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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.

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."


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.

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."

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:

  • 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.

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?

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.

"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.

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.

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.

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?

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.

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.

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."

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.

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."

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.

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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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.

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.

  • 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?

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.

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