If it wouldn’t
be for the authors’ success at P&G this would be a completely run of the
mill strategy 101 book. But it was a good refresher for me.
“Too often, CEOs
in particular will allow what is urgent to crowd out what is really important.”
(Lafley and Martin, 2013, p.3). Moreover we often describe things as strategy which are not. “Grow or grow
faster is not a strategy. Build market share is not a strategy. Ten percent or
greater earnings-per-share growth is not a strategy. Beat XYZ is nit a
strategy. A strategy is a coordinated and integrated set of where-to-play, how-to.win,
core capability and management system choices that uniquely meet a consumer’s
needs, thereby creating competitive advantage and superior value for a
business. Strategy is a way to win - and nothing less.” (Lafley and Martin,
2013, p.50).
“strategy is an
integrated set of choices that uniquely positions the firm in its industry so
as to create sustainable advantage and superior value relative to the
competition.” (Lafley and Martin, 2013, p.3). “a strategy is a coordinated and
integrated set of five choices: a winning aspiration, where to play, how to
win, core capabilities and management system.” (Lafley and Martin, 2013, p.5).
“the abstract
concept of winning should be translated into defined aspirations. Aspirations
are statements about the ideal future.” (Lafley and Martin, 2013, p.19). “The
winning aspiration broadly defines the scope of the firm’s activities; where to
play and how to win define the specific activities of the organization.”
(Lafley and Martin, 2013, p.20). “Remember, it is not how to win generally, but
how to win within the chosen where to play domains.” (Lafley and Martin, 2013,
p.24).
What is winning?
“What does
winning look like for this organization?” (Lafley and Martin, 2013, p.35).
“As a rule of
thumb, though, start with people (consumers and customers) rather than money
(stock price). Peter Drucker argued that the purpose of an organization is to
create a customer, and it’s still true today.” (Lafley and Martin, 2013, p.36).
“When setting
winning aspirations, you must look at all competitors and not just those you
know best.” (Lafley and Martin, 2013, p.45). “Do craft aspirations that will be
meaningful and powerful to your employees and to your cosumers.” (Lafley and
Martin, 2013, p.47).
Where to play?
“It’s a choice
about where to compete and where not to compete. (…) Geography (…) Product type
(…) Consumer segment (…) Distribution channel (…) Vertical stage of
production.” (Lafley and Martin, 2013, p.57).
How to win?
“All successful
strategies take on of these two approaches, cost leadership or
differentiation.” (Lafley and Martin, 2013, p.84). When products are perfect
substitutes the cost leader drives the market and makes the largest profits
which it can re-invest. “When a firm offers a product or services that buyers
consider unique, the pricing and profic dynamics are quite different. The firm
provices a uique offering is a price-setter, not a price taker; the demand for
the unique offering depends upon the price the firm sets – the higher the
price, the lower the demand and vice versa. But this time, because the producer
of a unique offering serves the entire market, the firm feels the shift in
demand directly.” (Lafley and Martin, 2013, p.235). “At some point, the
marginal revenue us lower than the marginal cost and the firm has pushed price
too far.” (Lafley and Martin, 2013, p.236). “For a particular group of
customers, the firm is a monopoly supplier.” (Lafley and Martin, 2013, p.237).
A
differentiation strategy implies deep and holistic understanding of customers
and commitment to innovation while the former means sacrificing nonconforming
customers. (Lafley and Martin, 2013, p.86).
“Do work to
create new how-to-win choices where none currently exists.” (Lafley and Martin,
2013, p.97). “Do consider how to win in concert with where to play. The choices
should be mutually reinforcing.” (Lafley and Martin, 2013, p.97). “Industry
dynamics might be changeable.” (Lafley and Martin, 2013, p.97). “In Peter Drucker’s
terms, Pampers disposable baby diapers “created customers.” (Lafley and Martin,
2013, p.98). “Determine whether a product innovation is really brand specific
or ultimately category generic. Never give your current brand user a
product-based reason to switch away.” (Lafley and Martin, 2013, p.101).
Play to your strengths
“Capabilities
that both fit with one another (…) and actually reinforce one another.” (Lafley
and Martin, 2013, p.112). “In 2000, P&G’s where-to.play chouces were coming
together (i.e. grow form the core; extend into home, beauty, health, and
personal care; and expand into emergin markets), and its how-to-win choices
were also becoming clear (i.e. excellence in consumer-focused brand building;
innovative product design; and leveraging global scale and retailer
partnership). These choices needed to be translated into the set of
capabilities required ti deliver.” (Lafley and Martin, 2013, p.113).
“things you are
currently good at may actually be irrelevant to consumers and in no way confer
a competitive advantage. Rather than starting with capabilities and looking for
ways to win with those capabilities, you need to start with setting winning
aspirations and determining where to play and how to win.” (Lafley and Martin,
2013, p.114).
Manage what matters.
“A strategy
discussion is not an idea review. A strategy discussion is not a budget or
forecast review. A strategy discussion is how we are going to accomplish our
growth objectives in the next three to five years.” (Lafley and Martin, 2013,
p.131).
“I found that
clearer and simpler strategies have the best chance of winning, because they
can be explained in a few words and internalized by the organization.
Strategies that can be explained in a few words are more likely to be
empowering and motivating.” (Lafley and Martin, 2013, p.156).
Shorten your odds
“In the end
building a strategy isn’t about achieving perfection; it’s about shortening the
your odds.” (Lafley and Martin, 2013, p.183). “Do stay focused on the most
important questions (what would have to be true for this to be a winning
possibility?)” (Lafley and Martin, 2013, p.201). “Rather than have them talk
about what they thought was true about the various options, I would ask them to
specify what would have to be true for the option on the table to be a
fantastic choice. The result was magical. Clashing views turned into
collaboration to really understand the logic of the options.” (Lafley and
Martin, 2013, p.204).
