazing the trail with an innovative liquid form. When Tide decided to enter as Liquid Tide, they knew they were going up against a strong competitor. But P&G executives had chosen "where to play" based on predictions that liquid detergent would experience strong overall growth. Therefore, though "Wisk did not give up a share point to Liquid Tide," the market grew overall, and Liquid Tide brought new liquid detergent customers into the field. "Liquid Tide created new consumers for liquid detergent, and none of them had a loyalty to Wisk."

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A small business can use the strategy of choosing 'where to play' to grow and attract new customers by identifying and entering markets where their unique offerings can stand out, even if these markets initially appear competitive. This involves making strategic decisions about which markets to enter based on predictions of future growth and the potential to attract new customers. For instance, a business might choose to enter a market with a distinctive product or service that can create new consumers, as was the case with Liquid Tide entering the liquid detergent market. This strategy can lead to overall market growth and the acquisition of new customers who have no prior loyalty to existing brands.

The strategy of choosing 'where to play' challenges existing practices in the field of market entry by encouraging businesses to not just go for the easiest or most obvious markets. Instead, it suggests that businesses should consider markets that may seem competitive or daunting if they have a distinctive offering and a smart entry strategy. This approach can lead to the creation of new consumers and growth in the market, as demonstrated by the example of Liquid Tide entering the liquid detergent market.

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How to win

Answering the "where to play" questions is a steep task, but defining "how to win" is just as important. "Winning means providing a better consumer and customer value equation than your competitors do, and providing it on a sustainable basis," the authors state.

Products and services "win" when they are either differentiated (and can charge price premiums), or when they have "cost leadership" and can offer a nearly similar product to competitive offerings but charge significantly less. Due to its size and scale, P&G can keep production costs low and charge competitive prices. But it primarily competes as a differentiator, seeking to find the new product technology or customer segment that is untapped or unserved. Achieving this requires a robust research and development arm, as well as a deep understanding of customers' behavior. P&G has both.

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Understanding customer behavior plays a crucial role in developing a successful business strategy. It helps in identifying untapped or unserved customer segments and developing new product technologies that cater to their needs. This differentiation strategy, backed by a robust research and development arm, can lead to a competitive advantage. For instance, Procter & Gamble, due to its deep understanding of customer behavior, competes primarily as a differentiator.

Procter & Gamble utilizes cost leadership by leveraging its size and scale to keep production costs low and charge competitive prices. This allows them to offer a product similar to competitive offerings but at a lower price. On the other hand, P&G primarily competes as a differentiator. They seek to find new product technologies or untapped customer segments. This requires a robust research and development arm and a deep understanding of customer behavior, both of which P&G possesses.

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Gain was a struggling P&G laundry detergent product. Its brand manager at one point pleaded with the CEO to kill the brand. The Gain brand was virtually out of business when management asked the team to give it "one more try." The team started by analyzing the consumer segments for laundry detergent to uncover insights about how to win. They discovered that "a small but passionate group of consumers wasn't well served by Tide or by any other competitive product. "This segment cared very much about the sensory laundry experience – about the scent of the product in the box, the scent during the washing process, and especially the scent of clean clothes."

Questions and answers

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The book 'Playing to Win: How Strategy Really Works' provides valuable insights into developing core capabilities and management systems to support a winning strategy. It emphasizes the importance of understanding consumer needs and preferences, as illustrated by the case of the Gain laundry detergent product. The product was struggling until the team analyzed consumer segments and discovered a niche of consumers who cared about the sensory laundry experience. This led to a turnaround for the product. Thus, the book suggests that a winning strategy involves deep consumer understanding, innovation based on these insights, and the development of capabilities to deliver on these needs. It also underscores the importance of giving strategies time to work, as seen in the 'one more try' given to the Gain brand.

The Gain brand managed to turn around its struggling business by analyzing the consumer segments for laundry detergent to uncover insights about how to win. They discovered a small but passionate group of consumers who weren't well served by Tide or any other competitive product. This segment cared very much about the sensory laundry experience – about the scent of the product in the box, the scent during the washing process, and especially the scent of clean clothes.

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Gain product executives decided that they could win in laundry detergent, in their own way, by becoming the product to meet this need. This shift required a concerted effort to re-brand and improve the product to meet the expectations of this segment. Designers re-thought the packaging to make it vibrant, busy, and unmistakably bold. Scent and the sensory experience of using Gain were featured prominently in advertising and stores. Gain is now a billion dollar brand.

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The book 'Playing to Win: How Strategy Really Works' outlines five key steps to developing a winning strategy: 1. Define your winning aspiration. 2. Determine where you will play. 3. Decide how you will win. 4. Identify the capabilities you need. 5. Design the management systems required to support your strategy. These steps are designed to help organizations create a strategy that is robust, clear, and tailored to their unique strengths and weaknesses.

The sensory experience of using Gain played a significant role in its success. The product executives focused on scent and the sensory experience of using Gain in their advertising and in-store displays. This strategy appealed to the consumers' senses, making the product more attractive and memorable. The unique sensory experience provided by Gain differentiated it from other laundry detergents, contributing to its success and making it a billion-dollar brand.

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Gain is an example of invigorating a stagnant brand by analyzing "how to win" in a specific consumer segment. Pampers diapers are another example of how P&G discovered how to win, but this time, in a new geography. Executives had decided to expand Pampers into Asia but struggled with how to feasibly sell the product at a price point that would resonate with consumers there. Typically, when entering an emerging market, executives would decide on one of two approaches to product design, both strategies aimed at keeping product costs low to make selling at a lower price feasible. The first is the "trickle-down" approach, whereby product innovations are only introduced to emerging markets after their distinguishing technology had grown stale elsewhere. The second tactic was a "bare-bones" method in which designers strip away many of the premium product attributes, leaving an affordable yet subpar product. But P&G had a different idea for diapers in Asia.

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P&G used a unique strategy to expand Pampers into the Asian market. Instead of the typical 'trickle-down' or 'bare-bones' approach, P&G decided to innovate. The 'trickle-down' approach involves introducing product innovations to emerging markets after their technology had become outdated elsewhere. The 'bare-bones' method involves stripping away many of the premium product attributes to leave an affordable yet subpar product. P&G, however, decided to take a different route for diapers in Asia, although the specific strategy is not detailed in the content.

P&G invigorated the stagnant brand Gain by conducting a thorough analysis of a specific consumer segment. They identified the needs, preferences, and buying behaviors of this segment and tailored their product and marketing strategy accordingly. This approach allowed them to effectively target and win over this consumer segment, leading to a revitalization of the Gain brand. It's important to note that this strategy is not limited to a specific product or geography, as demonstrated by P&G's successful expansion of Pampers into Asia.

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Playing to Win - Diagrams

Instead of choosing one of the two expected options, P&G executives took a third approach. This method was in keeping with P&G's standard practices elsewhere in the company – "start with the consumer." Rather than delivering an outdated or subpar product in Asia, they decided to learn as much as they could about the habits and practices of diapering babies in Asia. The executive in charge urged her team, saying "Let's find out what those consumers actually need and build that diaper. You only build what they need; you don't build all the bells and whistles that only consumers in developed markets expect." The team found that winning in diapers in Asia required making a diaper that could be sold for about the price of an egg. They repositioned their marketing to highlight how disposable diapers can improve cleanliness, reduce disease, and help babies get a better night's sleep. The simpler product at a reasonable price point, together with the brand repositioning, meant P&G's Pampers were positioned to win in Asia.

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The capabilities required

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

The capabilities that your firm will need to execute a successful strategy naturally flow from your choices about where to play and how to win there. Examples of these capabilities include branding and marketing, channel relationships and distribution networks, or industrial design and manufacturing. As a new strategy is launched, laying out a plan to develop or acquire the capabilities required is paramount. Lafley outlines the five core capabilities that P&G leverages. These all come into play in some fashion throughout P&G's strategy-setting exercises.

Questions and answers

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The theories presented in 'Playing to Win: How Strategy Really Works' challenge existing paradigms in the field of business strategy by emphasizing the importance of deep consumer understanding, innovation, brand building, go-to-market ability, and global scale. These theories suggest that success in business strategy is not just about having a good product or service, but also about understanding the customer, innovating to meet their needs, building a strong brand, reaching the customer at the right time and in the right way, and leveraging global scale for the benefit of all units.

Yes, Procter & Gamble (P&G) is a prime example of a company that has successfully implemented the practices of deep consumer understanding and innovation as outlined in 'Playing to Win: How Strategy Really Works'. P&G has a unique ability to understand customers so well that they can identify and meet new needs before customers themselves or competitors can spot them. Their primary goal with their innovation capability is to develop never-before-seen products or ways of doing business that meet previously unserved customer needs, or to improve existing products in the same way.

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  • Deep consumer understanding – P&G has a unique ability to know customers so well that they can reliably identify and meet new needs before customers themselves or competitors can spot them.
  • Innovation – P&G's primary goal with their innovation capability is to develop never-before-seen products or ways of doing business that meet previously unserved customer needs, or to improve existing products in the same way.
  • Brand building – P&G has a strong focus on not only creating and building strong brands but on training future leaders in the ability to do so themselves. This ensures their distinctive brand building capability will only continue.
  • Go-to-market ability – P&G recognizes the importance of not just reaching customers but reaching them at the "right time" and in the "right way." Perfecting this intersection leads to increased sales, which includes added benefits for retail partners.
  • Global scale – At P&G, global scale is leveraged for the benefit of all units. Consumer and geography insights, buying power, and back-office functions like HR and IT are all improved through the scale and size of P&G.

Making strategy part of culture – a management system

Lafley as CEO and other senior executives at P&G were becoming increasingly frustrated with business unit leaders who, during annual strategy review meetings, would bring endless PowerPoint presentations and an ironclad argument as to why the chosen strategy was the way to go. Where were the frank discussions and honest dialogue?

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Per the book, "Unfortunately, the management teams had been trained over decades to see strategy reviews as anything but an opportunity to share ideas. Traditionally, it had been their job to build an unimpeachable plan and to defend it to the death."

CEO Lafley had experienced enough of these meetings and decided to shift the culture to make strategy a core part of P&G's culture. Here are a few key changes he made.

Playing to Win - Diagrams

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