Playing to Win
By A.G. Lafley and Roger Martin
(Harvard Business School Press, 260 pages, $30)
Strategy is usually considered complex, best left to the experts. But A.G. Lafley, former chief executive officer of Procter & Gamble Co., and his long-time strategy adviser, Roger Martin, dean of the University of Toronto’s Rotman School of Management, argue that it can be demystified using a set of five key questions that should be asked at every level of your business.
The questions sound relatively simple: What is your winning aspiration? Where should you play? How can you win there? What capabilities do you need? What management system would support it?
Those were the five basic questions the duo used to guide P&G’s strategy for many years. The fact that, as CEO, Mr. Lafley regularly consulted with Mr. Martin and gave him wide access to the company shows that the questions aren’t so simple that some outside expertise isn’t necessary. But they are relatively straightforward, a distillation of famed strategist Michael Porter’s ideas, which Mr. Martin learned from the originator in his previous career at Monitor Consulting; and the questions are battle-tested, having helped power P&G to many strategic successes.
One of those successes was rethinking the Oil of Olay brand, when P&G craved a leading skin-care brand to be a credible player in the beauty business. Olay was seen as old-fashioned and not relevant (dubbed Oil of Old Lady) and the company considered launching another brand or seeking an immediate fix by buying a hot competitor.
Instead, after much study, P&G launched Olay Total Effects as a “masstige” brand, reformulated, repackaged and repriced to bridge the mass and prestige markets. The aim is to shift people who usually buy lower-priced items (such as Olay) to a higher-priced product, while also attracting consumers who want luxury products. The strategy worked, by satisfying the five questions:
Most companies have lofty mission statements but the authors say that isn’t the same thing as having a strategy. It’s a starting point, statements of an ideal future. For Olay, the winning aspirations were market-share leadership in North America, $1-billion in sales, and a global share that placed it among the market leaders. “This set of aspirations served as a starting point to define where to play and how to win, enabling the Olay team to see the larger purpose in what it was doing,” they write. Your aspirations should involve a focus on consumers, not just products, but be aimed at winning for your company – not just satisfying others.
Where to play
In which markets and with which customers is it best to compete? This is a vital question, because you can’t be all things to all people if you want to be successful. P&G determined which regions, categories and consumers could be tapped for a sustainable competitive advantage over other companies for each product. Olay decided to create, with retail partners, a new masstige segment in discount stores, drugstores and grocery stores, rather than entering the prestige market and selling through department and specialty stores.
How to win
After selecting the playing field, you must choose the best approach, which the authors stress might be very different from your competitors. They point to two Italian food restaurants, the Olive Garden chain and the Mario Batali group; the former can be described as mid-priced, casual, with more than 7,700 outlets, while the latter offers fine dining in a few select cities.
Olay chose to formulate genuinely better skin-care products that would fight the signs of aging, and create a powerful marketing campaign around the brand promise to “fight the seven signs of aging.”
What capabilities must be in place for your organization to win? For Olay, that involved innovation in product, packaging, distribution and marketing. It had to merchandise with mass retailers in a new way, and that involved partnering with designers such as Ideo and advertising/PR agencies such as Saatchi & Saatchi.
What needs to be in place in your management approach to support the strategy, and measure how successful you are with it? Olay tried to deepen its talent pool in the beauty sector through a new human resources approach and established detailed tracking systems to determine consumer response.
The five questions are iterative: As you grapple with one, the others have to be kept in mind, and sometimes you will have to return and rework your response in a previous category. For example, in assessing your capabilities, you might realize that where you are playing to win is unfeasible.
The book offers many inside stories about how P&G tackled strategy in various arenas, including examples of when it failed. That gives an even more practical flavour to this practical look at strategy, from two savvy strategy practitioners.
Toronto-based business observer Don Tapscott and frequent collaborator Anthony Williams crystallize their thinking about the new transparency demanded of corporations in a short, but thought-provoking, Kindle book, Radical Openness (TED Books, $2.95). They show how to thrive in an age of transparency and open up for innovation; discuss why sharing makes good business sense; and, in the wake of protests from Egypt to Quebec, consider radical youth and the global fight for freedom and openness.
Special to The Globe and Mail
Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter